Market Insight:
Green steel is steel that is less harmful to the environment than typical steel-making procedures. This footprint is reduced when non-coal-based alternative technologies are implemented. Green hydrogen is typically used in green steel manufacturing rather than coal or power generated from non-fossil sources.
The European green steel industry is projected to develop in the future as European steelmaking rivals such as Germany's Thyssenkrupp and ArcelorMittal consider utilising hydrogen to replace coking coal. With demand growing fast, green steel providers are likely to benefit from a very tight supply/demand balance over the next decade, with considerable profit upside forecast. However, as supply expands and green steel becomes the standard, price power is expected to dwindle. Europe green steel market is expected to reach US$76.97 million by 2023, growing at a CAGR of 75.24% during the forecast period.
The outlook for green steel demand has positively surprised over recent years with a larger range of end users than projected. It is clear that demand for green steel has spread into many more end sectors than was anticipated. Green steel demand is ultimately driven by a mix of two primary drivers: Scope 3 emissions reduction objectives and end-user demand. Green steel market demand in Europe is expected to reach 3.68 million tonnes in 2023. In 2021, the European green steel market saw a supply as SSAB, a Swedish partnership, supplied the first batch of the metal—made using 'green' hydrogen—to a vehicle manufacturer for truck manufacturing. Swedish steel makers would increase steel output in the next few years as green hydrogen drives the transformation of one of the most difficult sectors to decarbonize. Europe green steel market supply is predicted to grow to 1.51 million tonnes in 2023.
Segment Covered:
Geographic Coverage:
According to the report, the Europe green steel market can be divided into five sub regions: Sweden, Germany, France, UK and Rest of Europe. Sweden green steel market enjoyed the highest market share, primarily owing to aims for climate neutrality by 2045 and accounts for the biggest investment volume that has been announced. Swedish steel venture H2 Green Steel – founded in 2020 – announced that some of the most prominent European financial institutions have decided to support the hydrogen-based steel plant construction in northern Sweden. These investments and funding would increase the supply as many players would establish green steel plants in Europe. Swedish steel companies will ramp up the country’s steel production over the next few years as green hydrogen helps drive the transformation of one of the hardest industries to decarbonize.
Top Impacting Factors:
Growth Drivers
Challenges
Trends
Driver: Rising Green Penetration
A green field strategy is a penetration plan designed to broach the untouched or undeveloped areas. Often selling organizations are so focused on well-defined product sales opportunities that they miss the green field altogether. Many companies are following the strategy due to the environment concerns. Green steel is the manufacturing of steel without the use of fossil fuels. Demand for green steel is increasing and technologies continue to be developed as the industry moves towards decarbonization and a more sustainable future. Low-cost and renewable energy sources must be more readily available, however, should the industry wish to achieve its carbon neutral goals. Also, the government of different countries are and will be investing in the green steel market as the supply and demand for green steel is estimated to increase.
The ongoing European energy crisis has put the domestic steel industry under extreme pressure, driving significant cost inflation and testing the degree to which unprecedented supply discipline can force customers to accept price hikes. Ironically, while currently surging gas and power costs have not impacted all European steelmakers equally, leaving BF-based producers relatively better off, the companies are concerned that decarbonization will meaningfully increase the industry’s leverage to power and gas costs. Absent a meaningful correction in prices, this situation could expose the fundamental uncompetitiveness of the industry compared to other regions, in particular the US.
While certificate-based green products are the focus today, the market is changing rapidly, and today’s green products will be followed by a whole new range of options post-2025 as new technologies ramp-up. In Europe, the consensus plan is to develop green hydrogen capacity that will power new direct reduced iron (DRI) plants; green DRI will then be processed into steel in new EAFs powered by renewable energy. The industry's response to the challenges posed by traditional methods is green steel—metal produced without releasing carbon into the environment. There are various technologies being rolled out in pilots around the world, but the focus is on replacing coking coal in the process. Key technologies such as carbon capture, utilization and storage for cement and steel industries and hydrogen-based steel manufacturing are still in prototype and demonstration stages.
The COVID-19 Analysis:
The COVID-19 pandemic continues into 2022 and is still impacting different industries across the globe. There is no significant impact of COVID-19 on the Europe green steel market. In fact, the pandemic had helped manufacturers and buyers realize the importance of environment friendly products. Thus, the growth of green steel market emerged and companies as well as government are investing in different projects in the market on producing green steel.
Analysis of Key Players:
Europe green steel market is concentrated with SSAB, Salzgitter and ArcelorMittal as best positioned, in Europe. Key players of Europe green steel market are:
As the European market transitions there is a clear first mover advantage with SSAB and Salzgitter ahead of peers and aiming to fully shift to green steel by 2030 and 2033, respectively, vs peers’ targets of 2050. Notably, this will allow both companies to gain share in premium green products above and beyond their existing market share in standard grades whilst ArcelorMittal and Thyssenkrupp are set to lose market share due to their relatively slower transitions. SSAB has taken this one step further identifying the transition to green steel as an opportunity to take share in high value automotive markets by also investing in new downstream finishing capacity. The key players are constantly investing in strategic initiatives, such as new product launches, introducing their products to emerging markets and more, to maintain a competitive edge in this market. For instance, in 2022, ArcelorMittal plans to invest US$100 million Also, in 2021, Iberdrola & H2 Green Steel signed a green hydrogen deal of US$2.59 billion. With a capacity to generate 2 million tons of pig iron would be produced & fueled by green hydrogen at the new facility.