European green flat steel premiums hold steady; Nordic countries drive demand

Premiums for flat steel produced with reduced carbon emissions across Europe remain stable at high levels, with most demand coming from the Nordic states, Fastmarkets heard on Thursday January 9.

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, leading European suppliers maintained the premiums for such steel at €200-350 ($206-361) per tonne.

These offers have been broadly stable during the course of 2024, but tradable values for the spot market were lower, sources said.

“When it comes to deals, especially for bigger tonnages, some discounts can be achieved – depending on supplier,” a buyer in Germany said.

Buyer sources estimated achievable premiums for green steel with such levels of emissions to be at €80-150 per tonne, but the lower end of that range was not considered to be workable by mill sources – at least for the mentioned specifications.

As a result, Fastmarkets’ weekly assessment of the green steel domestic, flat-rolled, differential to HRC index, exw Northern Europe, was €100-200 per tonne on Thursday, stable since December 12, 2024.

Market participants said there is a lack of projects across Europe requiring green steel and that demand from the key consumer – the automotive industry – has recently been slowing, in line with the general downturn in steel sales.

Consequently, demand for such steel remained subdued and highly regionalized, sources said, with Nordic countries deemed “champions” in green steel procurement.

“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 they can pass these costs [of green steel] down to the end user,” the mill source added.

Two other supplier sources echoed that view, and told Fastmarkets that they were selling most of their volumes of steel with reduced carbon footprint in the Nordic states.

A deal for 17,000-18,000 tonnes of green heavy plate, produced via electric-arc furnace (EAF), with cardon emissions content below 1 tonne of CO2 per tonne of steel, was reported from Bulgaria to Denmark in late December.

The premium for such steel was reported to be €150 per tonne.

Published by: Julia Bolotova

European green flat steel suppliers maintain premiums at high levels

European producers maintained premiums for green flat steel stable, saying that only minor discounts were possible despite limited demand. Buyers kept a low profile, sources told Fastmarkets Thursday December 19.

In general, European steelmakers were optimistic regarding green steel uptake in the following years, despite ongoing challenges, sources told Fastmarkets.

“We don’t see booming volumes [for green steel sales] now, but we see steady inquiries almost every week — for 100, 500 tonnes — but the interest is growing,” a steel mill in Europe said.

Sources, however, agreed, that economic crisis in Europe was slowing down decarbonization and green steel uptake in the market in general.

“It’s hard to create sustainable demand for green steel in such environment, when businesses are struggling to keep afloat,” a buyer in the Benelux region said.
“[EU] member states must intervene — we need public infrastructure projects that would stimulate buyers to ‘go green,’” they added.

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.

Green steel suppliers in Europe maintained premiums for such steel at €200-350 ($209-366) per tonne.

Notably, a premium for steel with carbon emission of under 600 kilograms and Scope 1,2 and 3 upstream was reported at €200 per tonne.

Transactions for such steel were heard at €170 per tonne during the week, but for limited tonnages.

Premiums for steel, carbon neutral under Scopes 1 and 2 were reported at €300-350 per tonne.

And premiums for green steel, with Scope 1, 2 and upstream Scope 3 carbon emissions of less than 0.8 tonnes per tonne of steel, were reported at €200-250 per tonne.

Industry sources estimated achievable prices for such material at €100-150 per tonne.

Some bids were reported at even lower levels — €50-80 per tonne.

Producer sources said that it would be not commercially viable to sell green steel with such low premiums, considering costs of production and short availability.

“We can provide certain discounts on decent volumes [of green steel], but there is a limit — we can’t be selling green steel for free,” a second steelmaker said.

As a result, Fastmarkets calculated its weekly green steel domestic, flat-rolled, differential to HRC index, exw Northern Europe at €100-200 per tonne on Thursday, stable week on week.

Demand for green steel remains sporadic, regionalized across Europe; premiums slightly higher

Demand for green flat steel in Europe is still limited and highly regionalized, but premiums for such material have strengthened slightly because most suppliers refuse to undercut prices much even in the face of low demand, sources told Fastmarkets on Thursday December 12.

Sources noted that most demand for steel with reduced carbon emissions was coming from Nordic states.

“This is very simple: if there is fit legislation and public projects requiring green steel then there is a market [for green steel],” a mill source in southern Europe said.

“Nordic countries are champions of green steel procuring, while Central and Southern Europe are lagging far behind,” the mill source added.

“We sell most of our [steel with reduced carbon footprint] in the Nordic states,” a second supplier said.

Also, sources pointed out that publicly listed companies that had to submit sustainability reports have also been expressing more interest in green steel bookings.

“Investors are not only interested in financial data; sustainability is noticeably higher on everyone’s agendas lately,” a second mill source said.

