Steelmakers in the United States are poised to benefit as countries race to meet pledges to reach net-zero carbon dioxide (CO2) emissions, according to the director of the US Department of Energy’s National Energy Technology Laboratory (NETL)
By Mark Shenk, Fastmarkets
“As the world grapples with deeper decarbonization… I think there’s an opportunity for US steelmakers to position themselves for a premium product that can make its way into places like Europe that might be ready to pay a premium for a lower-embodied material such as decarbonized steel,” Brian Anderson, lab director at the NETL, told Fastmarkets.
Embodied carbon refers to all the CO2 emitted in producing materials.
US producers should benefit from the wide adoption of electric-arc furnace (EAF) steelmaking, which emits much less CO2 than blast furnaces, according to Anderson. EAFs are responsible for about 70% of US steel production, with the remainder coming from blast furnaces, while the reverse is the case with the global industry.
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And US steel mills are on pace to add more than 13.5 million tons of EAF flat-rolled steelmaking capacity over the next few years. Market participants had speculated that the new steelmaking capacity in North America would reverse the record-high price spike this year, but have since indicated that the additional production will not have much impact until deep into 2022.
Fastmarkets’ daily steel hot-rolled coil index, fob mill US was calculated at $94.06 per hundredweight ($1,881.20 per short ton) on Monday, August 9, up by 0.64% from $93.46 per cwt on Friday, August 6 and an all-time high.
“US steel producers already have a major advantage in CO2 footprint and clean steel, in some cases many times more efficient when it comes to carbon efficiency,” Anderson said. “But right now internationally there is no market driver in terms of clean credits, certifications for the embodied carbon material, steel, plastic, whatever the material we trade internationally.”
The European Commission has proposed a carbon border adjustment mechanism (CBAM) on some goods, including steel and aluminum. European steel association Eurofer also last month called for markets for green steel and affordable low-carbon energy, among other policy measures to support decarbonization.
And Democratic lawmakers in Congress likewise have proposed that the US implement its own carbon border tax.
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