13 September 2023
- A green steel market has taken another big step after Fastmarkets launched its first Asian green steel premium on Friday
Fastmarkets regional editor Asia Paul Lim told Stockhead premiums paid for low carbon steel had been seen in excess of US$300/t
- High grade iron ore and met coal producers could be among the winners as green steel output rises
- Japanese and Korean steelmakers are seeing premiums as high as
US$300/t selling low carbon steel in a sign the long-touted green steel
industry is finally awakening.
For a long time a nebulous phrase centred on hopes and dreams for the
future in an industry notoriously responsible for 8% of the world’s CO2
emissions, green steel is finally beginning to emerge as a genuine
It is traded in small volumes compared to the vast majority of the
nearly 2Bt of crude steel churned out by mills worldwide, around 70% of
which is produced in blast furnaces or basic oxygen furnaces.
Mills produces on average 1.85t of CO2 for every tonne of steel
worldwide. From coal-reliant blast furnaces that can be well in excess
On Friday, Fastmarkets launched an index for what it says is its first green steel premium,
tracking premiums offered by customers for a swag of products with
Scope 1, 2 and 3 emissions below 1.3tCO2/t from major steelmakers in
Japan, Korea and Taiwan. It’s known as the (and this is a mouthful)
Fastmarkets weekly green steel, flat-rolled, regional differential to
cfr Vietnam HRC index, Japan/South Korea/Taiwan.
“You can’t escape green steel, basically,” Fastmarkets regional editor Asia Paul Lim told Stockhead.
“Green steel is something which will continue to grow in the future in terms of momentum.
“The key on the sentiment to use green steel especially is a lot of
big OEMs, including automotive producers, are looking for certified
“You can say Asia was a little bit late in terms of coming to the
market with green steel, and instead previously it was the European
steelmakers, European carmakers, which actually had an earlier lead time
“But now, the Japanese and South Koreans are the ones in Asia making a move on this first.”
Steelmakers are using a range of methods to produce steel that falls
under this 1.3t limit, including electric arc furnaces with scrap steel
feed, carbon capture, tweaked or enlarged blast furnaces to replace
older infrastructure as well as carbon credits.
OEMs driving demand
Lim says Fastmarkets, one of two major iron ore and steel reporting
agencies along with S&P Platts, has seen premiums of US$200-300/t
for green steel made in Asia.
“We are seeing premiums as high as more than US$300 per ton over a
normal carbon steel product, and there is a range of about US$200 to
US$300 for now,” he said.
“As the market evolves, I feel that there’ll be more room for
differentiation between the various grades of green steel whether it is
really zero carbon or there’s 600kg of carbon or 1t of carbon.
“And perhaps we’ll have a clearer picture of what comes in the future.”
Among the products sold which fit into the premium index include Nippon Steel’s Carbolex,
made using a new electric arc furnace at its Setouchi Works, JFE
Steel’s JGreeX green steel, Hyundai Steel’s HyECOsteel and POSCO’s
POSCO, which is aiming to have its HyRex hydrogen reduced steel technology tested from 2026, agreed
on the sale of its first 200t under the Greenate brand to LG
Electronics earlier this year which will be used in the manufacture of
Lim said interest in products which attract a green steel premium is
largely coming from the auto and electronics sectors at the moment, and
open the potential for Asian steel producers to supply the European
market where the implementation of the EU’s Carbon Border Adjustment
Mechanism will begin from next month.
“I feel that once CBAM starts, there will be kind of a convergence
between the green steel premiums, and the kind of carbon taxes that are
being seen in Europe,” Lim said.
“I feel that way. And the green steel premiums also allow the Asian steelmakers to try to penetrate the European CBAM market.”
According to data provided by Fastmarkets, the Green Steel import
premium relative to the hot rolled coil index CFR Vietnam came in at
US$204-340/t, with base price of US$794-940/t on Friday.
In Europe the differential was tracking between 100-250 Euros, with a base price of 741.25-891.25 Euros.