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, leading European suppliers kept the premiums for such steel at €200-350 ($210-368) per tonne.

Buyer sources estimated the achievable premiums for green steel with such level of emissions at €50-120 per tonne, although the lower end of that range was not considered workable by mill sources.

A mill source reported a bid for steel with carbon emissions of 0.8 tonne of CO2 per tonne at €70 per tonne. The bid was rejected by the supplier, however.

Mill sources estimated achievable premiums for steel produced with Scope 1, 2 & 3 emissions at a maximum of 0.8 tonne CO2 per tonne of steel at €100-200 per tonne.

One supplier, however, said that for such a threshold the premium should be no lower than €150 per tonne.

As a result, Fastmarkets’ weekly assessment of the green steel domestic, flat-rolled, differential to HRC index, exw Northern Europe, was €100-200 per tonne on Thursday, narrowing upward by €20 per tonne from €80-200 per tonne seven days earlier.

Sources pointed out that lack of willingness to pay premiums for steel with reduced carbon emissions content was partially explained by the unfavorable economic situation in Europe.

“Many small and medium-sized steel companies have to fight for their survival, so sustainability becomes secondary in such conditions,” a trader in Germany said.

Meanwhile, Fastmarkets’ assessment of the flat steel reduced carbon emissions differential, exw Northern Europe, was €0-60 per tonne on Thursday, widening upward by €10 per tonne from €0-50 per tonne seven days earlier.

For steel produced in blast furnaces, with reduced carbon emissions of 1.4-1.8 tonnes of CO2 per 1 tonne of steel, premiums were reported at €40-60 per tonne.

A transaction for steel with emissions of 1.6 tonnes of CO2 per 1 tonne of steel was reported at €60 per tonne.

Buyer sources suggested a premium level of €0-50 per tonne for steel with emissions of 1.4-1.8 tonnes of CO2 per 1 tonne of steel, depending on the supplier.

A premium for steel with emissions of 1.8 tonnes of CO2 per 1 tonne of steel was reported at €40 per tonne.

Published by: Julia Bolotova

fastmarkets.com

Green steel in focus: five key questions answered by experts

With the race to decarbonize the steel sector gathering pace around the world, Fastmarkets reached out to subject experts in Europe, to discuss the major challenges and opportunities that lie ahead in the new, green steel landscape.

The context
In 2023-2024 Fastmarkets launched 12 green and reduced carbon steel prices to assess the price differential against traditional flat and long steel prices, to establish benchmarks in the emerging markets, bring more transparency for the industry and support the investment decisions needed to reduce emissions.

MB-STE-0904 Green steel domestic, flat-rolled, differential to HRC index, exw Northern Europe, €/tonne

MB-STE-0905 Green steel base price, HRC exw Northern Europe, daily inferred, €/tonne

MB-STE-0907 Green steel import, differential to HRC index, cfr Vietnam, $/tonne

MB-STE-0908 Green steel base price, hot-rolled coil cfr Vietnam, weekly inferred, $/tonne

MB-STE-0911 Flat steel reduced carbon emissions differential, exw Northern Europe, €/tonne

MB-STE-0912 Flat steel reduced carbon emissions, daily inferred, exw Northern Europe, €/tonne

MB-STE-0916 Green steel domestic, differential to US HRC, fob mill, $/short ton

MB-STE-0917 Green steel base price, hot-rolled coil fob US mill, weekly inferred, $/short ton

MB-STE-0921 Green steel import, differential to rebar assessment, cfr Singapore, $/tonne

MB-STE-0924 Green steel base price, rebar cfr Singapore, weekly inferred, $/tonne

MB-STE-0922 Flat steel reduced carbon emissions differential, exw China, yuan/tonne

MB-STE-0923 Flat steel reduced carbon emissions, daily inferred, exw China, yuan/tonne

The subject experts
Alexander Fleischanderl, chief technology officer, Primetals Technologies
Jose Noldin, chief executive officer, GravitHy
Paulo Carvalho, independent consultant and managing director, decarbValue

The Q&A

There are quite a few new green steel projects announced in Europe with new green steel tonnages expected to arrive in the market starting 2025-2026. Volume-wise, how many tonnes of green/carbon reduced steel will be in the market in the next five years?

Alexander Fleischanderl: It’s true that Europe is progressing at high pace with multiple transition projects. However, the first thing required is a definition of “green steel.” We see individual brandings for steel producers in the market, where the carbon footprint is different. And we should stop the proportional green steel allocation system, where the reduced fossils usage is allocated to a specific amount of steel produced.

The real carbon footprint of the individual coil purchased by the end-customer is different to what is allocated. What we need is a coil- or sequence-based carbon footprint certificate.

