Five takeaways from the Global Steel Dynamics conference

Delegates from across the steel industry gathered in New York June 26-28 for the Association for Iron & Steel Technology’s 2023 Global Steel Dynamics Forum, which focused heavily on the industry’s route toward decarbonization

Taking center stage this year were questions over premiums on and standards for green steel, carbon tariffs at the border, the stability of scrap supply in the US and hydrogen’s promising role in decarbonizing steel production.

Fastmarkets outlines the five key takeaways:

1. The green steel premium has not yet arrived

Panelists and conference-goers alike agreed that steel buyers in the US are not willing, nor ready, to pay a premium on green steel, and any premium that may emerge would have to be small.

What is more realistic, participants said, is a passthrough of any additional costs from green steel production using familiar methods like surcharges or adders.

“I don’t think that we’re going to have a lot of customers looking to pay a whole lot extra,” Kevin Dempsey, American Iron and Steel Institute (AISI) president and chief executive officer, told Fastmarkets. “They want a competitive price, and a low-carbon product. The market will figure that out.”

Dempsey added that if there is a premium, “that’s going to be up to individual companies negotiating with individual customers… We’ll just be having more and more availability of different products, and a lot will be individual company-branded products.”

“We talk to a lot of steel buyers, and I have yet to find any that are saying that their customers are willing to pay a green steel premium,” Timna Tanners, managing director and senior analyst at Wolfe Research, said.

“When you ask the mills who’s paying, you get answers like ‘Apple,’ ‘the auto industry,’ selectively, but that’s not a big share of the market. So, unless anyone’s forced to, it’s going to be a tough ask,” Tanners said.

2. The US needs carbon protectionism

One of the largest threats to decarbonization in the US is competition from cheap, high-carbon foreign steel imports, industry leaders told attendees.

Executives stressed the need for lawmakers to consider strengthening the USMCA trade agreement to protect against trans-shipment of “dirty” steel. Some also suggested the imposition of a carbon tariff to protect the green steel industry, though they warned against using the EU’s Carbon Border Adjustment Mechanism (CBAM) as a model, citing flaws.

Ternium CEO Máximo Vedoya agreed that trans-shipment into North America is a problem but strongly disagreed with comments from Lourenco Goncalves, Cleveland-Cliffs’ chairman, president and CEO, calling Mexico “the trans-shipment capital of the world.”

“I know we have some problems, but the US has the same problems, and bigger problems than that. You see some of the steel products in the US – take, for example, tubular products made from steel. More than 50% of the market is foreign nation steel, made probably with Chinese steel,” Vedoya said.

Congressman Frank Mrvan (D-IN), vice chair of the Congressional Steel Caucus, expressed his support for the Leveling the Playing Field Act 2.0 at the conference on Monday, June 26. The legislation aims to speed up the resolution of antidumping and countervailing duty cases before the International Trade Commission (ITC) and empower the commission to combat imports benefitting from cross-border subsidies.

3. Battle of the standards

On Tuesday, June 27, representatives from Nucor and ArcelorMittal butted heads over competing proposals for how to classify low-carbon steels.

The ResponsibleSteel standard supported by ArcelorMittal creates separate paths for lowering emissions intensity at blast furnaces (BFs) and electric-arc furnaces (EAFs). Under the proposed classification metric, steel produced in a BF could be considered low-carbon even if its carbon intensity exceeds the designated threshold for EAF-made steel.

The separation is meant to encourage the simultaneous decarbonization of both steelmaking avenues while recognizing that primary steelmaking will need to continue to exist in order to replace degrading ferrous scrap, according to Nicola Davidson, vice president of corporate sustainability at ArcelorMittal.

David Miracle, Nucor’s director of corporate sustainability, called the metric “absurd” and suggested the sliding scale was tantamount to greenwashing. Miracle promoted an alternate metric that would impose a single threshold that applies to all producers and would similarly decline over time.

Miracle also debated the argument behind promoting primary steelmaking in advance of a potential scrap shortage.

“If scrap scarcity is a real risk, why is everyone investing billions of dollars on EAFs in a country that is already EAF heavy?” he asked.

Davidson questioned whether the proposal presented by Nucor was based in science and stressed that the ResponsibleSteel standard was based on a rigorously determined budget of carbon emissions. She also pointed out that a single metric would allow EAFs to maintain a low-carbon designation even if they increased their emissions over time.

4. Scrap insecurity

The theme of scrap scarcity and degradation in the US cropped up several times throughout the three-day event. Aashish Gupta, chief strategy officer at Primetals Technologies, estimated that sinter-feed ferrous content will fall by 1% per decade going forward.

“Scrap is not something that you find on the ground,” Goncalves said. “Every time it melts, every time we shred a car, you have a little bit of copper. Over time, that scrap is gone, say. That’s another problem to be resolved.”

“We still have a lot of prime scrap that we control for ourselves,” he continued. “I think every company, every single individual company, will have to create their own solutions. Otherwise, some might not have theirs.”

If steelmakers continue to primarily invest in EAF steel production and neglect BFs, then the US — which has not had a BF constructed in the country in over 20 years – may be forced to import primary steel, a market participant told Fastmarkets.

While the US seeks to cut its carbon intensity, nations across Asia are dramatically ramping up their BF capacity without corresponding investment in carbon capture or mitigation.

According to Wee-Jin Yeoh, Secretary General of the South East Asia Iron and Steel Institute, nearly 77 million tonnes of steel mill capacity is set to come online in Southeast Asia by 2026, of which nearly 72 million tonnes will come from integrated mills.

5. Hydrogen will be ‘checkmate’ for decarbonization

“If you don’t use natural gas, you’re already at a disadvantage [in terms of decarbonization],” Goncalves said. “If you use sinter – even as a portion – you’re at another disadvantage… If we don’t use HBI [hot-briquetted iron] – and pretty much nobody uses HBI in blast furnaces – you’re at a huge disadvantage. And when you have hydrogen, it will be checkmate. And it will come in less than six years.”

Several market participants said they agreed with the estimate that hydrogen steelmaking will become a reality in less than six years, though some questioned whether sufficient investment is lined up to meet that target.

The introduction of hydrogen, which has applications for the direct-reduction of iron and the replacement of coking coal in BFs, carries huge promise for reducing carbon intensity and a monumental price tag, speakers said.

Large-scale electrolysis, which separates water into hydrogen fuel and oxygen, is not fully ready, Bradley Davey, ArcelorMittal’s executive vice president and head of corporate business optimization, said. But the technology exists today, and the remaining challenge is scalability.

What to read next
Fastmarkets has adjusted its assessments for the stainless steel scrap 430 bundles, solids, consumer buying price, delivered mill Pittsburgh and the stainless steel scrap 409 bundles, solids, consumer buying price, delivered mill Pittsburgh, effective Monday February 12.
Fastmarkets corrected its MB-STE-0337 steel scrap cut structural/plate 5ft max, consumer buying price, delivered mill Hamilton, which was published incorrectly on Friday February 9.
Ferrous scrap prices in main Mexican markets dropped sharply in the week to Tuesday February 6 – their third consecutive weekly decrease – amid weak sentiment, Fastmarkets understands
Trading activity for pellet feed imported into China increased in the week to Friday January 19, with more tenders from Australia. The pellet feed premium, however, continued to face downward pressure from uncertain demand outlook among market participants, sources told Fastmarkets
Fastmarkets’ international ferrous scrap prices were published earlier than scheduled on Friday January 26 due to an error.
High stainless steel production in China in 2023 generated lofty imports of raw materials, including chrome ore, ferro-chrome, nickel pig iron (NPI) and ferro-nickel