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
ArcelorMittal clarifies status of EU decarbonisations
Leading steelmaker ArcelorMittal has clarified the status of its decarbonisation projects in communications surrounding its third quarter earnings, released on 6 November, aligning the conditions for progress with those capitalised upon greenfield low-carbon steelmaking initiatives.
In its earnings release, ArcelorMittal lauded the European Commission’s proposal to strengthen the EU’s steel trade defences once – or potentially before – the existing safeguards lapse at the end of June 2026, seeing the measures as key to giving its European operations “the foundation […] to earn its cost of capital.”
Despite perceiving an improved outlook for steel market conditions to support its European operations, ArcelorMittal representatives were careful to limit expectations of continuations to its suspended decarbonisation plans across Europe, most prominently in Germany, Belgium, and France. The steelmaker suggested in its earnings call that said projects would be assessed on their own merits and progressed gradually, even if Q1 2026 brought strong market recovery on the continent.
ArcelorMittal’s earnings release said that while regulatory progress to restrict import accessibility was encouraging, further developments were needed to support specific decarbonisation investment cases across its operations.
“Of critical importance is visibility of industry access to competitive energy,” the steelmaker said. “At that point, the company will be able to review its investment priorities in its Europe segment.”
The company’s currently active decarbonisation renovations at its Spanish operations were described as “on track”. ArcelorMittal is constructing a new 1.1 mt electric-arc furnace (EAF) in Gijon, and is expanding its EAF capacity in Sestao to 1.6 mt, as described by McCloskey’s recently updated Green Steel Projects Database.
Conditionality on affordable energy aligns with greenfield low-carbon steelmaking projects in Europe such as Hydnum, Blastr, and Stegra, all of which are based in locations with access to competitive renewable energy sources in Spain and the Nordics.
Access to affordable renewables is particularly important for low-carbon EAF projects due to their relatively high electricity consumption, especially considering the removal of the ‘fuel/electricity exchangeability principle’ (FEP) from the calculation of ETS free allowances benchmarking from 2026 for EAF production processes. This will potentially improve EAF production competitiveness by eliminating current free allowance reductions for indirect emissions from electricity consumption within the ETS framework.
While some of McCloskey’s sources have questioned the fundamental necessity of cheap electricity for blast furnace (BF) producers’ decarbonisation investments given their relatively low exposure to energy prices on incumbent process routes, and benefits from the sale of electricity produced from captured off-gases, the issue has some nuance.
Blast furnace producers do currently recycle off-gases, but this is not only purposed for electricity generation and sale, but also recycled to heat rolling lines in optimising energy requirements downstream. Renovating to production via EAF would remove this optimisation route and impose additional energy requirements when heating rolling lines, as well as expose steelmakers to additional downstream ETS costs from ‘fall-back’ heat benchmarking.
When asked whether lower production during ETS reference periods could raise costs due to fewer free allowances, ArcelorMittal said it did not expect additional ETS exposure beyond the roughly 20% of emissions EU steelmakers already pay for, or the planned phase-out of free allocations from 2026.
European steelmakers – largely following the direct-reduced iron (DRI) to EAF decarbonisation route – must also convince financiers of the potential realisation of their investments on future, rather than present dynamics, making further relevant the “visibility of industry access to competitive energy,” as described by ArcelorMittal.
EUROMETAL at EU stakeholder consultation on Steel Label
The European Commission is engaging with the steel sector on the development of a voluntary low-carbon steel label — a crucial step toward making decarbonisation efforts more visible and valued in the marketplace. While the idea may seem straightforward, the discussion around the label’s design and implementation is complex and carries important implications, notably for the Carbon Border Adjustment Mechanism (CBAM).
On 5 June 2025, the Commission’s Directorate-Generals for CLIMA and GROW hosted a targeted stakeholder consultation workshop in Brussels, as part of the preparatory work for the upcoming Industrial Decarbonisation Accelerator Act (IDAA). The IDAA aims to accelerate the transition to competitive, sustainable, and resilient production in energy-intensive industries.
EUROMETAL was represented in Brussels by Vice President Fernando Espada, joining 25 key participants from across the industry and associations.
We welcomed the opportunity to contribute to this important debate and used the platform to underscore a key concern: “If the goal is to reward decarbonisation and ensure fair competition, the same rules must apply not only to primary steel products, but also to so-called ‘steel derivatives’ — processed and transformed steel goods. We cannot allow a situation where European steel consumption is penalised and final customers are driven toward finished imported parts.” — Fernando Espada, Vice President, EUROMETAL.