The ongoing transition projects will still work with a high share of natural gas for their Direct Reduction Plants (DRPs). The steel produced will be low-carbon steel, but not net-zero yet.

But cost competitive real green steel cannot be expected soon. Hydrogen procurement deals are at a level of around €8 per kg instead of earlier reported forecasts of €2-3 per kg before 2030.

The chicken-egg problem is obvious, the hydrogen market must scale, but it hasn’t yet because the demand side is weak.

Despite these roadblocks, we recognize a growing interest for low-carbon footprint steel from the demand side especially for automotive and white goods, but also in terms of public procurement. The share of green steel in Europe in five years’ time could be around 10% of total production.

But its competitiveness compared with “gray steel” (regular steel) can only be achieved by combining three things: the benefits from the avoidance of emissions trading scheme (ETS) payments; a green steel premium; and support from the public for Capex [capital expenditure] and Opex [operational costs].

Jose Noldin:
 I strongly believe the market will be tight and more than people might anticipate. But that will strongly depend on regulation, standards and definitions, rather than on self-imposed targets. It is carbon pricing developments and broader initiatives, such as the European Union’s “Green Deal Industrial Plan” and “Steel and Metals Action Plan,” that will move the needle in terms of business environment, demand aggregation, etc.

To give some numbers, I expect the demand for truly green, fossil-free steel (less than 400 kg of CO2 per 1 tonne of steel) to be at least 10 million tonnes a year in 2030. As the offer will not be there, people may end up with solutions such as CO2-reduced/mass-balance steels, which, in my opinion, is very borderline from a greenwashing perspective.

Paulo Carvalho:
 It depends on what we are calling “green steel” here. In terms of hydrogen-based, near-zero-emissions steel (with a CO2 footprint well below 400 kg per tonne, including Scope 3 emissions), for flat products, the available tonnages are [almost non-existent right] now – other than tiny pilot volumes – and will be very limited in the next five years. But before 2030, [availability will be] in the low-single-digits in millions of tonnes in the best case scenario.

Stegra [formerly H2 Green Steel] is likely to have ramped up the plant it is building in Boden, Sweden; Hybrit/SSAB will be scaling up its first demonstration plant; and GravitHy may have started up its H2-DRI [hydrogen-powered direct reduced iron (DRI)] plant in France enabling hydrogen-based green steel production elsewhere.

Various other projects could also be at or close to ramp-up, while some may face delays – so volumes will still be relatively small and that will remain the case even if we add volumes from European scrap-based EAF flat steel plants – because there are only a handful of those.

The bulk of low-carbon flat steel within this timeframe will still be of certificates-based products, or using mass balancing, with a higher carbon footprint. So the supply-demand balance will still be relatively tight. For long steel, a much bigger share of European production already meets lower CO2 emissions thresholds, so the supply-demand balance is much less tight.

Most of the EU flat steelmakers are opting to switch from the conventional, blast furnace-basic oxygen furnace (BF-BOF) route to using electric-arc furnaces (EAFs) or the EAF+DRI steelmaking route, but what other options does industry have?

AF:
 Well, there are not too many transition options out there, despite opting for EAF, with a flexible feedstock mix, but including DRI/HBI to dilute tramp elements coming along with scrap usage. The DRP can either be integrated or decoupled from steelmaking, allowing for an investment in regions that benefit from much lower energy costs.

A viable option, still not sufficiently supported by governments, is carbon capture utilization and storage (CCUS). We believe the net-zero timeline will be missed without a proper deployment of CCUS technologies.

Last, but not least, there is the option to optimize existing assets. This includes the electrification of burners and furnaces, endless casting & rolling, any energy efficiency measures, waste heat recovery from waste gas as well as improving circularity [through] yield improvement, recycling of by-products and more scrap usage.

JN: Options include 100% scrap (very limited due to scrap availability both in terms of quantity and quality), biomass (huge challenges in supply chain) and CCUS (huge issues with regulation, economics and TRL). Other options, such as Molten Oxide Electrolysis (MOE), still have a long development journey ahead of them.

I, therefore, firmly believe that pursuing the H2 based DRI+EAF route – especially with innovative business models where Iron is decoupled from steel – remains the right way to go and will allow for a very competitive scheme. In this way, iron is produced where low-carbon electricity is available and competitive; is then shipped globally as a commodity to steel producers that will play in their own backyards, in their comfort zone – ie, steel production. And in the transition, using hot-briquetted iron (HBI) to boost blast-furnace operations can also be a very interesting and competitive solution.

PC: 
Europe has a large fleet of existing BF-BOF plants, many of them running very efficiently and close to downstream processing plants and end markets – although most are suffering in current market conditions. Therefore, many players are opting for an intermediary solution, replacing the BFs only (with a DRI+smelter to leverage lower-grade ores) and keeping the steelmaking with their existing BOFs. The economic case for this solution is probably better than a full conversion to H2-DRI steelmaking, especially if the cost of hydrogen remains higher for longer.

