Global green steel markets in 2026: regulation, costs and regional divergence
But 2026 is shaping up to be the first year when green steel ambitions meet a transformed policy environment and an unforgiving market reality. The introduction of the Carbon Border Adjustment Mechanism (CBAM) in January 2026 in the EU is expected to be a watershed moment – one that forces clearer definitions, shifts cost structures, and begins to separate early winners from laggards.
While Europe is pushed by regulation, Asia is driven by cost and technology pragmatism, and the Middle East positions itself as a strategic supplier of ultra-low-emissions steel and raw materials. The US, meanwhile, enters a period of uncertainty as the new administration signals a shift away from federal green-industry goals, creating a more fragmented landscape where state-level incentives and corporate demand – rather than national policy – will shape the trajectory of low-carbon steel. Together, these regions will define the competitive landscape for green steel over the next several years.
Fastmarkets has done a forward-looking preview of what to expect in 2026 for the green steel market globally, along with the key challenges and opportunities as some regions move from green steel storytelling to measurable decarbonization.
Europe: Definitions, Regulations and Cost Pressure
For Europe, the ambiguity around green steel will become increasingly difficult to sustain. The introduction of the CBAM will force producers and importers to quantify emissions with unprecedented precision.
With CBAM payments becoming financially material, the market can no longer operate on loosely defined green branding or mass-balance accounting. Instead, Europe will be pushed toward a more consistent emissions-intensity threshold, covering Scope 1, 2 and, increasingly, Scope 3. This will bring Europe closer to emerging frameworks abroad, including India’s 2024 star-rating system and the rules emerging in different regions for “clean” materials.
In this context, the need for a harmonized certification and “green steel” label that aims to bring transparency and credibility to the market becomes crucial. Without credible supply-side labeling and traceability, Europe risks undermining trust in green steel – which could discourage procurement and investment.
Initiatives for certification standards, like the one led by Low Emission Steel Standard (LESS) or Responsible Steel therefore become particularly relevant.
If LESS or a similar standard gains broad acceptance in Europe – including among producers, buyers, and regulators – 2026 could mark the birth of credible “lead markets” for low-emission steel. Large institutional buyers (automakers, construction firms etc.) will demand certified emissions data, not marketing claims. That could make low-emission steel the new baseline for “responsible sourcing.”
So far, European steelmakers have found it challenging to charge premiums for green steel owing to a lack of willingness to pay among buyers and a lack of consumer awareness of green steel.
The lack of common standards, even for the definition of “green steel”, slowed its uptake in the market, sources said.
“There is a lack of awareness [of green steel] from buyers in some regions,” a mill source said. “Sometimes we get ridiculous requests. It is clear they have no idea of what they need.”
Fastmarkets’ methodology defines European green flat steel as “steel produced with Scope 1, 2 or 3 emissions at a maximum of 0.8 tonnes of CO2 per tonne of steel.”
Fastmarkets’ weekly assessment of the green steel domestic, flat-rolled, differential to HRC index, exw Northern Europe, meanwhile, was set at €100-170 ($117-199) per tonne on January 2, unchanged from December 24.
In 2025, green steel premiums for flats have remained relatively stable, fluctuating within a narrow band of roughly €120-180 per tonne. The premium has been showing only modest week-to-week volatility. Despite movements in underlying base steel prices, the green premium itself has not shown major directional shifts and has instead held within the same range throughout the year. This suggests a broadly steady market perception of the green surcharge rather than strong upward or downward pressure in 2025.
Overall, the decarbonization shift in Europe remains quite “painful” for steelmakers, despite state funding.
“Even with strong policy backing and potentially rising demand due to regulatory changes, producing green steel is expensive and difficult to scale-up,” a mill source in Europe said.
Regulatory uncertainty and deteriorating economic conditions have led several European steelmakers to revise their decarbonization strategies, Fastmarkets reported – for example:
Salzgitter delayed implementation of its Salcos green project.
Thyssenkrupp has put a hydrogen tender for its green steel plant on hold due to elevated prices but said it remains committed to the Duisburg site’s green transformation.
SSAB postponed the start date for its Lule green project from the end of 2028 to the end of 2029 because of technical challenges – notably, delays in the modernization of the national power grid that will supply electricity to the facility.
Switching to electric-arc furnaces (EAFs) and EAFs/DRIs implies a steep increase in electricity requirements. SSAB estimated that electricity usage would rise significantly, demanding greater supply of fossil‐free power.
Electricity accounts for less than 4% of the costs in the BF-BOF production route. For EAF mills, electricity can be around 20% of the total, industry sources estimated.
The first wave of DRI/EAF projects has already faced increasing pressure relating to raw materials availability and energy pricing. DR-grade pellet, high-quality scrap, and reliable renewable electricity remain critical constraints for scaling low-carbon output. Europe’s energy transition delays – slow permitting for renewables, elevated electricity costs, and underdeveloped hydrogen infrastructure – will make 2026 a challenging year for many plants seeking full certification and compliance.
In such circumstances, decoupling energy-intensive ironmaking from steelmaking has become an omni-present discussion point.
Importing hot-briquetted iron (HBI) and DRI from origins such as the Middle East-North Africa region (MENA), where HBI/DRI production is more commercially viable, was one possible scenario in coming years.
Despite all the challenges, the opportunity remains real. CBAM phasing in, along with phasing out of free carbon permits under the EU Emissions Trading System (ETS), will give potentially compliant producers a structural price advantage over BF-BOF imports. Combined with a credible low-emission steel standard like LESS or Responsible steel, European producers who secure “clean” raw materials, renewable energy, and transparent emissions accounting could build a strong market position.
