The European market for green steel was “not a priority” for buyers in the week to Thursday January 29, with no fresh trades reported and a clear focus on broader market challenges, sources told Fastmarkets.
Those challenges include the implementation of the EU’s Carbon Border Adjustment Mechanism (CBAM), upcoming changes to the trade regime and slow demand.
Trading in the spot market for green steel continued to be muted, with buyers more interested in securing long-term contracts for steel and raw materials produced with lower carbon emissions in anticipation of a pick-up in demand over the next few years.
Market participants said the European market for low-carbon steel was very much still a niche are, with the wider adoption of green steel across supply chains not expected to pick up until decarbonization accelerator policies, such as the Industrial Accelerator Act (IIA), come into force.
The IIA is expected to unlock green steel demand through public procurement and the final version of the Act is expected to be published in the end of February 2026.
“At present, only a few European flat steel producers are capable of manufacturing green steel with emissions below one tonne of CO2 per tonne of steel, without mass-balancing,” a mill source told Fastmarkets. “Additional projects are not expected to begin production until 2027-2028, which could lead to a supply bottleneck.”
On January 22, Swedish steelmaker SSAB and German defense and technology company Rheinmetall signed a letter of intent for the supply of fossil-free steel.
The collaboration will begin with deliveries of SSAB Zero, with volumes increasing over time. Future deliveries will also include SSAB Fossil-free steel produced using HYBRIT technology. Actual volumes were not disclosed.
SSAB Zero is ultra-low emissions steel produced from slabs manufactured at SSAB’s electric-arc furnace (EAF) facility in Iowa, in the US Midwest.
By the end of 2029, SSAB will be able to start green production at its Lulea facility on the northern coast of Sweden.
Fastmarkets’ methodology defines European green steel as “steel produced with Scope 1, 2 & 3 emissions at a maximum of 0.8 tonnes of CO2 per tonne of steel.”
Scope 1 refers to direct emissions, while Scope 2 and 3 are indirect emissions.
Premiums from major European steelmakers for green steel were reported at €200-300 ($239-359) per tonne, sources said.
But buyer estimates of the tradable value for green steel premiums were heard at €100-150 per tonne in the week to Thursday, with some sources reporting bids below €100 per tonne, while seller sources estimated the achievable premium at €150-180 per tonne.
As a result, Fastmarkets’ weekly assessment of the green steel, domestic, flat-rolled, differential to HRC index, exw Northern Europe, was flat at €100-150 per tonne on January 29.
Fastmarkets’ assessment of the flat steel reduced carbon emissions differential, exw Northern Europe, was €0-50 per tonne on Thursday, widening from €40-50 per tonne seven days ago.
For steel produced in blast furnaces, with reduced carbon emissions of 1.4-1.8 tonnes of CO2 per 1 tonne of steel, offer for premiums were reported at €60-80 per tonne in the week to Thursday.
Buyer estimates came in at €0-50 per tonne.
A source on the sell side confirmed that, in some cases, deals could be done without a premium for marketing purposes.
“Very often, buyers book steel with reduced carbon emissions content simply because they need it to show on sustainability reports or for marketing purposes,” a distributor in Germany said. “In such cases, [buyers] will go for the cheaper option, rather than a significantly lower carbon emissions threshold.”
Another buyer source said that when a customer places a large order – such as one above 10,000 tonnes of hot-rolled coil – European steel producers might offer its reduced-carbon brands at no additional cost.