Imported, or third-party, DRI/HBI could also play a major role, either from EU countries/sub-regions where green power prices are competitive, or from third countries/regions such as the Middle East & North Africa (MENA) region, which are well suited to renewable power and have competitive gas prices.

Policies and regulations in the EU are massive drivers for decarbonization, notably the EU emissions trading scheme (ETS) and its carbon border adjustment mechanism (CBAM). So, is CBAM a problem or a saviour for the industry? What impact will there be on the market once CBAM is fully phased in from 2026 on and free-ETS certificates start being phased out (halved by 2030 and fully eliminated by 2034)?


AF:
 ETS is the main pillar supporting EU transition project investments. For example, assume that a 6 million tonnes per year steel mill emits 10 million tonnes of CO2… If the ETS price is at €150 per tonne in 2034, the steelmaker would have to pay €1.5 billion per year, adding €250 per tonne of steel produced.

CBAM is, indeed, controversial [because] it adds a lot of administrative burdens for all players in the steel value chain, including technology providers, such as Primetals. But it is the only instrument identified to avoid carbon-intensive steel from flooding into the EU from other markets. So it at least provides a level [playing field] for all players. But it can be expected that foreign markets will produce their own share of low-carbon steel for export to the EU, so the CBAM weapon may not be as effective as hoped.

JN: 
CBAM cannot be reduced to a saviour or a problem. It is a good (yet complex) starting point because without instruments like CBAM the market does not resolve the decarbonization puzzle by itself. CBAM is imperfect, I agree, but it is definitively needed, so I hope it stays and gets improved, optimised, fixed, reinforced, and so on… but not abandoned or significantly slowed down.

The impact is obvious! For example, with a carbon pricing of €100 per tonne of CO2 once allowances are phased-out, a fossil-based steel producer will have a “penalty” of  roughly €200 per tonne of steel if it insists on sticking with the coke-based BF-BOF route. From a different perspective, this could be considered the so-called “green premium” which is needed during the transition while the CBAM/phase-out allowances are not fully in place.

But a workable and strong CBAM, along with a full phase-out of the allowances, will make the polluters pay and will, therefore, serve as a huge driver for investments in green steel.

PC:
 CBAM is a temporary but necessary evil – as I keep repeating. Necessary, because, in the absence of a global carbon price, European production is penalised vis-à-vis imports and that distorts capital allocation (and jobs, tax generation etc); evil, because the sheer complexity of compliance – most usual exporters to the EU are not prepared yet – generates distortions itself and ends up being a de-facto non-tariff trade barrier.

So, in my view, CBAM has to be temporary. There will be pushback from other regions and, ultimately, industry and policy efforts have to be toward convergence of carbon policies and pricing globally, not on raising border tariffs. Until that happens, of course, it will affect the market, favouring imported steel with lower-emissions footprints – with MENA potentially emerging as a key source – and penalizing existing conventional steel importers.

Another major impact will be on the competitiveness of EU steelmakers in export markets: because there is no ETS rebate for exports or “inverted CBAM.” The European mills [that bear a carbon costs] will increasingly be at a competitive disadvantage in export markets without a similar carbon price and will lose market share.

Raw materials challenges arise from new ways of steelmaking. Can we expect potential shortages of pellets, scrap? And how will raw materials supply chains evolve?


AF:
 The trend for massive new DRI/HBI capacity is likely to continue and even accelerate. DR-grade iron ore will be in short supply and pelletizing capacity is likely to run short as well.

We see three ways forward: iron ore beneficiation efforts; using lower-grade iron ore in DRP; and ground-breaking fluidized bed based DRP that does not require pelletizing. In the case of lower grade ore usage, a smelter is required to maintain high metal yields and efficient gangue removal in he form of added-value slag to support circularity.

Fluidized bed DRPs are more energy efficient, improving yield and are lower in overall Capex. Utilization of more scrap is indeed the most effective way to decarbonize. However, even in 2050 more than 50% of steel production will be based on virgin iron ore. The EU is still exporting about 20 million tonnes per year of lower-quality scrap, mainly to Turkey. We should increase our efforts to process and clean EU scrap to produce a recycled feedstock with certified quality and chemical analysis. Digitalization, including artificial intelligence (AI) will support these efforts.

JN:
 I believe the market will react if the demand is there. Today, pellet makers, for example, face a chicken-and-egg dilemma. There is a potential shortage, but projects need to be more mature and reach final investment decision (FID) to allow pellet producers and scrap processors to invest in new capacity, new technologies and debottlenecking!

