The European green steel market continued to show fragmented demand with spot activity remaining close to nil amid high premiums, sources told Fastmarkets on Thursday April 23.
Demand for steel produced with reduced carbon emissions footprint across Europe remained patchy and regionalized.
A mill source reported an inquiry for 200 tonnes for green steel from a construction company, noting increased amount of inquiries for green material from
construction sector in general lately, but noted that high premiums remained a stumbling block.
“Some buyers inquire for green steel, but refuse to pay three-digit premiums, noting that other steelmakers can sell green steel cheaper,” an electric-arc furnace (EAF)-based green steelmaker said. “But here we once again stumble over the lack of clarity on green steel definition in Europe. Naturally, steel with carbon footprint of 1.6 tonnes of CO2 per tonne of steel is cheaper than steel with carbon footprint below 1 tonne of CO2 per tonne of steel. But these are two different products,” they added.
Under Fastmarkets’ framework, European green steel refers to material produced with combined Scope 1, 2 and 3 emissions not exceeding 0.8 tonnes of CO2 per tonne of steel.
Suppliers reported offers for premiums for material witch such specs around €200 ($234) per tonne, with one supplier even aiming for €300 per tonne.
Achievable premiums, however, were lower — at €150-170 per tonne, sources said, and mainly achieved for project business rather than spot sales.
Overall, industry sources continued to report project-driven demand for green steel from construction and wind sectors, as well as from automakers and white good producers, while spot activity remained negligible.
“The cost of steel in a car or in a washing machine is relatively low, so it’s affordable. For distributors and steel-service centres buying green steel for stock is simply freezing money,” a buyer in Germany said.
Buyers estimated workable green steel premiums for spot market from €0 to €100 per tonne during the assessment week.
A buyer source said that green steel premiums in the three-digit range were attainable only in project-driven transactions, noting that higher premiums are typically limited to public procurement and are otherwise unaffordable.
An automotive end-user told Fastmarkets it is locking in green steel through offtake agreements with upcoming DRI-EAF producers, maintaining that currently available scrap-based green steel is not “fully green.”
Therefore, the green steel uptake across the market remains gradual and fragmented.
Fastmarkets’ weekly assessment of the green steel domestic, flat-rolled, differential to HRC index, exw Northern Europe was stable at €100-160 per tonne on Thursday.
Meanwhile, Fastmarkets’ assessment of the flat steel reduced carbon emissions differential, exw Northern Europe was €0-50 per tonne on Thursday, also stable week on week.
For steel produced in blast furnaces with reduced carbon emissions of 1.4-1.8 tonnes of CO2 per tonne of steel, offers for premiums were reported at €70 per tonne during the assessment week.
Buyers’ estimates of tradable prices were around €0-50 per tonne, with no new trades reported.
A source on the sell side indicated that, in certain cases, transactions for such material can be concluded without a premium for marketing reasons.
