Green steel premiums stagnate in Europe, recovery pushed to second half of the year
Europe's green steel market entered the new year sluggishly with limited buyer interest. Sellers expect CBAM and the phase-out of free carbon allowances to lift demand in 2026, but effects are not expected in the short term.
At a glance
- Green steel premiums in Europe stagnated as buyer interest remained limited at the start of the year.
- Sellers expect demand to recover in 2026 as CBAM and the gradual removal of free carbon allowances take effect, although the impact is not expected in the short term.
- Weekly Northern European green flat steel premiums remained at €100-170 per tonne, while the low-carbon flat steel differential traded at €40-50, according to Fastmarkets data.
- Sellers sought at least €200 for steel below the 0.8-tonne CO2-per-tonne threshold, while buyers described prevailing premiums of €70-150 as more typical.
Europe's green steel market entered the first weeks of the year sluggishly. Buyer interest remained limited while premiums stagnated. Sellers, however, believe demand will recover in 2026 as the EU's carbon policies take effect.
The winter holiday's impact is significant in the weak demand for low-carbon steel products. Sellers received virtually no buying inquiries in recent weeks. Nevertheless, forward-looking expectations are positive. The entry into force of the Carbon Border Adjustment Mechanism (CBAM) and the gradual removal of free carbon allowances could increase interest in green steel. However, these effects are not expected to be felt in the short term.
Price gap between buyers and sellers
For steel produced with below 0.8 tonnes of CO2 per tonne, sellers are requesting a minimum premium of €200 ($ 232). They acknowledge this figure could come down to €150-170 for high volumes. One supplier said dropping below €150 for products under the 800 kg CO2 threshold was not possible.
Buyers paint a very different picture. According to them, prevailing market prices are in the €70-150 range. Three-digit premiums only come into play in public tenders or project-specific agreements; beyond that, these figures are unaffordable.
Green steel's definition remains contentious
An automotive sector end-user explained that they meet their green steel needs through producers investing in direct reduced iron and electric arc furnace (DRI-EAF) technology. Having signed long-term agreements, this company takes the view that steel produced from scrap in the market cannot be considered “truly green.”
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This approach once again exposes the fundamental problem in the sector: there is no universally agreed definition for green steel. This uncertainty prevents the product from becoming widespread in the market.
Prices unchanged
According to Fastmarkets data, the green flat steel premium in Northern Europe remained at €100-170 per tonne on a weekly basis. The low-carbon flat steel differential traded at €40-50.
For steel produced in blast furnaces with 1.4-1.8 tonnes of CO2 emissions per tonne, sellers are offering a €60-70 premium. The level buyers consider workable is €40-50. No new transactions took place during the week.