If nothing is done, yes, there will be a shortage. But I still believe that when DR projects reach FID, pellet producers will recognize the great opportunity to play in the high-value side of the business and then invest in new capacity.

Still, for some years the market may be tight and support good premium levels which, by the way, will incentivize new investments in capacity.

PC:
 DR-grade pellets and agglomerates are already relatively scarce and the raw materials industry has an immense challenge to ramp up capacity and production. That requires big investments in concentration/beneficiation plants and pelletizing plants as well. Other high-grade pellets will also be increasingly used, in combination with a melter/submerged-arc furnace to remove gangue after the DRI making process, which will help alleviate the relative scarcity.

Scrap is already fully recycled and we already broadly know now how much will be available to be recycled into new steel in, say, 2050 – only about half of the world’s steel needs by then. But given it’s direct contribution to lowering the carbon footprint of the steel produced, I currently see a scramble for scrap resources (and sorting/processing facilities) and that will only intensify in the coming years.

The supply chain will continue to further integrate vertically into scrap and the miners, steelmakers and end users will intensify the development of partnerships to ensure end-to-end availability of high-quality raw materials for the required low-carbon final products.

Renewable energy and green hydrogen are deemed to be the weak spots of decarbonization, notably due to high price of hydrogen. Are there alternatives to the use of green hydrogen in steelmaking?


AF: 
Renewable power availability and pricing is the most pressing roadblock. Power prices have a strong impact on hydrogen prices – the main reason why decoupling the energy-intensive ironmaking from steelmaking has become an omni-present discussion point.

Regions like the Middle East, North America and Australia have different energy prices. We are talking about up to 10-fold prices per MWh in Europe! The alternative to hydrogen is electrification of process steps (again electric power) and the intermediate use of natural gas while processes are designed to switch to hydrogen at a later stage.

JN:
 I believe people are looking from the wrong angle here. Instead of just saying that hydrogen is expensive, people should reconsider their business model. Make hydrogen where low-carbon electricity is available and competitive and then ship DRI/HBI as a commodity to steel-producing sites. It’s a big mistake is to insist on making iron close to steel just because “this is what we have been doing as an industry for decades.”

It’s very simple! Hydrogen-based DRI/HBI can be cost effective and a smart way to store and/or transport hydrogen! It’s just that it will be H2 in “metallic form.” In other words, decoupling iron from steel can catapult the H2 economy and decarbonize steel production with a very interesting and competitive value chain. In the future, Iron will be produced by ironmakers and steel by steelmakers. Looks logical, doesn’t it?

PC: 
Ironmaking has been dominated by coke (fossil coal) as the key reductant and, although hydrogen is the key solution to reducing the reliance on fossil reductants, natural gas is a tried-and-tested (and widely used) alternative.

To produce near-zero emissions steel, its CO2 emissions have to be captured and stored. The economics and geology for that to happen at scale are still to be proven and differ widely region by region, and it can involve controversial aspects such as enhanced oil recovery, but in my view carbon capture and storage (CCS) will play a key role in the steel sector’s transition to net zero.

Published by: Julia Bolotova

Green premium uptake needs regulation, clarity: Kallanish Green Steel Strategies

Green steel premiums are being achieved for some contracts, but regulation and clarity over definitions are needed to advance their uptake, panellists said during the Kallanish Green Steel Strategies event in Brussels this week.

Christoph Zinsser, head of project finance at Stegra, noted: “We have been able to secure long-term offtake agreements with a euro per tonne premium over seven years take or pay contract. So there certainly is the demand.”

He added that customers’ willingness to pay a premium has evolved over the years.

“The business case was developed on the back of the demand from the automotive industry for green steel. There has been a lot of interest, and it has evolved quite significantly over the last three years,” he asserted.

He noted this was not “widespread across different industries as we would all hope,” but he does see growing interest from the white goods and construction industry.

“There are players who certainly are interested in understanding what the possibility is. Maybe not so much for this year, today, but thinking ahead into 2027 and 2028, and leading to 2030, where can we secure supply for the future. Those discussions are very active,” he observed.

Zinsser also flagged that the offtake agreements were part of the financing requirements for the project, which is currently under construction.

“We had to demonstrate that there is a market to make the project bankable for 50% of our future production. We have been able to secure green premiums, we have not signed one contract that would not have a green premium,” he said.

Josu Piña Bilbao, director of business development at SSAB Europe, sees the premium developing differently amid challenges including a lack of regulatory clarity over the definition of “green steel”. He does however see this coming imminently.

“And also, clear set targets from regulation. If you look at the automotive [sector], they have clear tailpipe emission targets … Most OEMs have been focusing on electrifying their fleet,” he noted. “Some of them are stepping up and having targets for scope 3 upstream, which is the raw materials, but it is voluntary. FMC, Steelzero, and other initiatives, those are voluntary”.

