Ten key points on low-carbon steel, aluminium markets

While policymakers push for greater adoption of lower-carbon metals, the global market for green steel and aluminium is still evolving unevenly.

The IAA puts the focus on supporting the uptake of lower carbon emission steel and aluminium, markets that have so far seen several hurdles not only in Europe, but globally.

Fastmarkets rounds up key points of the current low-carbon steel and aluminium markets across different regions.

1. Supply of low carbon metal expected to rise fast, but premiums may not follow long-term

Fastmarkets expects a significant increase in low carbon aluminium and steel output in the coming years. But as greener production procedures become mainstream, especially in Europe, the green premium is likely to erode because a low-carbon rating will cease to be a differentiator.

2. Green premiums fragmented, inconsistent

Premium levels vary by product, region and contract type. Long term contracts (LTCs) show the strongest premiums, while spot markets, dominated by traders without net zero-carbon commitments, often show little or no upcharge, particularly for aluminium.

3. Conventional market dynamics still drive low carbon pricing

Premiums for low carbon steel and aluminium are heavily influenced by supply, demand and price behavior in the broader metals market. Green and conventional pricing are still interconnected.

4. Europe leads – driven by regulation, not necessarily higher premiums

Europe has the most developed low carbon trading environment, supported by the EU’s Carbon Border Adjustment Mechanism (CBAM) and end user demand. But this does not always translate into higher premiums, compared with Asian markets.

5. Asia has highest low-carbon aluminium prices, but adoption is uneven

Asia’s low carbon aluminium differentials are globally the highest, supported by tight supply and demand from automotive buyers. Uptake, however, varies across different Asian countries

6. Middle East, Africa becoming strategic low carbon hub

Middle Eastern aluminium and steel producers benefit from low cost energy and are scaling-up renewable power and scrap usage. While they have not yet established a regional premium market, they are positioning themselves as major suppliers of lower emission steel and future low carbon aluminium. The first low-carbon direct reduced iron shipment from Namibi was expected soon to arrive in Europe.

7. Americas lag – except for Mexico, a rising premium market

The US market shows little appetite for low carbon aluminium premiums due to its traditional reliance on Canada-origin material produced using hydro-electric power, and shifting political priorities. Steel production in the US is similarly lower carbon emission due to the volume of scrap usage. But Mexico’s automotive driven demand is creating one of the continent’s meaningful low carbon aluminium premium markets.

8. Low carbon aluminium definitions narrow, scrap not counted, low-carbon steel definitions vary

Fastmarkets defines low carbon aluminium as having an output of maximum 4 tCO2e per tonne (Scope 1 & 2). Scrap content is excluded from the definition due to the lack of global consensus on scrap carbon accounting. Low-carbon steel labelling remains fragmented across industry associations, governments and regions, leaving it unclear what “green” means.

9. Low-carbon steel, aluminium still niche, but CBAM will be a turning point in EU

Steel will shoulder the largest share of CBAM related costs, making 2026 a pivotal year for whether buyers will turn to imports or domestic material. The phasing-out of free emissions allowances for the aluminium and steel industries could result in EU domestic prices increasing in line with CBAM costs for imports.

10. Long term outlook: volumes up, premiums down

Fastmarkets forecasts that, by 2035, green steel premiums will fall sharply due to tighter cost convergence, but production of low and near zero emissions steel will surge. In aluminium, demand will grow across new sectors such as electric vehicles, renewable energy infrastructure and advanced manufacturing.