As a result, 2026 promises to be a moment of “sorting” for European steel: companies and projects that align early with emissions-based certification and clean energy strategies will gain first-mover advantages; others risk being left behind, exposed to both regulatory costs and eroding market trust.
MENA paradox
The Middle East-North Africa region holds the strongest position among all regions when it comes to low-carbon steel production.
The region’s steelmaking industry, being comparatively recent, is almost 100% represented by EAF-based mills, their CO2 emissions being below one tonne per one tonne of steel produced versus the global average of 1.9 tonnes of CO2 per tonne of steel produced.
On top of that, MENA has abundant gas reserves, and great potential for renewable energy – particularly solar, and the push for the potential of green hydrogen, which would allow cutting of CO2 emissions even further.
Additionally, the region enjoys a favorable geographical position thanks to relatively close access to Europe and Asia as well as reasonably developed port infrastructure.
But despite all these benefits, the region cannot fully enjoy them since the European region – the only one that currently shows interest in steel with a low carbon footprint – mainly needs flat products, whereas MENA is largely concentrated on production of long steel.
“If you go into the data of European imports, they import 38 million-42 million tonnes [per year] roughly and 90% or more of that is flat products. The MENA [region] produces mostly long products, but [Europe] does not need long products,” Rajesh Singh, general manager at United Iron and Steel said during Fastmarkets’ Middle East Iron and Steel Event (MEIS) held in Dubai in November.
And, in 2026, long steel imports into Europe are projected to shrink once the new trade regime cutting foreign steel supply by around 50% comes into force.
Under the new regime, only 844,526 tonnes of rebar and 1.56 million tonnes of wire rod will be able to enter the union free of a 50% duty.
“Thus, we cannot use this good positioning that we have in terms of low emissions,” said Ramy Saleh, chief business development & sustainability officer at El Marakby Steel.
According to Saleh, the MENA region could capitalize on steel sections and sheet piles as well as various downstream products.
Additionally, the region could potentially go downstream once European mills switch to EAF-based production since it is one of the largest DRI producers in the world.
In 2024 the region (excluding Iran) produced 28.55 million tonnes of DRI, according to Worldsteel, while overall steel output was 43.7 million tonnes.
Nevertheless, some of the region’s key producers repeatedly mentioned that it would be better to sell products with high added value rather than raw materials.
China ready to export green steel, but CBAM cost concerns persist
China is advancing its production and export of green steel, with many mills now able to reduce carbon emissions by 30-40% compared with the traditional BF-BOF process, which typically emits 1.8-2.2 tonnes of CO2 per tonne of crude steel.
Several steel producers are already manufacturing products that meet the CBAM carbon emission benchmarks.
For example, HBIS Group has utilized hydrogen metallurgy to produce green steel, exporting its first batch of green steel slabs to European buyers in 2025. Similarly, Baowu Steel supplied green rebar for a low-carbon construction project in Shanghai. Although volumes were modest, industry observers noted that this demonstrates the capability of Chinese mills to produce a range of green steel products in response to market demand.
China also benefits from a substantial supply of green electricity, which supports environmentally friendly steel production, particularly at electric-arc furnace (EAF) mills.
As of the end of 2024, the cumulative installed capacity of new energy power generation in China reached 1.41 billion kilowatts, a year-on-year increase of 33.9%, accounting for 42% of the total installed capacity in the country. In 2024, China’s new energy power generation reached 1.84 trillion kilowatt hours, a year-on-year increase of 25%, according to China’s National Energy Administration.
Furthermore, the Chinese government has finalized the carbon emission allowance allocation plan for the steel sector under the national ETS for 2024-2025, enabling producers to trade carbon credits. This mechanism is expected to promote green steel production by allowing mills to offset a portion of their costs through the sale of surplus carbon quotas.
Nevertheless, concerns persist regarding high CBAM-related expenses. The European Commission sets China’s default emissions value for hot-rolled coil (HRC) under CBAM at 3.187 tonnes of CO2 per tonne, leading to an estimated cost of €145.46 per tonne according to Fastmarkets’ data.
“This cost will undermine the competitiveness of Chinese green steel in the European market, hindering the mass production of the product,” an exporter based in China said.
“The carbon emission benchmarks for Chinese steel products are lower than we previously expected, which could be a challenge for most Chinese steelmakers for now,” a Chinese mill source said.
Higher costs caused by the launch of CBAM in Europe from 2026 will likely constrain trade flows of Chinese steel into the European market in the near term; in the longer-term, this, coupled with the Chinese government’s decarbonization push, is expected to help facilitate the green development of the Chinese steel industry, a second Chinese mill source said.
Fastmarkets’ fortnightly price assessment of flat steel reduced carbon emissions differential, exw China, which calculates the premium for flat-rolled reduced carbon emissions steel over products produced from the traditional blast furnace-based route, came in at 0-500 yuan ($0-71) per tonne on Monday January 5 2026, unchanged since June 20.
The corresponding assessment of flat steel reduced carbon emissions, daily inferred, exw China was 3,260-3,770 yuan per tonne on Monday January 5, with the range moving down by 10-30 yuan from 3,270.00-3,800.00 on December 31.
Decarbonization and the green steel movement lose steam in Trump’s America
When Donald Trump began his second term as President of the United States on January 20 2025, it was clear that his administration’s policies would veer sharply away from his predecessor Joe Biden’s.
Trump had run his campaign on the promise of putting ‘America First’, and the country’s turn away from making climate-conscious policies was a natural consequence of this, one that has put decarbonization and the green steel movement on the back foot.