“We are working to develop a low emission steel portfolio together with our customers’ needs and we need to go through that process. Customers need to test the material, make sure the characteristics and properties are okay and it’s working; all of that takes time,” Bilbao said.

He added SSAB is not focusing so much on the premium, as this is something the market would decide in the future.

Meanwhile, Alexander Julius, managing partner of distributor macroMETAL and EUROMETAL Presidency member, noted that some customers were unwilling to pay more than the material they are receiving from other suppliers, and that the premium was of limited importance amid the small volumes in customer portfolios.

Limited available supply of the material is also an obstacle to creating a market where a premium is achievable.

“The market for low carbon emission steel is not there yet,” Bilbao said. “For different reasons, [such as] lack of availability and supply. How many producers are actually offering low emission in Europe, what products, what grades, etc?”

“There are also worries [about] 2026, with CBAM, how much carbon reduced steel will be available then. Will it be sufficient to cover market demands in different industries? There are so many question marks at the moment,” Julius pointed out.

Zinsser also commented on the issue in regard to negotiating a premium.

“The lack of supply is part of the reason why it’s so challenging to enter into the discussion on the right price because there’s no comparison,” he said.

“[An automotive producer] is careful to commit to a premium, because they don’t have a comparison. They don’t know what the market is [to be able] to commit to pay a premium [for] 2027 in 2024; it’s a big ask for any company,” he concluded.

Carrie Bone UK

kallanish.com

Buying interest for green flat steel in Europe muted amid poor market fundamentals

The market for green steel in Europe was quiet and trading activity was close to naught amid numerous economic headwinds, sources told Fastmarkets on Thursday November 28.

European steel market participants have been digesting the recent news about several new investments in green steel projects put on hold due to challenging market fundamentals.

The economic slowdown in Europe — notably the downturn across key steel-using sectors, such as automotive and construction — weighed on the green steel market as well, slowing down the uptake of decarbonized products.

“Not the best time to pay premiums for green steel, when mills cannot even push €40 increases for gray steel due to lack of consumption,” a buyer in Germany said.

Green steel produced in European electric-arc furnaces, with Scope 1, Scope 2 (direct) and Scope 3 (indirect) greenhouse gas emissions below 0.8 tonnes of CO2 per 1 tonne of steel, has been on offer at premiums of €200-350 ($211-369) per tonne in November.

These offers have been broadly stable during the course of the year, but tradable values for the spot market were lower, sources said.

“Higher premiums of €200-350 per tonne was something mills were getting under long contracts with [original equipment manufacturers],” a buyer said.

Buyer sources estimated the achievable premiums for green steel with that level of emissions would be closer to €50-150 per tonne. Bids were reported at €50-80 per tonne during the week.

One mill source estimated achievable values at €100-200 per tonne.

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 €80-200 per tonne on Thursday, stable 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, premiums were reported at €40-60 per tonne.

A buyer source suggested a premium level of €0-50 per tonne for steel with emissions of 1.4-1.8 tonnes of CO2 per 1 tonne of steel.

One mill offered at a premium of €60 per tonne for steel with emissions of 1.95 tonnes of CO2 per 1 tonne of steel, but this was deemed “too high” by most buyer sources.

Another steelmaker in Northern Europe was offering a premium of €40 per tonne for steel with emissions of 1.8 tonnes of CO2 per 1 tonne of steel.

Fastmarkets’ assessment of the flat steel reduced carbon emissions differential, exw Northern Europe was €0-50 per tonne on Thursday, widening from €30-40 per tonne a week earlier.

Published by: Julia Bolotova

European ‘green steel’ premiums steady despite economic woes limiting buying interest

The number of buyers willing to pay extra for “green” flat steel in Europe remained limited in the week to Thursday November 14, with the downturn in EU manufacturing stifling already patchy demand, sources told Fastmarkets.

But premiums held steady and Fastmarkets’ weekly assessment of the green steel, domestic, flat-rolled, differential to HRC index, exw Northern Europe was again steady at €100-200 ($106-212) per tonne on Thursday, unchanged since September 5.

Premium offers for steel compliant with Scope 1 and  2 (direct) and Scope 3 (indirect) greenhouse gas emissions (GHGs) came in at  €200-350 per tonne, according to sources.

But bids for the same material were heard at €80-150 per tonne during the assessment week.

One supplier told Fastmarkets it had rejected a bid at €80 per tonne for 25 tonnes of carbon-neutral (Scope 1 and 2 direct emissions) flat steel because “going below €150 per tonne for such material would not be commercially viable.”

Sources said that, in addition to the high premiums, the lack of public projects in 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.

“Decarbonization is great and buying steel with reduced carbon content is great; it’s just not affordable when many companies are fighting for survival in a tough market,” a buyer source in Germany told Fastmarkets.