Fair treatment across the entire value chain is essential to ensure that Europe’s decarbonisation policies strengthen — not undermine — its industrial competitiveness. As the European Commission advances the IDAA and the voluntary steel label, EUROMETAL will continue to advocate for a balanced and inclusive approach that reflects the realities of the full steel supply and processing ecosystem.
Insufficient certified steel to mandate sustainability, says Volkswagen
There is not enough sustainability certified steel on the market yet to make sustainability criteria a prerequisite for sourcing of steel, says Volkswagen.
The carmaker aims to develop parameters for a sustainability specification sheet for steel to be used in sourcing for its own pressing plants. Though industry standards covering a range of ESG issues are being developed, the volume of certified steel remains prohibitive, the firm says in its 2024 Responsible Raw Materials Report.
The Volkswagen group is continuously evaluating options for joining specific industry initiatives for steel and suitable certification opportunities, it says in the report seen by Kallanish.
It aims to increase the share of low-emission green steel used in its vehicles and is extending its partnerships with suppliers of steel produced with hydrogen and renewable energy.
The firm adds it is in dialogue with its direct suppliers about transparency and risk mitigation measures in their upstream supply chains for coal and iron ore.
Volkswagen – including the equity-accounted Chinese joint ventures – produced 8.95 million vehicles in 2024, down 3.8% on-year. Production in Germany fell 12% to 1.69m units. The proportion of the group’s production accounted for by Germany fell almost 2 percentage points to 18.8%.
In December, the firm agreed to reduce production capacity in Germany by 734,000 units to improve profitability amid overcapacity and increasing competition from China.
Adam Smith Poland
The green steel revolution in 2025 – navigating a new frontier
As we prepare for the arrival of carbon emission-free steel, it is critical to understand the implications for pricing models, market dynamics, and the way supply chains will need to evolve. The key question for the industry is no longer whether zero-carbon steel will happen – it is how to adapt to a world where it becomes the norm. To succeed, stakeholders must adopt new strategies, embrace transparency, and collaborate more deeply than ever before.
Steel mills: balancing innovation with viability
Steelmakers are at the forefront of the green transition, embracing hydrogen-based direct reduction iron (DRI) in Europe and scrap-based electric arc furnace (EAF) technology in the US. While hydrogen shows great promise, its adoption is hindered by high costs, limited availability of green hydrogen, and the need for significant infrastructure upgrades.
Energy costs pose an additional challenge. In traditional EAF steelmaking, energy accounts for 15-20% of production costs, but in new hydrogen-based DRI/EAF processes, this could rise to over 40%, reflecting the energy-intensive nature of hydrogen production.
Regulatory pressures, such as the EU’s Carbon Border Adjustment Mechanism (CBAM), which comes into full effect in 2026, further complicate operations. While CBAM incentivizes decarbonization by protecting low-emission producers from cheaper high-carbon imports, it also pressures steel mills to accelerate investments in green technologies to stay competitive in a changing global market. Rising energy costs and potential supply chain bottlenecks add financial strain, requiring steelmakers to adopt more agile production and procurement strategies.
End users: the demand for decarbonized supply chains
Industries like automotive and construction face dual pressures to reduce carbon footprints while controlling costs. Green steel promises a lower-emission alternative, but its premium – which has consistently tracked at an additional cost of 20-40% across Fastmarkets’ global suite of green steel differentials – remains a stumbling block for many end users.
The solution lies in strategic partnerships between steelmakers and end users, with long-term offtake agreements that balance costs while ensuring supply chain sustainability. Certification standards, still evolving, will become critical to verifying claims and aligning procurement decisions with climate goals.
Middle players: navigating complexity and uncertainty
For middle players such as traders, distributors, and service centers, the green steel transition adds layers of complexity. Managing inventories that include traditional, low-emission, and zero-carbon products introduces logistical challenges, while pricing volatility and regulatory compliance add further strain.
The EU’s upcoming Waste Shipment Regulation, which limits scrap exports to non-Organisation for Economic Co-operation and Development (OECD) countries, will increase competition for high-quality feedstocks within the EU. Middle players must adapt to tighter supply conditions, rising prices, and shifting trade dynamics to maintain their roles in the value chain.