For example, Trump’s One Big Beautiful Bill Act (OBBBA) made it harder for solar and wind energy projects to qualify for federal tax credits and repealed several Inflation Reduction Act (IRA) incentives such as those for electric vehicles (EVs) and residential energy products.
During his address to the United Nations General Assembly (UNGA) on September 23, Trump dismissed climate change as “the greatest con job ever perpetrated on the world” and a “hoax made up by people with evil intentions.” He also called green energy a “scam” and took aim at wind farms and environmentalists.
“You need strong borders and traditional energy sources if you’re going to be great again,” Trump said during his address. “I worry about Europe; I love the people of Europe. I hate to see it being devastated by energy and immigration,” he added.
It is unsurprising that, in the current political climate, green steel initiatives are not picking up steam.
US steel market participants have often expressed the opinion that steel made in the US is “cleaner” than production methods elsewhere, as more than 70% of production is through electric-arc furnaces (EAFs).
EAF steel production emits lower levels of carbon, while production via blast furnaces, which rely on coal, emits higher CO2 levels.
Fastmarkets’ weekly green steel domestic, differential to US HRC, fob mill was flat at $0 per short ton on Wednesday December 31, unchanged since the differential was launched on May 22, 2024.
Fastmarkets’ carbon threshold is 0.7 tCO2e per one tonne of steel produced. Renewable energy credits and mass balancing can be used for carbon calculation, but carbon-offset credits are explicitly disallowed.
Author: Julia Bolotova, Vlada Novokreshchenova, Jessica Zong, Zihuan Pan, Rijuta Dey
European coil and green steel round-up: Northwest European HRC prices rise despite trading slowdown
European coil market activity slowed in the week to 7 November as steelmakers are largely booked for the rest of the year, and are now signalling further price increases for 2026 offers.
Northwest European hot-rolled coil (HRC) prices did inch a little higher on week despite thin liquidity, with smaller volume deals reported directly to McCloskey at levels between EUR620-630/t ex-works, and price indications from sources generally clustering toward in the middle of EUR600-640/t ex-works.
Offers for January delivery are still currently available at prices of around EUR630-650/t ex-works, with only a few offers reported as low as EUR600/t ex-works – though distributors expect upward revisions from steelmakers in the near-term, with signals pointing toward EUR700/t delivered as reported by multiple stockholders.
“Trading activity is slower, and recent positivity is fading as a result,” said a German distributor. “Mills are indicating EUR700/t delivered for the next round of price increases.”
The tractability of further increases is still uncertain among the trade, as distributors are generally running high stock levels and are working through inventories at a slower pace due to depressed EU consumption. That said, the distribution segment considers the latest round of price increases as tied to regulatory developments rather than demand fundamentals, so expected that further policy changes could drive prices further given the uncertain market environment.
“There’s been no real demand improvement – the price recovery is being driven by regulatory changes,” said a trader.
Northwestern ports are also “full” of material imported to beat the new year deadline for CBAM-free clearance, as described by a German distributor, offered at effective prices of EUR600/t delivered (around EUR580/t base) into the Northwest European market. Import prices for delivery in the second quarter – increasingly offered by traders on a DDP basis in absorbing CBAM’s variable and uncertain cost pressures – were reported at the same EUR580/t DDP.
Prices for Italian HRC experienced similarly muted dynamics on week, finding some liquidity at levels of approximately EUR580/t ex-works given buyer bids at EUR580-590/t delivered. A producer source did expect that mill price discipline could falter before year’s end however, as sellers seek to offload excess December volumes.
“There’s more talk than activity in the market this week,” said the source. “I wouldn’t be surprised to see mills give discounts to get rid of December rolling material.”
Italian buyers were said to be referencing all-in import offers ex-Turkey at EUR560/t DDP, but with Turkish origin offers available at EUR490-500/t CFR, mill sources expected actual DDP pricing to lie closer to EUR580/t.
HRC from Indonesia was reported from multiple sources at the EUR560-570/t DDP price level, while imports ex-Turkey, Algeria, and the Far East were reported at around EUR610/t DDP.
One trader described the aggressiveness of Indonesian-origin HRC as threatening to “ruin the market for everyone,” being offered under the market consistently due to their WTO developing-country status exemption from the EU’s existing safeguard measures.
While limited to market speculation at present, McCloskey has discussed the feasibility of the European Commission initiating a developing country review for the safeguards in late-December, for January effect, as Indonesian HRC volumes now well-exceed the 3% annual share threshold required to neutralise its exemption.
At least one large trading outfit told McCloskey it had ceased sourcing HRC from Indonesia as far back as the Blechexpo trade fair in mid-to-late October, but McCloskey knows of several other import purchases due for arrival in late December, which would potentially face duties if delayed into January and the Commission does review existing protections.
Green Steel
While substantive green steel activity remains thin in Europe in the emerging low-carbon market due to rapid developments affecting traditional steel – seeing workable green HRC premia move sideways at EUR70-80/t – increased regulatory attention from events such as Germany’s Steel Summit further exemplified the political will to redefine steel procurement needs toward low-carbon, domestic offerings.
Speaking at the event, President of the German Steel Federation (Wirtschaftsvereinigung Stahl) Hans-Jürgen Kerkhoff said that the desire to support green steel demand development via public procurement was “very clear,” both supported “at the state level, and also through incentive systems in the private sector.”
