The green steel would be produced at Tata’s site at Port Talbot in South Wales which is set to undergo a £1.25 billion ($1.58 billion) overhaul.
The steelmaker added that this was the first supply agreement it had made since the announcement of the transformation of the Port Talbot site.
The project includes building a new 3-million-tonne per year electric arc furnace (EAF), which offers a low-carbon alternative to the traditional blast furnace method.
The EAF is expected to be functional at the end of 2027, thus, replacing the two blast furnaces, which were operational a few months ago.
BF5 was closed in July this year, and BF4 was closed in September.
The Port Talbot site produced mainly hot-rolled coil and cold-rolled coil.
The company managed to receive a support package of £500 million from the UK government to fuel its plan to develop a lower-emissions electric-arc furnace-based steelmaking plant.
Tata Steel UK added that JBC is focused on carbon reduction in its manufacturing and will integrate the steel into its machinery range.
“We are fully supportive of Tata Steel UK’s investment proposals and are pleased to be one of the first customers to endorse those plans by making this agreement to secure British-made green steel as soon as it is available,” Wayne Asprey, JBC’s group purchasing director, said.
Market overview
Demand for green flat steel in Europe is still limited and highly regionalized, but premiums for such material have strengthened slightly on a weekly basis because most suppliers refuse to undercut prices much even in the face of low demand, Fastmarkets reported.
According to industry sources, most demand for green steel was coming from the Nordic states.
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.”
Leading European suppliers kept the premiums for such steel at €200-350 per tonne, sources told Fastmarkets.
During the assessment week to December 12, buyer sources estimated 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.
Even slightly higher bids, reaching at €70 per tonne, have been rejected.
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 December12, narrowing upward by €20 per tonne from €80-200 per tonne seven days earlier.
But the green steel premium in Northern Europe averaged €145 per tonne in November, compared to €200 per tonne in January this year.
According to industry sources, the lack of willingness to pay premiums for steel with reduced carbon emissions content was partially explained by the unfavorable economic situation in Europe.