Raw material producers: rising demand for premium inputs
As steel production increasingly pivots to hydrogen-based and EAF technologies, raw material producers face growing demand for higher-quality inputs like DRI-grade iron ore and quality scrap. To meet this demand, these producers may need to innovate by developing methods to improve the quality of lower-grade ores or increase the efficiency of extraction processes. The EU’s upcoming restrictions on scrap exports to non-OECD countries will further disrupt traditional supply chains. Scrap producers will need to adapt by enhancing the quality of their materials through better sorting technologies or exploring regional supply chains to comply with the regulations. Strengthening relationships with steelmakers and securing long-term contracts will be key to ensuring a steady demand for premium materials as steel mills shift toward low-emission production.
Financiers: decoding risks and opportunities
Green steel projects require enormous capital investments, often without guaranteed returns in the short term. For financiers, this raises questions about risk and reward, particularly as regulatory environments evolve. Financial instruments like sustainability-linked loans and green bonds are increasingly critical, and their effectiveness depends on the availability of consistent benchmarks for green premiums.
Financiers also face pressure to align with environmental, social and governance (ESG) goals, and the complexity of valuing decarbonization efforts presents both a challenge and an opportunity. Those who can effectively quantify and mitigate risks tied to green steel investments stand to play a pivotal role in enabling the sector’s transformation.
The role of multi-stakeholder platforms
Collaborative initiatives are essential for navigating the complexities of green steel production. Multi-stakeholder efforts such as UNIDO’s (United Nations Industrial Development Organisation) Industrial Deep Decarbonisation Initiative, and the Climate Group’s SteelZero, bring together policymakers, producers, and end users to align on decarbonization goals and drive systemic change.
These platforms help stakeholders address overlapping challenges, from standardizing low-emission certifications to developing frameworks for sustainable supply chain finance. By fostering collective action, they reduce uncertainty and promote scalable solutions.
Navigating the challenges of today – trade tensions, and the just transition
The global push for decarbonization is colliding with escalating trade tensions. Tariffs on steel and its raw materials could undermine efforts to create open markets for green steel. The CBAM rollout might trigger friction with trading partners, with some viewing it as protectionist.
But this challenge opens the door to regional collaborations. Agreements between climate-aligned countries could streamline trade for green steel, providing a much-needed competitive edge for low-emission producers.
Decarbonization is as much about people as it is about technology. The shift to green steel production risks leaving traditional steelworkers behind, especially in regions dependent on emissions-intensive plants. Without investment in retraining and support, the transition could exacerbate inequality.
Yet, the human dimension also presents an opportunity. Companies prioritizing a just transition will attract ESG-driven investors, build stakeholder trust, and gain a competitive edge by integrating social considerations into their business models.
What lies ahead in 2025
The road to decarbonization in 2025 will be defined by:
• The first zero-carbon steel production in Sweden, setting a global benchmark.
• The phased implementation of CBAM, reshaping trade flows and emissions accounting.
• The fine-tuning of international standards for low-emission steel, providing long-awaited clarity for buyers and sellers.
• Supply-chain disruptions in scrap and iron ore markets, necessitating greater agility and foresight.
• Gradual energy sector transformation in Europe to feed new DRI capacities.
Navigating the transition
Reliable market intelligence will be critical for navigating this new frontier. Clarity of pricing across the entire steel value chain – from raw materials and semi-finished products to finished goods – provides a foundation for informed decision-making. Fastmarkets’ robust pricing solutions, including green steel and green ferroalloy differentials, empower stakeholders to manage volatility, enhance transparency, and build confidence in their strategies.
With the right tools, insights, and collaborations, the steel value chain can transform the challenges of 2025 into pathways for growth and leadership in a decarbonized future.
Green steel demand rising, premium remains challenge: UK Metals Expo
The steel sector is seeing rising customer demand for green steel but achieving a premium for the material remains challenging until market strength returns, Kallanish heard from panellists at the UK Metals Expo in Birmingham last week.
“[Demand] is coming from large end users, but in longs, they aren’t willing to pay the difference yet; it’s tough out there. For the time being, people are just looking to survive. It will come but it’s going to take some time and require a stronger market to fully accept green steel and the cost for it,” said Tom McDougall, commercial director at All Steels Trading.
Customers were keen to know emissions data, but this did not extend to a premium being achieved yet.
“Most people now ask what are the emissions levels of the various mills we are buying from,” said Godfrey Watt, president of the International Steel Trade Association (ISTA). “I don’t think anybody is prepared to pay more for anything at the moment in this market, but maybe it’ll happen – not yet.”
Meanwhile, Christiane Taylor, pricing manager at Tata Steel UK, did see a premium achievable, noting customers asking for the material was one reason the company is switching to an EAF, as part of its £1.25 billion transformation. This would give its customers access to green steel domestically, a move which could make the sector more competitive.