As indicated by Commission communications, lead market support from proposals such as the Industrial Accelerator Act (quietly renamed from the Industrial Decarbonisation Accelerator Act), and adjacent policy initiatives are expected in the near-term.
| Weekly European steel coil | |||||
| EUR/t | Term | 07-Nov-25 | Change | ||
| Weekly Northwest Europe steel coil | |||||
| Northwest Europe ex-works HRC | EX-WORKS | 615.00 | 5.00 | ||
| Northwest Europe ex-works CRC | EX-WORKS | 695.00 | 0.00 | ||
| Northwest Europe ex-works HDG | EX-WORKS | 710.00 | -10.00 | ||
| Weekly South Europe steel coil | |||||
| Italy ex-works HRC | EX-WORKS | 580.00 | -5.00 | ||
| South Europe CIF HRC | CIF | 560.00 | 0.00 | ||
| Source: McCloskey by OPIS. | © 2025 Dow Jones Energy Limited. | ||||
| Weekly green steel | |||
| EUR/t | Term | 07-Nov-25 | Change |
| Green Northwest Europe HRC premium (scopes 1-3 CO2 under 0.8t) | 75.00 | 0.00 | |
| Green Northwest Europe ex-works HRC (scopes 1-3) | EX-WORKS | 690.00 | 5.00 |
| Green HRC premium (scopes 1-2 CO2 under 0.5t) | 75.00 | 0.00 | |
| Green Northwest Europe ex-works HRC (scopes 1-2) | EX-WORKS | 690.00 | 5.00 |
| Green HRC reduced carbon price (scopes 1-3) | 44.48 | -1.53 | |
Maria Tanatar Associate Director, Steel and Green Steel
Benjamin Steven Journalist, Steel
European green steel market: a quiet period
While the green steel segment has been experiencing something of a quiet period – and attention remains focused on traditional steel products given the significant regulatory developments presented this week – timelines are moving forward, and policy commitments for lead-market support such as an official green ‘steel definition’ as promised in the European Steel and Metals Action Plan (ESMAP) shouldn’t be too far away.
European steel distribution association EUROMETAL announced its creation of a green steel working group this week, and Hydnum Steel’s greenfield renewables-powered direct-reduced iron to electric-arc furnace route steel plant (DRI-EAF) – to operate on green hydrogen inputs – announced a circular supply agreement with automotive OEM Gestamp.
As regards CBAM and its incoming definitive stage from January, market participants are becoming more consolidated in their expectations for CBAM’s benchmark and default values: around 1.3t and 0.2t CO2e/t for blast furnace and electric-arc furnace route steel, respectively, estimating relevant import costs at around EUR50-80/t.
McCloskey tracks the value of a single unit of reduced carbon among the EU’s domestic decarbonised offerings, calculated on the basis of all green HRC premia surveyed on week and currently standing at EUR47.62/t. McCloskey’s reduced carbon price remains largely consistent with the market’s CBAM cost estimations, soon in effect as the European steel market’s first product-level carbon cost.
Weekly green steel
| EUR/t | Term | 10-Oct | Change |
| Green Northwest Europe HRC premium (scopes 1-3 CO2 0.8t) | 80.00 | 0.00 | |
| Green Northwest Europe ex-works HRC (scopes 1-3) | EX-WORKS | 660.00 | 5.00 |
| Green HRC premium (scopes 1-2 CO2 0.5t) | 80.00 | 0.00 | |
| Green Northwest Europe ex-works HRC (scopes 1-2) | EX-WORKS | 660.00 | 5.00 |
| Green HRC reduced carbon price (scopes 1-3) | 47.62 | 1.61 |
Source: McCloskey by OPIS
EUROMETAL launches Green Steel Working Group
EUROMETAL hosted a kickoff meeting last Thursday in Brussels, bringing together key stakeholders from across the European steel supply chain, to launch a “Green Steel Working Group”.
The initiative aims to identify practical pathways to accelerate the use of green steel, bridge existing gaps between supply and demand, and support distributors, service centers, and manufacturers in navigating the transition toward more sustainable steel solutions.
This meeting, chaired by Jaap Jan Aardenburg (EUROMETAL Board Member) gathered high-level representatives from across the industry and members of EUROMETAL, including:
- Hydnum Steel – Fernando Pessanha (Chief Strategy Officer) & Gilles Mirol (Chief Commercial Officer)
- Knauf Interfer – Sebastian Schulze (Head of Operational Purchasing)
- Metalogalva – António Pedro Antunes (Chief Executive Officer)
- EUROMETAL – Ricardo Silva (Managing Director) and Alexander Julius (President)
Participants exchanged views on the current challenges related to the availability and certification of green steel, the role of distribution in facilitating market access, and the importance of transparent standards and documentation along the value chain.
The EUROMETAL Green Steel Working Group will serve as a neutral platform to connect producers, distributors, and end-users, promoting knowledge sharing, good practices, and coordinated actions that can help scale up the market for green steel in Europe.
After defining its framework and work plan, the group will move forward to convene the main European actors in a dedicated “Green Steel Day” — an event designed to foster dialogue between steel producers, distributors, industrial users, and policymakers, and to showcase practical examples of green steel distribution in action.
BIR warns against sliding scale steel green standards
The Bureau of International Recycling (BIR) has released a new position paper calling for “a fair and science-based approach” to green steel policymaking; namely, how green steel is to be methodologically defined as the steel industry embarks on its industrial transition.
In the paper, the industry association warns against defining green steel against a “sliding scale” approach, which gives diminished accreditation for carbon emissions reductions the greater the constituent share of secondary (scrap) steel in the steel’s production.
This methodology, preferred by leading decarbonisation standards bodies in the steel sector such as ResponsibleSteel and the Low Emissions Steel Standard (LESS), is premised on a “realistic and practical” approach to decarbonisation, attempting to recognise inherent limitations in scrap availability to meet steel and green steel demand out as far as 2050 – an institutional carbon-neutrality deadline worldwide.
