Fastmarkets launches Asia green steel differential amid growing decarbonization drive in South Korea, Japan

Read more about our green steel Asia differential, the region’s first green steel benchmark aimed at serving the East Asia market

Fastmarkets, a leading international price reporting agency (PRA) providing pricing data, analysis and events to the global cross-commodity markets, will today, Thursday, September 7, launch a green steel differential price aimed at serving the East Asia market, primarily South Korea and Japan. This follows the launch of Fastmarkets’ European green steel prices in June this year.

Green steel, also known as low-carbon emission or sustainable steel, refers to the production of steel using environmentally friendly and energy-efficient processes that minimize carbon dioxide (CO2) emissions. Traditional steel production methods, such as the blast furnace route, are highly carbon-intensive and contribute significantly to global greenhouse gas emissions.

Fastmarkets’ green steel benchmarks will assess the price differential against traditional flat steel prices, creating transparency for the industry and supporting the investment decisions needed to reduce emissions.

Steelmaking accounts for 7-9% of global CO2 emissions, the majority of which come from coal-based blast furnaces. Most steel produced from traditional blast furnaces emits around 2 tonnes or more of CO2 for each tonne of steel produced.

Fastmarkets’ Asia green steel price is the region’s first green steel benchmark and one of the outcomes of the dramatic changes expected in the Japanese steel industry. In the run-up to 2030, Japan is expected to greatly increase its use of metallics such as hot-briquetted iron and ferrous scrap, shifting the trade flows of these products even as it tries to increase the usage of converters and electric-arc furnaces.

Fastmarkets’ Asia green steel import, differential to flat-rolled steel, Cost and Freight (CFR) Vietnam will be assessed weekly against the established Fastmarkets CFR Vietnam import hot-rolled coil (HRC) index.

A weekly inferred green steel price will also be calculated by adding the new differential to Fastmarkets’ Asia HRC Japan, Korea and Taiwan (JKT) origin price to provide real-time transparency.

The maximum carbon limit will be set to 1.3 tonnes and will initially include mass balancing. Mass balancing is a way of taking the accumulated CO2 savings from industrial processes and allocating those savings to steel products, which buyers pay for. The green steel prices will capture the differential between traditional flat-rolled steel prices and prices for steel produced with emissions (including Scopes 1, 2 & 3) of a maximum of 1.3 tonne CO2 per tonne of steel.

All production methods and raw materials will be considered, including scrap-based production and steel made from hydrogen-reduced iron.

In parallel, Fastmarkets has continued to develop its price series for high-grade iron ore, metallics and ferrous scrap.

The introduction of green steel prices for Asia follows Fastmarkets’ launch in June this year of the world’s first green steel prices – a domestic flat-rolled differential ex-works Northern Europe price and an inferred daily green steel base price for Northern Europe.

Andrew Wells, global steel and ferro-alloys editor at Fastmarkets, said: “Following extensive discussions with the industry, we have developed a first-of-its-kind price for Asia which will bring clarity and transparency to a market that is fast becoming a priority area for all steel industry players committed to the energy transition.”

Raju Daswani, CEO of Fastmarkets, added: “We are excited to partner with the steel industry on its decarbonization journey. The Asia green steel prices complement our market leading steel prices in the region, and add to our growing suite of steel, scrap and steelmaking raw materials tools which are helping the industry with the vital task of reducing its carbon emissions and addressing climate change.”

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