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:
- 94 Projects
- 42 Maps
- 47 Charts and Tables
- 50 Pages
- PDF format
- Price: 350$ USD
- Order by email or online
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.
Knauf Interfer bezieht ab 2023 grünen Stahl
Die Knauf Interfer Cold Rolling GmbH und die thyssenkrupp Hohenlimburg GmbH haben am 10.08.2023 ein Memorandum of Understanding über den Bezug von CO2-reduzierten Stählen unterzeichnet. Geplant ist ab 2023 im ersten Schritt die Belieferung des Kaltwalzwerks der Knauf Interfer Gruppe mit Stählen, die durch den Einsatz von aufbereiteten Schrotten einen deutlich geringeren CO2-Fußabdruck aufweisen (bluemintÒ recycled).
Ab Ende 2026 wird Knauf Interfer darüber hinaus Stähle der Produktfamilie bluemintÒ Steel beziehen, die nach dem Direktreduktionsverfahren mithilfe von grünem Wasserstoff produziert werden (DRA/SAF).
bluemintÒ recycled reduziert die CO2-Emissionen im Vergleich zu konventionellem Warmband im Schnitt über alle Güten und Abmessungen um ca. 60%. Knauf Interfer ermöglicht dies eine produktspezifische Anrechnung der CO2-Emissionen in der Kategorie Scope 3.
Über den Bezug und die Bearbeitung von grünen Stahlprodukten setzt die Business Unit Steel, zu der die Knauf Interfer Cold Rolling GmbH gehört, dazu unter anderem auf eine effiziente, trimodale Logistik und kurze Lieferwege dank günstig gelegener Standorte.
Domenico Marino, COO im Vorstand der Knauf Interfer SE, sagt:
„Über Stahlbezugsvereinbarungen können wir die Lieferketten unserer Kunden mit Green Steel absichern. In diesem dynamisch wachsenden Segment kann sich Knauf Interfer auch dank der engen Partnerschaft mit thyssenkrupp Hohenlimburg durch maßgeschneiderte Lösungen, Material- und Beratungskompetenz positionieren.“
André Matusczyk, CEO der thyssenkrupp Hohenlimburg GmbH, ergänzt:
„Die heute unterzeichnete Vereinbarung markiert einen weiteren Meilenstein auf dem Weg zum „grünen Stahl“ und zeigt das gemeinsame Bekenntnis zu mehr Nachhaltigkeit und Klimaschutz.“
Quelle: Knauf Interfer & home-of-steel.de
Klöckner sees increasing low-emission steel products acceptance
Steels that are certified as low-carbon-emission products have so far been demanded mainly in Europe and by big users, but are gaining ground in other segments and regions, Klöckner & Co observes.
When asked about buyers’ acceptance of CO2-reduced product premiums, chief executive Guido Kerkhoff said during a recent conference that it was “good in principle”, but varied by segment and region. Comparing the distribution group’s two main markets, he explained the level of acceptance in Europe is better than in the USA, “but they [US buyers] are catching up”.
Also, “green” steel is primarily a domain of the big user groups like the automotive industry, while small and medium-sized customers are content with receiving “some kind of certificate”, he added. However, “inquiries are increasing and interest is becoming more profound,” Kallanish heard him say during the conference.
“The wind is changing in the USA as well, so in the premium segment you will not be able any more to offer only grey and black standard products,” he observed.
He did not elaborate on the short-term future, when more costly CO2-reduced material in Europe could face a hard time amid continued sluggish demand. In a different context, he stated that “on the domestic market, we need to prepare for rough competition for low volumes”.
Last year, Klöckner introduced its own low-CO2 steel brand under the name of Nexigen. In spring, it launched the Nexigen PCF Algorithm, which can be used to determine the Product Carbon Footprint (PCF) for almost all its products. More recently, it presented a tracking solution that allows customers to view their emissions history for products purchased from the company.
Christian Koehl Germany
