Fastmarkets’ inaugural assessment of the flat steel reduced carbon emissions differential, exw Northern Europe, was €40-60 ($44-65) per tonne on January 25.
Market sources said that this price range has been quite stable in recent weeks, with steelmakers seeing sales of material with 30% emissions reduction (1.55-1.65 tonnes of CO2 per 1 tonne of steel) as the option with the greatest commercial viability so far.
Most European steelmakers have announced significant investments in green steel projects to reduce emissions and to comply with strict EU regulations. These projects largely make use of hydrogen-based direct-reduction iron (DRI) and electric-arc furnaces (EAFs), while in the shorter term scrap-based flat steel production has increased.
But the majority of flat steel production in Europe was still achieved using traditional blast-furnace (BF)-basic oxygen furnace (BOF) methods. Major European mills were offering reduced carbon emission steel solutions for flat products produced via the BF-BOF route with more “digestible premiums” as opposed to “fossil-free” steel produced via the EAF route.
“The use of ‘greener’ steel is not well regulated in the EU. Many customers can start with around a 30% reduction,” a mill source said.
“Premiums for steel with 30-50% carbon emissions reduction are more affordable for buyers,” a second mill source said.
In general, market sources agreed that, at the moment, buyers felt no pressure to book “cleaner steel” although such demand was expected to rise gradually in the years ahead, with the EU’s Carbon Border Adjustment Mechanism (CBAM) being phased-in and the free allocations under the former Emissions Trading System being phased-out.
Fastmarkets’ will assess the flat steel reduced carbon emissions differential weekly, against its established Northern Europe hot-rolled coil (HRC) price index.
Meanwhile, Fastmarkets’ weekly assessment of the green steel, domestic, flat-rolled, differential to HRC index, exw Northern Europe, was €150-250 per tonne on January 25, unchanged since mid-December.
One producer source reported a premium for steel with “CO2 emissions close to zero per 1 tonne of steel” around €300-350 per tonne. This price point, however, was not included in the assessment because most sources, including mills, said that buying interest in such material was very low. There was also the very high premium to consider, and the lack of pressure on end-users to procure such steel.
“There is very little demand for even smaller premiums, while [material with premiums of] €300-350 per tonne might mainly be booked by end-users directly and in really small volumes,” a producer source in the European market said.
The same producer estimated achievable premiums for steel with CO2 emissions content about 0.4-0.6 tonnes of CO2 per 1 tonne of steel at €150-250 per tonne.
Buyers’ price ideas for such material were around €100-150 per tonne.
Published by: Julia Bolotova