BIR supports methodologies on an absolute emissions approach such as the Global Steel Climate Council’s Steel Climate Standard (GSCC SCC), which BIR states “applies to all steel producers equally, focusing on actual emissions intensity across time rather than production method.” While this is not wholly inaccurate, the SCC does distinguish between flat and long steel products, setting different emissions targets for each at comparatively high thresholds as demonstrated in appendix one.
Supporters of definitions incorporating a sliding scale argue that these limitations in scrap availability risk merely redistributing embedded emissions across steelmaker product lines, and negates potential for higher-carbon blast furnace (BF) route producers to enact real emissions reductions on economic non-viabilities.
The European Commission is currently formulating low-emissions steel labels under the upcoming Industrial Decarbonisation Accelerator Act, as per the European Steel and Metals Action Plan (ESMAP), to be presented at the end of the year. McCloskey’s industry sources indicate that LESS is a forerunner in these consultations between policymakers and European steel market participants.
Under ESMAP, EU authorities recognise that the steel industrial transition is not workable without demand for green steel products such to fund decarbonisation-focused renovations among steel producers; aiming to create lead markets for green steel through official green steel definitions and their incorporation into public procurements. With public procurement representing around 15% of steel demand on the continent, steel producers – regardless of production route – will be looking to secure their piece of this pie as European climate targets approach their deadlines.
BIR does acknowledge scrap’s finite supply, but equates it to other raw materials, stating “much like iron ore, [scrap] is not scarce,” denying that this warrants special treatment for BF producers over electric-arc furnace (EAF) producers – who largely dominate scrap consumption as their primary steelmaking input.
The association adopts the same studies as the standards they criticise for their arguments, citing the possibility to reach 45% recycled steel input in global manufacturing by 2050 to counter what they term the “shortage narrative” – but BIR does not give much attention to the decarbonisation of the other 55%, or the fact that 2050 represents the carbon-neutrality deadline, not the starting line for a scrap-based transition.
BIR’s arguments are understandable in the sense that EAF producers should not be isolated from any green steel markets created and stimulated by emerging regulatory definitions – but the European Commission’s strategy focuses on incentivizing the decarbonisation of its existing industries, to which BIR has not provided an alternative solution.
Indeed, the scrap-independent decarbonisation routes available to integrated blast furnace producers – most prevalently, looking to direct-reduced iron (DRI) processes as an alternative to carbon-intensive blast furnace iron reduction – are also available to EAF producers, allowing them to reduce the scrap share in their productions on an already-competitive production route, as well as support the development of the DRI markets and the wider industrial transition via additional demand.
BIR states that the sliding scale model “contradicts the fundamental principle that green standards should reward actual emissions reductions” – yet if Europe’s existing integrated production is going to achieve actual emissions reductions, its operators will certainly require supportive demand to do so before 2050, as afforded by the incorporation of a sliding scale approach into regulatory definitions.
Appendix One: Green Steel, Standards and Thresholds
| Green Steel Standards (scrap share) | Green Steel Thresholds 2025 (t CO2e/t) |
| LESS (100%) “Near zero” | 0.12 |
| LESS (100%) A | 0.24 |
| LESS (100% ) B | 0.36 |
| LESS (20%) “Near-zero” | 0.40 |
| LESS (0%) “Near-zero” | 0.47 |
| LESS (100%) C | 0.48 |
Benjamin Steven Journalist, Steel
Italy reaches strategic agreement to relaunch green steel production in Piombino
All parties have reached an agreement on a strategic framework to relaunch the steelmaking hub in Piombino, Tuscany, Italy.
The agreement, the result of extensive discussions between the Italian ministry of enterprises and made in Italy, local authorities, the Italian State Property Agency, and the Piombino port authority, represents a key step in the country’s national plan for sustainable steel production.
The deal builds on the process launched on February 19 this year with the signing of a shareholders’ agreement between Ukrainian steel producer Metinvest and Italian plantmaker Danieli, establishing the joint venture Metinvest Adria S.p.A. to build a new low-emission steel plant in Piombino. It also follows the development agreement signed with JSW Italy, a subsidiary of India’s JSW Group, on April 18 for the modernization of the site’s rail production line.
“This agreement is the result of teamwork,” said Adolfo Urso, minister of enterprises and made in Italy, highlighting the importance of coordinated efforts among government, local institutions, and industrial partners. “Today we are looking at the opportunity to create in Piombino one of the most strategic green technology sites in both Italy and Europe,” he added, recalling the critical state of the site two years ago.
Luca Villa, CEO of Metinvest Adria, described the deal as “another concrete step” toward establishing a sustainable and competitive production facility that will serve the broader European steel supply chain. Marco Lerz, head of project finance at Danieli Group, reaffirmed the company’s commitment to bringing cutting-edge green technologies to the site, with a strong focus on efficiency and minimal environmental impact.
The framework agreement will now be presented to trade unions before the formal signing. The overall goal is to transform Piombino into a key European hub for low-emission steelmaking.
Green Steel: buyers more willing to pay premiums for flats rather than longs
Green flats
Fastmarkets’ weekly assessment of the green steel, domestic, flat-rolled, differential to HRC index, exw Northern Europe was €150-200 ($220-330) per tonne on April 10, flat week on week.
Fastmarkets’ methodology defines European green flat steel as “steel produced with Scope 1, 2 & 3 emissions at a maximum of 0.8 tonnes of CO2 per tonne of steel.”
