The European green steel market continues to show fragmented demand, while activity in the spot markets remains close to zero amid high premiums, Fastmarkets sources said on Thursday, April 23.
The demand for steel produced with reduced carbon dioxide emissions in Europe remained heterogeneous and regionalized.
A source at the plant reported a request for the supply of 200 tons of environmentally friendly steel from a construction company, noting an increase in the number of requests for environmentally friendly materials from outside
The construction sector as a whole has been growing recently, but noted that high premiums remain a stumbling block.
"Some customers order "green" steel, but refuse to pay triple-digit premiums, noting that other steel manufacturers can sell "green" steel cheaper," said a manufacturer of "green" steel working with electric arc furnaces (EDP). "But here we are again faced with a lack of clarity in the definition of "green" steel in Europe. Naturally, steel with a carbon footprint of 1.6 tons of CO2 per ton has become cheaper than steel with a carbon footprint of less than 1 ton of CO2 per ton of steel. But these are two different products," they added.
According to the Fastmarkets concept, European environmentally friendly steel refers to a material produced with cumulative emissions on scales 1, 2 and 3 not exceeding 0.8 tons of CO2 per ton of steel.
Suppliers reported offering surcharges on materials with such characteristics in the amount of about 200 euros ($234) per ton, and one supplier even counted on 300 euros per ton.
However, the achievable premiums were lower — 150-170 euros per ton, according to sources, and were mainly achieved for the project business, not for spot sales.
Overall, industry sources continued to report project-driven demand for environmentally friendly steel from the construction and wind energy sectors, as well as automakers and manufacturers of white rolled products, while local activity remained low.
"The cost of steel for a car or washing machine is relatively low, so it is affordable. For steel distributors and service centers, buying green steel in a warehouse is just freezing money," said a German buyer.
During the evaluation week, buyers estimated acceptable premiums for "crude" steel on the spot market in the range of 0 to 100 euros per ton.
A customer source said that triple-digit premiums for "eco-friendly steel" are only possible in project-related transactions, noting that higher premiums are usually limited to government procurement and otherwise