European sellers of environmentally friendly steel are having a hard time closing deals with current premiums
The green steel markets across Europe saw complete stagnation last week in terms of both lows and long positions; activity in the spot markets was close to zero as buyers were reluctant to pay high premiums for decarbonized steel, Fastmarkets reported on Thursday, February 5.
Buyers across Europe continued to show limited willingness to pay premiums for steel produced with reduced carbon content, citing unfavorable market performance and broader challenges faced by the European steel company.
The Fastmarkets methodology defines European eco-friendly steel as "steel produced with emissions in volumes 1, 2 and 3 not exceeding 0.8 tons of CO2 (tCO2e) per ton of steel."
Scope 1 refers to direct emissions, while application areas 2 and 3 relate to indirect emissions.
Premiums for European steel producers capable of producing steel with such emission thresholds are still 200-300 euros ($236-354) per ton, which has been relatively stable over the past few months.
During the evaluation week, a supplier source confirmed the offer of green bonuses in the amount of 200 euros per ton with the possibility of receiving discounts on larger shipments, but reported no deals over the past few weeks.
"We have several inquiries, but when it comes to prices, buyers show great reluctance to pay triple-digit premiums," said a supplier source.
During the week up to Thursday, buyers' estimates of the market value of premium grades of "green steel" did not exceed 100-150 euros per ton. Some sources suggested that even lower premiums — below 100 euros per tonne — are possible for spot transactions, arguing that higher premiums can be mainly fixed in sales agreements.
Sources in the sellers estimated the achievable premium for pure flat rolled products at 150-180 euros per ton.
As a result, Fastmarkets' weekly estimate of prices for domestic flat rolled products with a differential to the HRC index for Northern Europe, produced on EXW terms, as of February 5 has not changed since January 22 and amounted to 100-150 euros per ton.
Meanwhile, there has been virtually no demand for environmentally friendly products in the long products sector lately.
"Unfortunately, no one is willing to pay premiums for environmentally friendly long products. Our usual long positions are already considered "green"[because they are produced via electric-arc furnace (EAF) using a preferred energy mix in the countries where assets are located]," a source in the supplier said.
According to sources, the companies involved in the project were interested in the environment.