For steel that falls under such specifications, offers from major European suppliers were stable at premiums of €200-300 per tonne. Offers at the higher end of the range were mainly reported from Nordic-based suppliers.
These offers have been broadly stable in the past months, but tradable premiums for the spot market were lower, sources said.
During the assessment week, minor tonnages were traded at a premium of €200 per tonne in Northern Europe.
The latest transactions for green flat steel were reported in March at premiums of €170-180 per tonne for volumes over 1,000 tonnes, sources said.
Buyer sources told Fastmarkets they estimated that achievable premiums for green steel with that level of emissions would be closer to €100-200 per tonne.
Some bids were even reported at premiums of €70-80 per tonne during the week, but suppliers said that such premiums would be acceptable for steel produced with higher CO2 emissions content.
“[A premium of] €70 per tonne is for steel with an emissions threshold of around 1.5 tonnes of CO2 — some suppliers in Europe offer steel with such emissions exactly at such levels,” a mill source said. “But, for steel [made in electric-arc furnaces (EAFs)] with emissions below 1 tonne of CO2 per 1 tonne of steel, this price is too low.”
A mill source estimated achievable premiums at €150-200 per tonne.
Another mill source estimated achievable premiums at €170-200 per tonne.
Overall, activity in the spot market remains sporadic, while increasingly more buyers are looking to sign long-term agreements with green steel suppliers, expecting higher demand in the years to come.
Notably, Nordic green steel startup Blastr signed a memorandum of understanding with Netherlands-based steel service center Vogten Staal for low-carbon emissions steel supply on Monday April 7.
This is the third offtake agreement announced by Blastr in the past few months, supporting a material increase in the supply of decarbonized steel products in Europe.
But when contacted by Fastmarkets, the company did not specify either the start of the deliveries or the volumes.
Established in 2021 with the aim of becoming an integrated low-CO2 steel producer, Blastr planned to produce around 2.5 million tonnes per year (tpy) of hot- and cold-rolled steel.
Final investment decisions on both a direct-reduced iron (DRI) plant and a steel plant were expected by early 2026.
Vogen Staal has processing lines in Maastricht, the Netherlands. The company has recently invested in a second production facility. When all new lines are installed, the production capacity of both facilities will be well over 1 million tpy.
Green longs
On Wednesday April 9, Fastmarkets launched two new European green long steel prices to reflect emerging market interest in low-carbon material.
Fastmarkets’ inaugural weekly price assessment for green steel, differential to steel reinforcing bar (rebar), domestic, delivered Northern Europe was €20-30 per tonne on April 9.
And the first assessment of the green steel base price, reinforcing bar (rebar), domestic, delivered Northern Europe, inferred was €660-710 per tonne on Wednesday.
The latter price is calculated by adding the weekly green long steel differential to the weekly price for steel rebar, domestic, delivered Northern Europe.
The European long steel industry is predominantly EAF-based, which makes it a priori cleaner in terms of emissions compared with the blast furnace-basic oxygen furnace (BF-BOF) route that prevails in flat steel production.
EAF production typically emits around 0.8 tonnes of carbon emissions per 1 tonne of steel. Therefore, “green” requirements for long steel producers are stricter than in the flat steel sector.
Several sources stressed that, to be green, emissions produced by EAF-based mills within all three scopes should not be above 0.5 tonnes per 1 tonne of steel. As a result, Fastmarkets’ methodology defines European green long steel as “steel produced with Scope 1, 2 & 3 emissions at a maximum of 0.5 tonne of CO2 per tonne of steel.”
In such conditions, long steel producers in Europe are squeezed between stricter criteria for being considered green and limited demand.
“Being an EAF producer is both an advantage and a disadvantage,” a producer from Southern Europe told Fastmarkets. “On one hand, we are already green, but on the other, customers do not see why they have to pay a premium for what they had previously been buying without it.”
Even in Northern Europe, which is pioneering the utilization of green long steel, the demand is said to be limited.
“At this moment, I see no willingness to pay extra for low-carbon steel in the rebar sector — only for specific projects where there is an order qualifier and the options are limited,” a trader from Northern Europe said.
In such conditions, customers are not ready to accept mills’ offers, which vary in the range of €30-50 per tonne, depending on the supplier.
A source on the sellers’ side said that customers accept premiums at the lower end of the range, but sometimes, producers accept lower numbers.
“Charging premiums for longs is very difficult in Europe, as the production nature is already greener than for flats,” a trading source said, providing an assessment of a workable premium at a maximum of €20 per tonne.
Evolution of green steel premiums in Europe: flats versus longs
Under the European Green Deal, the European Commission has proposed a new EU goal to become a net-zero emitter by 2050.
The steel industry was responsible for around 5% of the CO2 emissions in the EU and 7% globally, according to Commission data.
But alongside the numerous challenges this has created, there were also opportunities for steelmakers to charge premiums for steel with a lower carbon footprint. The uptake of green premiums, however, has been very different in the flat steel and long steel sectors in Europe.
Fastmarkets has taken a closer look into the matter, investigating the new green steel landscape in the region.
Conventional steelmaking in Europe
Around 55% of the steel produced in Europe is created through the integrated blast furnace/basic oxygen furnace (BF-BOF) route. Carbon emissions from this production method amount to around 2.0-2.2 tonnes of CO2 (direct and indirect emissions) per tonne of steel, according to the Commission
Approximately 45% of the steel produced in Europe is made using the electric-arc furnace (EAF) route, but this share was expected to rise to around 57% when the EU shifts toward clean technologies on the way to net-zero emissions by 2050.