The EU Steel Action plan, published by the European steel industry association Eurofer and European trade union IndustriAll earlier this week, calls for a coordinated approach and makes the case for measures to protect domestic steelmakers during the so-called “green transition.

“Demand for low-CO2 steel should be stimulated through public procurement and in public auctions… A well-recognized labelling system for green steel should be developed by the industry and stakeholders, to be used as a benchmark and reference,” the report says.

In the report, Eurofer and IndustriAll stress the fact that stimulus packages at member-state and EU level are essential to support developments in steelmaking and should include creating and promoting the key markets that will drive demand for green steel made in Europe.

Green Steel: the building block of the future

Julian Verden, a member of the EUROMETAL Presidency Board and Managing Director of Stemcor Europe, participated in the 695th Lord Mayor’s Lecture yesterday, themed “Green Steel – The Building Block of the Future.”

In his presentation, Verden provided an overview of the steel industry, emphasizing its global importance and the challenges posed by carbon emissions. He explained the two main methods of steel production: the blast furnace, which is carbon-intensive, and the electric arc furnace (EAF), a more sustainable option that uses recycled steel scrap and cleaner energy sources.

Verden discussed the potential of green hydrogen as a fuel source in steel production, highlighting its capacity to reduce carbon emissions significantly. However, he acknowledged the challenges of scaling up hydrogen production and ensuring its availability for widespread industry use.

The discussion also addressed the role of government policies in advancing green steel initiatives. Verden emphasized the need for supportive policies and investments to facilitate the transition to low-carbon steel production.

Overall, the lecture offered valuable insights into the steel industry’s current landscape and the transformative potential of green steel in building a sustainable future:

From flats to longs: Europe’s ‘green’ steel conversation expands

When it comes to Europe’s nascent “green” steel sector, conversation for the most part has centered on flat products.

After all, flats — including hot-rolled coils and sheets –, account for the bulk of both the continent’s steel production and consumption, and the flats sector was the first to see premiums for material certified with a lower carbon profile than standard steel.

The annual combined European flat product deliveries and imports averaged around 82.96 million metric tons from 2013-2022, according to European steel producers association Eurofer. During the same period, the annual combined European long product deliveries and imports averaged about 49.58 million MMt.

Premiums emerged last year in Europe for carbon-accounted flat steel, and Platts, part of S&P Global Commodity Insights, addressed market demand for price assessments and data to help bring transparency to trade in such products — launching first-of-their-kind daily carbon-accounted HRC assessments in May 2023.

And now that the green conversation in Europe has extended to other markets, including long steel products used in construction, Platts has also expanded its carbon-accounted assessment offerings.

 

Carbon-accounted longs enter the picture

Effective Sept. 11, Platts launched new weekly spot price assessments for European carbon-accounted rebar and medium sections.

The new assessments — which Platts understands to be the first carbon-accounted assessments for long steel — include a European Rebar Carbon-Accounted Steel Premium (Rebar CASP), a European Medium Sections Carbon-Accounted Steel Premium (Medium Sections CASP), a Northwest Europe Rebar Carbon-Accounted Steel Price and a European Medium Sections Carbon-Accounted Steel Price.

Based on industry feedback, the European rebar and medium sections carbon-accounted steel premiums reflect any differential achieved for the spot sale of rebar and medium sections, with total accounted carbon emissions of 0.6 metric tons of CO2-equivalent, or less, for every metric ton of steel produced.

The assessments include emissions from direct, indirect and associated upstream and downstream activities, such as processing of steelmaking raw materials, hot metal production, steel rolling and associated transportation and logistics — typically referred to by market participants as scopes 1, 2 and 3.

Carbon emissions must be certified by an internationally accepted independent organization, and market participants will be expected to supply proof of such certification upon request.

Trade in steel products using offsets to reduce overall emissions profiles, such as carbon credits sourced from voluntary carbon markets, will not be considered for inclusion in the assessments. Platts will consider trade where a mass balancing approach has been applied and validated by a certified internationally accepted independent organization.

Platts assessed the Rebar CASP at Eur40/mt, Sept. 18, down from Eur70/mt Sept. 11 and the Medium Sections CASP at Eur65/mt, Sept. 18,down from Eur92.5/mt Sept. 11.

 

 

‘Historic, strategic turning point’

It is easy to see why the construction sector has entered the green conversation. Construction — which relies heavily on longs like rebar and medium sections for support — is not only the largest end-use sector for steel, but is also one with high associated carbon emissions.

Steel production generates 7%-9% of global CO2 emissions and about 5% of overall emissions in Europe, according to the Institutional Investors Group on Climate Change.

