Sources said that a lack of willingness to pay premiums for steel with reduced carbon emissions content could be partially explained by the unfavorable economic situation in Europe.
“Since about two-three weeks [ago] we have very few inquiries [for green steel],” a mill source said. “Buyers said they are focused on survival in the current market conditions.”
Despite this, publicly listed companies that have to submit sustainability reports have been expressing more interest in green steel bookings, sources said.
“Automotive is the major green steel buyer among all steel-using sectors,” a distributor 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.”
Premiums for such steel were reported at €200-300 ($208-313) per tonne.
During the assessment week, bids for such material were reported at €70-100 per tonne.
But producers pointed out that steel with such specification was expensive to produce, and therefore “big discounts made no sense.”
“We must pay for green energy, pay for certification [of green steel products]. This can’t be cheap,” a second mill source said.
Buyer sources estimated achievable premiums for green steel with such levels of emissions to be at €100-150 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, stable since December 12.
Meanwhile, Fastmarkets’ assessment of the flat steel reduced carbon emissions differential, exw Northern Europe was €30-60 per tonne on Thursday, narrowing upward by €10 per tonne from €20-60 per tonne in the prior week.
For steel produced in blast furnaces, with reduced carbon emissions of 1.4-1.8 tonnes of CO2 per 1 tonne of steel, offers for premiums were reported at €40-70 per tonne during the assessment week.
Buyer sources suggested a premium level for such specs at €30-50 per tonne, depending on the supplier.
“Not everybody needs 80-90% decarbonized steel or can afford it. Some buyers can start with 30-40% [CO2 emissions reduction],” a mill source said.