“I think there is definitely a green steel premium, definitely in the first few years until maybe it normalises, and then green steel becomes the norm,” she noted.
The company already offers a reduced CO2 product offering, under the names of Zeremis in the Netherlands and Optemis in the UK.
“Our customers want green steel, particularly in automotive, and construction. In construction, for many customers the low carbon targets are not just nice to have but essential, and a prerequisite for the future. I think there is also appetite in what we’ve seen elsewhere in Europe as well,” she added.
“We’ve definitely seen an increase in inquiries for green steel,” said Mike Nielsen, commercial manager at Salzgitter Mannesmann UK. He noted there was a variety of low-emission brands being offered in the market, with no single definition of green steel. “Many people want to see an environmental product declaration [EPD] when you deliver the order,” he added.
Nielsen also noted that regulation such as CBAM could be the catalyst to making a real step change in the market.
“Regulation is important but we do also see some of that demand coming from companies with corporate social responsibility aims to reduce carbon, also in the finance sector there’s an increase in the amount of ESG investment – some of that is tying people to have lower carbon content in projects,” he said.
“There’s going to be a gradual step over and there’s a tipping point somewhere, where no stockholder wants two piles of steel; one pile of green steel and one pile of non-green steel. At some point there has to be a choice to convert over towards green steel and hold that because that’s what customers demand. Regulation is important but I don’t think it’s the only thing in this mix,” he added.
“We’ve already got strong sustainability controls in construction which are already in place,” said Watt. He noted that when certification authority CARES was first introduced for rebar, there was still a market for non-CARES material which gradually faded away, and now expects to see a similar gradual transition to green steel.
Carrie Bone UK
SKF decarbonises production using Austrian and Swiss Steel
European roller bearings producer SKF and voestalpine Wire Technology have produced the first prototype bearing made from steel that contains hydrogen-based direct reduced iron (H-DRI).
SKF and voestalpine have been working together since 2022 to explore the possibilities of using H-DRI steel for bearing applications, Kallanish hears from the Sweden-based company. The spherical roller bearing prototype was handed over to voestalpine Wire Technology at SKF’s factory in Steyr, Austria. Spherical roller bearings can be used in many different applications and industries, such as marine, pulp and paper production, mining and construction.
“Steel is a critical raw material in bearings, and to achieve the change and speed needed in decarbonising bearing production, the whole industry must come together,” says SKF chief technology officer Annika Ölme.
SKF recently announced it also started sourcing low-carbon steel from Swiss Steel. Since the beginning of the year, Swiss Steel has been delivering its GreenSteel Climate+ brand made at German unit Deutsche Edelstahlwerke (DEW) exclusively to SKF.
Christian Koehl Germany
Europe still lacks green steel necessities
There was consensus among panellists that a green steel revolution is taking place, but they disagreed on the order of magnitude.
Carlo Beltrame, chief executive at Donalam & LME at AFV Beltrame Group, said few are willing to pay a premium for green steel at present.
“From my perspective, [the revolution] should [be] derived from the market. And from the market nothing is coming. Nobody is ready to pay anything on top,” Beltrame observed.
Beltrame noted that within Europe itself, there are different takes on electric arc furnaces, electricity supply, levels of state aid for CO2 and data for decarbonisation. As a result, Europe is already creating several different playing fields.
“The direction to a greener Europe is inevitable. It will come,” proclaimed Henrik Adam, vice president of Europe corporate affairs at Tata Steel. But, with new rules comes the reality of people trying to bend those rules.
”I think we must be aware that wherever there is regulation, there is a circumvention,“ Adam added.
Adam cited green steel coming into Europe that is not impacted by the Carbon Border Adjustment Mechanism (CBAM).
“We must have appropriate protection for the industry, cars, steel and other sectors to be able to spend money to become green without cutting the tree for which we are sitting – in terms of no jobs in the future to pay the taxes for the next generation,” Adam urged.
Adam said optimistically that Europe is approximately one or two more years away from appropriate hydrogen supplies.
Harssha Shetty, ceo of Jindal Shadeed Iron & Steel, offered a different angle toward Europe’s green steel transition.
“Europe can focus on engineering and use other pockets in the world to get low-carbon raw material,” he explained.
Shetty also highlighted China’s trend. “China is decarbonising fast. And China just recently announced 150 million tonnes of their steel production is going to be converted from blast furnace to EAF capacity,” he noted.
John Isaacson USA
Clean, lean US steel sector hunts for green steel premium
By global standards, US steel is already pretty green — and pretty pricey.
