Mercedes-Benz, Steel Dynamics rev up green auto steel relationship

German automaker Mercedes-Benz has signaled its preference for greener steel in the US alongside a commitment to 50,000 tonnes per year from long-time supplier Steel Dynamics Inc (SDI)

The “CO2-reduced steel” stipulated in the buy will be supplied by SDI’s Tuscaloosa, Alabama, electric-arc furnace (EAF) facility, using at least 70% recycled scrap and 100% renewable energy, the automaker said in a statement on Monday September 18. The companies have had a business relationship since 2015.

“Our ambition is clear: Together with our partners, we want to make our entire fleet of new vehicles net carbon neutral along the entire value chain by 2039,” Mercedes-Benz head of procurement and supplier quality Gunnar Güthenke said in the release.

Mercedes-Benz spelled out its preference for EAF over blast furnace steel, noting that EAFs running on green electricity can halve CO2 emissions compared with traditional methods.

Both parties agreed to potentially increase the share of scrap in the near future, which would reduce the carbon footprint even further.

The company added that “both parties agreed to potentially increase the share of scrap in the near future, which would reduce the carbon footprint even further.”

The agreement comes against a complicated auto and green steel backdrop.

The United Autoworkers initiated a targeted strike on Friday September 15 against all Big Three producers – General Motors, Ford and Stellantis – and the fear of that strike had been chipping away at US hot-rolled prices for some time.

Fastmarkets’ daily steel hot-rolled coil index, fob mill US Midwest was calculated at $33.48 per hundredweight ($669.60 per short ton) on Friday, down by 1.96% from the day before and by 3.18% week-on-week.

Meanwhile, demand for green steel in Europe is still in the exploratory phase, but auto companies appear to be leading the charge.

Green steel premiums there remain relatively wide. Fastmarkets’ weekly assessment of the green steel, domestic, flat-rolled differential to HRC index, exw Northern Europe was flat at $107-268 per tonne on September 14.

To keep up with the green steel discussion and to follow the critical developments in green steel pricing and low carbon steel production, visit our Green Steel Spotlight page.

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