The difference between spot buyers' premiums for "pure steel" compared to projects and end users remains high, McCloskey sources said during the Tube & Wire Trade Fair in Dusseldorf, April 13-17.
Numerous sources have reported on the growing demand from the construction industry, as it has become easier to find steel with a lower CO2 content compared to other building materials, which makes it possible to achieve decarbonization targets. A similar situation is observed in the automotive segment, which remains the leader in the consumption of environmentally friendly steel, as steel is one of the materials used in the manufacture of cars, which makes it easier to decarbonize compared to other components such as plastic.
In both the construction and automotive sectors, the premiums achieved for pure hot-rolled coils (HRC) as a result of new projects, the upcoming installation of equipment and existing electric arc furnaces (EDP) amounted to 160-200 euros per ton, and in some cases even higher.
Some sources also reported that steel mills, which previously accepted premiums of about 100 euros per ton from end users, have now increased them to about 200 euros per ton.
One steel producer noted that the surcharges also depend on the end customer and product specifications, but they confirmed the prices.
In both cases, the surcharges for "raw steel" are easier to account for in total production costs. Distributors, meanwhile, continue to avoid purchasing low-CO2 steel due to higher additional costs, unless they trade directly with the end user.
As a result, the premiums that spot buyers were willing to accept ranged from 60 to 100 euros per ton.
Demand for "green" steel
Demand for environmentally friendly steel is expected to grow, albeit at a relatively slow pace in the short and medium term. The European market first needs to adjust to traditional changes in the steel market, such as the Carbon Boundary Regulation Mechanism (CBAM) introduced in January this year and the expected reduction in duty-free import quotas from July 1. Both policies are fraught with uncertainty, as exporters will only be able to account for their emissions in steel cleared in the EU this year in 2027, exposing buyers to the risk of paying higher duties based on default values. Although the EU authorities have confirmed new quotas for each product, some important details, such as country-specific volumes and melting and pouring conditions, have not yet been disclosed.