And regulatory requirements, such as the European Union’s Carbon Border Adjustment Mechanism scheme, as well as accelerated decarbonization efforts around the world, have underscored the need for heavy industries like steelmaking to move quickly to reduce carbon emissions.

In a Sept. 5 paper titled ‘Investor priorities for transitioning the European steel sector,’ the IIGCC said “the steel sector’s decarbonization is essential” and that “creating a supportive policy environment for the transition of high-emitting sectors is critical for achieving Europe’s commitment to climate neutrality by 2050.”

To stimulate low-carbon steel demand, the IIGCC said public steel procurement could be used as a tool to drive decarbonization innovation and incentivize use of low-carbon steel products. Financial incentives could include point-of-sale subsidies, tax exemptions, post-purchase rebates or tax credits, the IIGCC said.

Such investment would mirror investment made by European steelmakers offering carbon-accounted steel — mainly through conversion to electric-arc furnaces or implementing hydrogen and fossil-free fuel production. The steelmakers that have technology upgrades and innovative steelmaking investments will be essential not only for Europe’s own industry, which faces a “historic, strategic turning point,” but in the global steel industry’s decarbonization journey as well, IIGCC said.

“Investors see Europe as well positioned to lead the global transformation of the steel sector,” it said. “The EU is a large, highly developed economy with generally high-end steel production that can seize the opportunities and show what is possible, paving the way for other regions to follow.”

 

Several factors holding back green market activity

While the release of investment funds by the European Union and individual governments in the region have helped to kick off technical enhancements to reduce producer emissions, there are still several factors that are holding back trading activity of lower carbon emission products.

A hampering factor for the acceleration of carbon-accounted steel is the lack of an internationally adopted industry standard. Associations and trade groups such as the German steel federation and Responsible Steel have started to publish guidelines in the hope that they would become standards, but they’ve yet to gain widespread adoption.

A difficult economic environment seen in 2024 has meant that those who do not necessarily need to buy material with a lower carbon profile have opted for less expensive conventional steel – or have limited their spot market buying activity.

Rising interest rates and a near-recession in Germany hit medium-sized businesses — the so-called Mittelstand in Germany and the backbone of Europe’s biggest economy. German manufacturing remains weak, while the automotive industry also is struggling.

Demand and price development for carbon-accounted steel remains deeply correlated with the conventional steel market, and in times of weak steel demand for the market at large, carbon-accounted steel remains heavily affected.

Analysts at Commodity Insights do expect some near-term upside, with a steel price recovery from December 2025 due to restocking and restricted import supply.

Once restocking activities resume and economic tightness ease, trading activity is likely to resume to previous levels, market participants contend.

It then will be up to steelmakers in Europe and abroad to execute on the vision of Europe as a global leader in the energy transition.

Laura Varriale | Christopher Davis

spglobal.com

European green steel premiums slide amid general downturn in steel sector

Premiums for green steel in Europe fell again in the week to Thursday September 5, with only limited demand tracking the general downturn in European steel amid a slowdown in key end-user sectors, sources told Fastmarkets.

“This year started on a positive note, but demand is deteriorating, the steel market is weak in general and the willingness to pay a premium [for green steel] is not there,” a mill source told Fastmarkets.

Market participants said there was a lack of projects across Europe requiring green steel and demand from the key consumer – the automotive industry – had also been slow lately.

European suppliers have, therefore, started to be more flexible with their green steel sales and have started offering discounts on bigger lots.

Notably, recent trades for steel with Scope 1, 2 and upstream Scope 3 emissions below 0.8 tonnes of CO2 per tonne of steel, were reported at €100-150 ($111-166) per tonne.

And one transaction was said to have been completed with a premium below €100 per tonne – although that was for for steel with CO2 content below 0.3 tonnes per tonne of steel and could not be widely confirmed, sources told Fastmarkets.

Most buyers estimated the achievable premiums for green steel with Scope 1, 2 and upstream Scope 3 emissions below 0.8 tonnes of CO2 per tonne of steel at €100-200 per tonne.

In stark contrast, however, offers for the same material were reported at €200-300 per tonne during the assessment week.

Fastmarkets’ weekly assessment of the green steel domestic, flat-rolled, differential to HRC index, exw Northern Europe was €100-200 per tonne on Thursday, widening downward from €150-200 per tonne on August 29.

The corresponding green steel base price, HRC exw Northern Europe, daily inferred was €737.60 per tonne at the midpoint on September 5.

Despite the weak market and slow consumption, sources told Fastmarkets they remain optimistic regarding the take-off of green steel in Europe in the coming years.

“The transition to green steel is still on the cards – it’s coming; it’s inevitable. But considering the current economic situation [in Europe], it is going to be delayed,” a large buyer in Northern Europe said.

Published by: Julia Bolotova