In Europe, 79% of carbon steel long products are produced via the EAF route, while 96% of flat products are produced using the BF-BOF route.
But the EU’s ambitious decarbonization goals and the growing cost of carbon emissions under the Emission Trading System (ETS) in the bloc have been stimulating European steelmakers to invest heavily in the decarbonization of their operations, using steelmaking methods that reduce carbon dioxide emissions.
Major suppliers were offering their own steel brands with lower carbon footprints – XCarb, Arvzero, SSAB Zero, Bluemint, Greentec, PureSteel+, Calibria, etc – but there was no common standard for green steel in the industry yet.
Most flat-steel makers use the same approach, intending to replace BF-BOF capacity with EAFs and hydrogen-fuelled direct-reduction iron (DRI) modules.
Consequently, the transition from traditional blast furnace-based steelmaking, widely used for flat steel manufacturing, to so-called “green” and less polluting routes of production has become an integral element in major European steel companies’ strategies.
Using coal-based DRI reduces CO2 emissions by 38% compared with the traditional BF-BOF route. Using a combination of natural gas and hydrogen and carbon monoxide in DRI reduces CO2 emissions by 61% compared with BF-BOF. And using only hydrogen can allow CO2 emissions to be reduced by as much as 97%.
Evolving green flat steel market
Demand for low-emission steels has been growing slowly due to the notably high premiums for such materials and the lack of regulation in the industry, which would stimulate buyers to “go green.”
Fastmarkets’ methodology defines European green flat steel as “steel produced with Scope 1, 2 & 3 emissions at a maximum of 0.8 tonne of CO2 per tonne of steel.” Under that methodology, in June 2023, Fastmarkets launched its inaugural green flat steel assessment.
Fastmarkets’ most recent weekly assessment of the green steel, domestic, flat-rolled, differential to HRC index, exw Northern Europe, was €150-200 ($166-221) per tonne on April 3, unchanged week on week.
European steelmakers have maintained their offer prices for green flat steel at €200-300 per tonne.
But despite slow demand, the room for discounts was quite limited due to the high costs of green steel production, market sources said.
“To produce green steel, we have to buy green energy, and pay for environmental declarations,” a mill source said. “What’s the point of selling [green steel] below cost?”
At the same time, the majority of flat steel production in Europe was still achieved using traditional BF-BOF methods. Major European mills were also offering reduced carbon emission solutions for flat steel products produced via the BF-BOF route with more “digestible premiums” as opposed to “fossil-free” steel produced via the EAF route.
“There are different shades of green in the market,” a mill source said . “Not everyone needs 80-90% decarbonized steel, and not everyone can afford it. For many buyers, a 30-50% reduction in emissions is enough to meet their needs.”
In January 2024, Fastmarkets launched an assessment for a reduced carbon emissions differential paid for flat steel produced in European blast furnaces, with carbon emissions of 1.4-1.8 tonnes of CO2 per tonne of steel.
Fastmarkets’ most recent assessment of the flat steel reduced carbon emissions differential, exw Northern Europe, was €40-60 per tonne on April 3, 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 of premiums were reported at €60-70 per tonne in April, with some limited room for discounts.
Green long steel
In the long steel sector, which mainly uses the EAF route of steel production, the acceptance of premium charges by customers was comparatively more difficult because this method of production was already considered more ecologically sound.
Traditionally, steel produced in EAFs using scrap feedstock produces no more than 0.8 tonne of carbon per tonne of steel.
“Being an EAF producer is both an advantage and a disadvantage,” a producer from Southern Europe told Fastmarkets. “On one hand, we are already green, but on the other, customers do not see why they have to pay a premium for what they had previously been buying without it.”
As a result, the demand for green long steel in the region remained limited and was mainly concentrated in Northern Europe, where the culture of care about the environment is at a high level.
“If you sell green longs in Scandinavia, that is more in their culture,” a producer with mills across Europe said. “Southern Europe is different, [and] most customers are not ready to pay for low carbon emissions.”
Another producer with assets across Europe confirmed that the construction and automotive industries in Northern Europe were the key consumers of green steel in Europe at the moment.
A push from governments was another reason for better demand for green steel in Northern Europe.
“Demand for green [steel] should be stimulated through public procurement, the way it is in Nordic countries. Otherwise, it’s difficult to motivate buyers to pay a higher price,” a buyer in Germany said.
“In Scandinavia, there are many public projects requiring green steel procurement. There is an actual market for green steel,” a mill source in Europe said. “So distributors and trading companies there are more keen to buy green. They know that they can pass the costs [of green steel] down to the end-user.”
To track the development and prices of this emerging market, Fastmarkets has launched two new weekly assessments for green long steel prices, domestic, delivered Northern Europe.
Fastmarkets’ inaugural weekly price assessment for green steel, differential to steel reinforcing bar (rebar), domestic, delivered Northern Europe, was €20-30 per tonne on April 9.
And the first assessment of the green steel base price, reinforcing bar (rebar), domestic, delivered Northern Europe, inferred, was €660-710 per tonne on the same date.
The latter price was calculated by adding the weekly value for the green steel differential to steel reinforcing bar (rebar), domestic, delivered Northern Europe, to the weekly assessment of the price for steel reinforcing bar (rebar), domestic, delivered Northern Europe.
Stricter green criteria
At the same time, the criteria for green steel produced in EAFs have become stricter. According to market sources, 0.5 tonne of CO2 per tonne of steel is the new maximum level for EAF mills, but this is beyond the capabilities of many producers.
“In Poland, emissions are around 0.75-0.8 tonnes of CO2 per tonne of steel because their electricity is generated using coal,” the producer from Southern Europe said.
