European Green Steel Premiums Hold Steady as Policy Impact Awaits

Trading was slow in European green steel markets during the week to Thursday January 15, but sellers expect policy updates to push up demand later in the year, sources told Fastmarkets. Buying interest for steel produced with a reduced carbon footprint remained limited across Europe during the assessment week. Seller sources have reported “very few inquiries” for green steel in recent weeks, but attributed this partly to the winter holiday break in Europe. Still, sellers expressed cautious optimism, expecting green steel demand to pick up in 2026, supported by regulations. Several sources noted that green steel had come increasingly into focus following recent decisions related to the EU’s carbon border adjustment mechanism (CBAM) and the proposed automotive package regulation Market participants added that while the rollout of CBAM and the gradual phase-out of free carbon allowances in Europe are expected to support demand for green steel, any meaningful impact is unlikely in the near term. Under Fastmarkets’ methodology, European green flat steel is defined as material produced with Scope 1, 2 and 3 greenhouse gas (GHG) emissions capped at a maximum of 0.8 tonnes of carbon dioxide per tonne of steel produced. Offers for steel meeting these specifications were reported at a minimum of €200 ($232) per tonne across Europe. But several supplier sources agreed that for reasonable tonnages, lower premiums could be achieved around €150-170 per tonne. One supplier source said that premiums below €150 per tonne were unworkable for emissions thresholds below 800 kg of CO2 per tonne. But buyers gave lower estimations in the range of €70-150 per tonne during the assessment week. A buyer source said that green steel premiums in the three-digit range were attainable only in project-driven transactions, noting that higher premiums are typically limited to public procurement and are otherwise unaffordable. At the same time, an automotive end-user told Fastmarkets that it was securing green steel through offtake agreements with future direct-reduced iron/electric-arc furnace (DRI-EAF)-based producers, arguing that scrap-based green steel currently available on the market could not be considered “fully green.” Such comments highlight that the absence of commonly accepted standards and definitions for green steel remains one of the key obstacles to its broader adoption across supply chains. Fastmarkets’ weekly assessment of the green steel domestic, flat-rolled, differential to the hot-rolled coil index, ex-works Northern Europe was stable at €100-170 per tonne on Thursday. Meanwhile, Fastmarkets’ assessment of the flat steel reduced carbon emissions differential, ex-works Northern Europe was €40-50 per tonne on Thursday, also stable week on week. For steel produced in blast furnaces with reduced carbon emissions of 1.4-1.8 tonnes of CO2 per tonne of steel, offers for premiums were reported at €60-70 per tonne during the assessment week. Buyers’ estimates of tradable prices were around €40-50 per tonne, with no new trades reported. Author: Julia Bolotova