The American Iron and Steel Institute credits EAFs in its most recent industry profile with about 71% of US domestic steel production, compared with a 26% global average.
A round-up of estimated greenhouse gas emissions from the top four US steelmakers — Cleveland-Cliffs, Nucor, Steel Dynamics Inc and US Steel — from each company’s most recent sustainability report show a range of about 1.98 tonnes of carbon dioxide equivalent (CO2e) per 1 tonne of steel down to as low as 0.39 tonnes C02e per 1 tonne of steel, covering Scope 1 and 2 emissions, which are direct emissions generated by an entity or its subsidiaries and indirect emissions from energy used by an organization.
Scope 3 emissions are a little harder to pin down due varying definitions – most producers lump them in with raw material costs rather than assume the carbon emissions of heavy end-use emitters like automobiles.
Even there, however, at least one major producer – Steel Dynamics Inc – puts its Scope 1, 2 and 3 average emissions as low as 0.78 tonnes CO2e per 1 tonne of steel. The same sustainability report puts the global average around 1.91 tonnes CO2e per 1 tonne of steel, with the global blast furnace average at 2.33 C02e per 1 tonne of steel.
That cleanliness comes at a cost. Though environmental concerns are just one piece of the US price puzzle, they are partially reflected in the disparity between US, European and Asian prices.
Fastmarkets’ daily steel hot-rolled coil index, fob mill US Midwest was last calculated at $38.97 per cwt ($779.40 per short ton) on Wednesday May 15. This is against a backdrop of sideways-to-stagnant prices.
In contrast, Fastmarkets calculated its daily steel hot-rolled coil index, domestic, exw Northern Europe at €641.83 per tonne ($632.91 per short ton) on Thursday May 16.
Likewise, Fastmarkets’ weekly price assessment for steel HRC import, cfr Vietnam was $550-555 per tonne ($498.95-508.02 per short ton) on May 10.
Fastmarkets currently publishes green steel differentials for these European and Asian HRC assessments. The European green differential works out to $147.92-246.53 per short ton, while the Asian differential works out to $185.07-308.44 per short ton.
In a simplistic and possibly coincidental view, the European HRC price subtracted from the US HRC price is roughly the value of the European green steel differential.
When all steel is green, none is
It’s tempting to say that buying US HRC in general is buying green steel, but the industry can’t be complacent if it wants to retain or grow that premium, according to Greenway Steel founder Randy Charles.
“US-produced steel does represent global leading low emissions — for now,” he told Fastmarkets. “That will change rapidly in the EU given the incentive behind the ETS [Emissions Trading System] and carbon liability, as well as investments being made in new H2 technology.”
Earlier this year, one steel mill executive told Fastmarkets that they wouldn’t be surprised if carbon emissions ultimately become another tool in the US’ protectionist toolbox, similar to the Carbon Border Adjustment Mechanism in place in the EU.
Such a move would have bipartisan appeal, regardless of the victor in the US presidential election in November, the executive said. It would echo the 232 national security restrictions originally put in place by President Donald Trump — and maintained by President Joe Biden — and it would mollify environmental advocates and industrial concerns alike, as the US already has a leg-up on the green steel front.
In that scenario, a prospective US green steel differential may actually go negative, as the carbon costs for higher-emission steel add up; it may be cheaper to buy green.
A second executive likened the push for green steel to the bounty some states place on mercury switches, a once-common and toxic component of older cars being sent to the scrapyard.
Some states paid a bounty per switch, incentivizing their removal. Some states still do. And some moved to a voluntary system that did away with bounties entirely, putting the cost of removal and reporting on the scrapyard.
A carbon tax on steel would harm incentives to go green in search of higher profit and make it just another cost of doing business — a boon to a burden in just a few years, he said.
Ultimately, green steel will come in two primary shades, worldwide, Charles said — relative and absolute.
“The absolute basis, and lowest footprint, will carry the highest premiums for end users wanting, or even needing, to decarbonize supply chains.”
Published by: Dan Hilliard
Kallanish Green Steel report with 94 decarbonisation projects
Kallanish published the 2nd edition of the Kallanish Index Services Green Steel Monitor report.
This second edition contains details for 94 steel decarbonisation and low-carbon steelmaking projects by 38 companies around the world.
This resource will help you understand the status of global steelmaking decarbonisation projects underway and in the pipeline globally, and zero in on the scope and scale of the transformation taking place.
More details:
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Projects covered range from research initiatives, through demonstration and pilot plants to full-scale investments in a range of established and new technologies, including: carbon emission reduction targets for each company.