One of the main ways to cut emissions for EAF-based producers was to use renewable energy such as solar and wind power, or clean energy from nuclear plants or hydrogen.
During discussions with producers across Europe, Fastmarkets learned that, with the help of clean energy, EAF mills can reduce emissions to 0.2-0.4 tonnes of CO2 per tonne of steel, and ask for a $20-50 per tonne premium for that, while some mills did not charge premiums at all.
Nevertheless, if paid at all, the premiums accepted by customers were normally at the lower end of the offer range, while according to some producers they did not compensate for the investments and costs put into the production of such materials.
“Customers are not ready to pay for low emissions while investments are huge. So they are important, but not the priority. There will be demand later, but as of now the market is not ready,” a source with a group that owns production units across Europe said.
For this reason, market sources said, investment in emissions reductions by long steel producers will be realized at a much slower pace than in the flat steel sector.
Demand for green flat steel muted in Europe, but premiums remain high
Fastmarkets’ methodology defines European green steel as “steel produced with Scope 1, 2 & 3 emissions at a maximum of 0.8 tonne of CO2 per tonne of steel”.
During the assessment week, premiums for such steel were reported at €200-300 ($216.96-325.43) per tonne from major European suppliers.
Buyer sources estimated that achievable premiums for such material were at €100-150 per tonne. But suppliers claimed that the lower end of the range was not workable for electric-arc furnace (EAF)-produced green steel.
Notably, two suppliers told Fastmarkets that they would be willing to knock off no more than €20-30 per tonne from their offers of €200 per tonne.
Buyer sources argued that big tonnages (more than 3,000 tonnes) could be booked with lower premiums – of around €150 per tonne
“The demand [for green steel] is not booming, but we sell 200 tonnes here, 100 tonnes there,” a mill source said.
“Nobody books green steel to stockpile it – it would have been too expensive. So this is back-to-back business – you have a project, you book green steel for it,” the mill source added.
Transactions for flat steel produced with emissions below of 0.7 tonne of CO2 per tonne of steel were reported at €170-180 per tonne, for May-shipment material.
While Nordic countries remained the main demand drivers in Europe, sources have also pointed out that they noted they have heard more inquiries coming from Spain lately.
As a result, Fastmarkets’ assessment for green steel domestic, flat-rolled, differential to HRC index, exw Northern Europe was €150-200 per tonne on Thursday, widening upward from €150-180 per tonne in the previous week.
Meanwhile, Fastmarkets’ assessment of the flat steel reduced carbon emissions differential, exw Northern Europe was €30-60 per tonne on Thursday, unchanged week on week.
For steel produced in blast furnaces, with reduced carbon emissions of 1.4-1.8 tonnes of CO2 per 1 tonne of steel, offers for premiums were reported at €40-70 per tonne during the assessment week.
Notably, premium steel produced with carbon footprint of 1.5 tonnes of CO2 per 1 tonne of steel was reported at €70 per tonne from one supplier.
For steel with produced with 1.8 tonnes of CO2 carbon footprint, the premium was reported at €40 per tonne.
Buyer sources estimated a premium level of €30-60 per tonne, depending on the carbon footprint.
European green steel premiums edge higher in recent deals; traded volumes limited
Across Europe, green steel produced in electric-arc furnaces (EAFs), with Scope 1, Scope 2 and upstream Scope 3 greenhouse gas emissions below 0.8 tonnes of CO2 per 1 tonne of steel, was offered at premiums of €200-300 ($207-311) per tonne during the assessment week.
Bids for such material were reported at €80-150 per tonne. However, several sources pointed out that mills were firmly insisting on prices above €150 per tonne for such specs, considering the costs of production.
“To produce green steel, we have to buy green energy, pay for environmental declarations,” a mill source said. “What’s the point of selling it [green steel] below cost?”
Transactions for such material were reported at €150-170 per tonne over the past seven days.
One large-size deal was also reported within the range of €150-170 per tonne for April-shipment material.
As a result, the green steel premium for flat steel in Europe was stable, with Fastmarkets’ weekly assessment of the green steel domestic, flat-rolled, differential to HRC index, exw Northern Europe set at €150-170 per tonne on Thursday, narrowing upward from €100-170 per tonne a week earlier.
Even though overall traded volumes for green steel were low across Europe, sources pointed out that there was a positive tendency over the past two years.
“In 2021-2022, traded volumes [for green steel] were zero or close to zero. Now we have a market — small, but evolving rapidly,” a buyer in Northern Europe said.
Besides, demand for green steel remained highly regionalized across Europe, with Nordic countries leading the race, sources said.
“In Norway, Denmark and Sweden, there are state-funded projects requiring green steel procurement. Not mass-balanced, but real physically produced green steel,” a second buyer source in Europe said. “At the same time, in Southern and Central Europe, interest in green steel is very low,” they added.
Sources said that, in addition to the high premiums, the lack of public projects across Europe — projects that could insist on green steel procurement — and the lack of stimulus measures to encourage “going green” were limiting demand for green steel.
“Buying steel with reduced carbon content is great for the environment — it’s a step in the right direction. It’s just not affordable when many companies are fighting for survival in a tough market,” a third buyer source told Fastmarkets.
Despite the looming challenges, however, European steelmakers were committed to the green steel transition and expected the market for green steel to grow exponentially in the upcoming years, supported by regulations.
“It’s a very small market so far, but with big potential. We have already seen an exponential rise in booked volumes [of green steel] year on year, and these volumes are only set to grow in the future, supported by the EU’s decarbonization plans,” a second mill source said.
