Green steel premiums are being achieved for some contracts, but regulation and clarity over definitions are needed to advance their uptake, panellists said during the Kallanish Green Steel Strategies event in Brussels this week.

Christoph Zinsser, head of project finance at Stegra, noted: “We have been able to secure long-term offtake agreements with a euro per tonne premium over seven years take or pay contract. So there certainly is the demand.”

He added that customers’ willingness to pay a premium has evolved over the years.

“The business case was developed on the back of the demand from the automotive industry for green steel. There has been a lot of interest, and it has evolved quite significantly over the last three years,” he asserted.

He noted this was not “widespread across different industries as we would all hope,” but he does see growing interest from the white goods and construction industry.

“There are players who certainly are interested in understanding what the possibility is. Maybe not so much for this year, today, but thinking ahead into 2027 and 2028, and leading to 2030, where can we secure supply for the future. Those discussions are very active,” he observed.

Zinsser also flagged that the offtake agreements were part of the financing requirements for the project, which is currently under construction.

“We had to demonstrate that there is a market to make the project bankable for 50% of our future production. We have been able to secure green premiums, we have not signed one contract that would not have a green premium,” he said.

Josu Piña Bilbao, director of business development at SSAB Europe, sees the premium developing differently amid challenges including a lack of regulatory clarity over the definition of “green steel”. He does however see this coming imminently. 

“And also, clear set targets from regulation. If you look at the automotive [sector], they have clear tailpipe emission targets … Most OEMs have been focusing on electrifying their fleet,” he noted. “Some of them are stepping up and having targets for scope 3 upstream, which is the raw materials, but it is voluntary. FMC, Steelzero, and other initiatives, those are voluntary”.

“We are working to develop a low emission steel portfolio together with our customers’ needs and we need to go through that process. Customers need to test the material, make sure the characteristics and properties are okay and it's working; all of that takes time,” Bilbao said.

He added SSAB is not focusing so much on the premium, as this is something the market would decide in the future.

Meanwhile, Alexander Julius, managing partner of distributor macroMETAL and Eurometal Presidency member, noted that some customers were unwilling to pay more than the material they are receiving from other suppliers, and that the premium was of limited importance amid the small volumes in customer portfolios.

Limited available supply of the material is also an obstacle to creating a market where a premium is achievable. 

“The market for low carbon emission steel is not there yet,” Bilbao said. “For different reasons, [such as] lack of availability and supply. How many producers are actually offering low emission in Europe, what products, what grades, etc?”

“There are also worries [about] 2026, with CBAM, how much carbon reduced steel will be available then. Will it be sufficient to cover market demands in different industries? There are so many question marks at the moment,” Julius pointed out.

Zinsser also commented on the issue in regard to negotiating a premium.

“The lack of supply is part of the reason why it’s so challenging to enter into the discussion on the right price because there’s no comparison,” he said.

“[An automotive producer] is careful to commit to a premium, because they don’t have a comparison. They don’t know what the market is [to be able] to commit to pay a premium [for] 2027 in 2024; it’s a big ask for any company,” he concluded.