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Steelmaker Posco is banking on its “Greenate” brand of steel products to fulfill downstream buyers’ ESG needs. It plans to use its “HyREX” hydrogen reduction steelmaking technique, which uses iron ore fines and 100% hydrogen in a reduction furnace to produce DRI, which is then fed into an EAF to produce hot metal.
In local media reports, Posco has said that it had already sold low-carbon steel to LG Electronics, has signed an offtake green steel deal with car producer Volvo and named Samsung Electronics as another potential customer.
Baosteel is looking to start up a hydrogen/natural-gas based DRI plant at its Zhanjiang facility in southern China, while Hebei Iron & Steel in northern China is to supply automaker BMW with steel made from hydrogen-based DRI.
In Thailand, Meranti Steel is looking to produce high-grade HRC with hydrogen-based DRI, and in Singapore, major steel market participants expect to see price differentials for low-carbon rebar.
While Fastmarkets’ new Asian green steel premium aims to make clearer the nascent price differentials for low-carbon steel, this process does not start or end with steelmakers and many others in the steel and ferro-alloys supply chain are also looking at green premiums.
Iron ore producers, for instance, are watching green steel premiums keenly to calculate the capital expenditure needed for new beneficiation plants and are looking at investing in areas such as the Middle East, where abundant natural gas makes it an ideal location for natural gas or hydrogen-based metallics production.
While such metallics output will undoubtedly first be funneled toward the European market, it will likely find its way to various other destinations - wherever steelmakers find they require low-carbon steelmaking raw materials. And these raw materials will naturally incur their own green premiums if rising demand creates an obvious price differential to non-green steelmaking raw materials.
Even coking coal miners can benefit from green steel premiums if their metallurgical coal is high-strength, low-ash and low-sulfur, Fastmarkets understands. And miners that own Tier-1 premium hard coking coal assets will continue to reap the benefits of decarbonization as steelmakers continue to try to reduce emissions by using higher-strength coke.
Low-carbon steel premiums are a brand new tool in the transition to greener steel, but they will undoubtedly start to take firmer shape in the years to come when raw materials and steel products start to adhere to Scope 1-3 standards and steelmakers fight to stay relevant and retain market share. fastmarkets
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- [Editor:kangmingfei]
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