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    April 21, 2024

    GSCC: Steel decarbonizing for a more sustainable future

    Steel is a foundation of the global economy. It is an essential raw material for nearly every industry, from automotive and construction to transportation, machinery, and energy. About 2 billion metric tons (mt) of steel are produced each year. Yet because much of the global steel production depends on high-carbon iron and coal, the commodity produces about 7% of global carbon emissions.

    This Earth Day, steel manufacturers around the world are working to decarbonize and reduce their environmental impact. The industry is coming together to innovate and invest in clean-steel technologies through partnerships. These will accurately and truthfully track emissions, and provide a pathway for both steel producers and consumers toward a low-carbon future.

    GSCC

    The partnership that I lead, the Global Steel Climate Council (GSCC), has brought together more than 40 steel producers and supply-chain stakeholders from around the world to advance a global climate strategy by sharing best practices, establishing standards, and advocating for lower carbon emissions by all members of the steel industry.

    Steel Climate Standard

    We have developed The Steel Climate Standard to measure and report the carbon emissions for all products, regardless of the manufacturing process used. The standard is aligned with a science-based glide path to achieve a 1.5-degree Celsius (C) scenario by 2050, in line with the Paris Climate Agreement. This is an effort to limit warming to 1.5 degrees C above pre-industrial levels. It requires producers to independently verify and report their carbon emissions data and science-based targets.

    In the months ahead, we will be providing steel manufacturers with tools to independently certify that they are producing steel products in line with the targets in The Steel Climate Standard. This process will also let steel customers know the carbon emissions in the products they are buying and using in their own manufacturing processes. As consumer preferences shift towards more sustainably produced goods, manufacturers have to provide more information on the carbon intensity of the products they make.

    Qualities of steel

    Steel is a unique material because it can be repeatedly recycled, and, indeed, has the highest recycling rate of all commodities. Steel’s strength, durability, and adaptability are essential characteristics of its circularity, enabling products at the end of their life to be effectively recycled, remanufactured, or repurposed. In fact, about 75% of all the steel ever produced is still in use today. 

    The process of making steel requires a lot of energy, which usually comes from fossil fuels – but that is changing. Steel operations are increasingly incorporating renewable energy, which is also critical to decarbonization. By utilizing wind, solar, hydropower, and other renewable sources, steel manufacturing emissions can be reduced, contributing to global efforts to address climate change. 

    Many companies are researching and piloting renewable energy innovations, such as using hydrogen gas to reduce iron ore, which results in water vapor rather than carbon dioxide emissions. Electric-arc furnaces (EAFs) use electricity to melt recycled steel, emitting significantly fewer greenhouse gases than traditional iron-ore blast furnaces. Also in the early stages of development are carbon capture and storage technologies, in which emissions from steel plants are captured and stored underground to prevent their release into the atmosphere. 

    The transition of the global steel industry to a low-carbon future requires a sustained commitment by producers and consumers over the next several decades. But we have the technology to make steelmaking more sustainable, and innovations on the horizon will accelerate decarbonization even more.

    What is needed is a collective effort. Industry needs to invest in low-carbon solutions. Governments need to provide incentives and support. Steel users need to make purchasing decisions that take into account carbon emissions.

    Earth Day is a moment when everyone can be better informed of the impact we have on the environment. Steel is a vital commodity in all our lives. It is used in the vehicles we drive, the buildings we work and live in, and the infrastructure and equipment we depend on for our modern lives. This year, on Earth Day and every day, people across our industry are working to transition to low-carbon steel, making the difficult decisions and commitments to move us toward a more sustainable future.

    Editor’s note: This is an opinion column. The views in this article are those of an expert on issues of relevance to the current steel market. They do not necessarily reflect those of SMU. We welcome you to share your thoughts as well at info@steelmarketupdate.com.

    Latest in Market Data

    Steel market chatter this week

    Steel market chatter this week Earlier this week, SMU polled steel buyers on an array of topics, ranging from market prices, demand, and inventories to tariffs, imports, and evolving market events. We are sharing a selection of the comments we received below, in each buyer’s own words. Before diving in, we reviewed all of the responses collected and compiled these key takeaways: • Most buyers continue to expect higher prices in the near future and report that demand is stable to improving. • Inventories are moving faster than they were this time last year for most respondents, attributed to limited availability and leaner supply chains. • Imports are attractive for many buyers on both price and availability, though quotas, long lead times, and quality concerns continue to limit their appeal. • Buyers were split on whether tariff policies are helping their businesses, while a slight majority reported some evidence of manufacturing reshoring, though many said it is still too early to tell. Want to share your thoughts? Contact david@steelmarketupdate.com to be included in our market questionnaires. How do you expect prices to trend over the next three months? “I expect prices to rise at a fairly rapid pace for at least the next two to three months because inventories will continue to decrease.” “Upward, capacity remains tight.” “Climbing for several months.” “Trending toward $1,300/st HRC, only because one small player is driving prices up with no one else selling spot.” “Higher, the Q1 bump is not showing in the futures market.” “We expect things to keep going up from here. Next year could get ugly, but we're not there yet.” “Still trending up. There are some soft spots getting softer, but still steady demand and a shortage of supply.” “Continue to rise slowly.” “Slow increases like they have been doing.” “Upward due to continued demand and mill maintenance outages.” “Will remain high but steady due to demand and tariff implications.” “Plate prices most likely will be flat to up over the next three months.” Is demand improving, declining or stable? “Demand is stable (if anything, overstated), with inventories so lean, late mill deliveries, and contract prices increasing next year.” “Demand is fairly consistent with the rest of the year.” “Stable, but very strong for our products.” “Stable as many projects are trying to get ahead of potential additional price increases.” “Stable due to the ‘slow season’ in our market.” “Plate demand is stable to improving.” “Demand is good to improving. We'll take it!” “Improving, but still not to 100% capacity.” Is inventory moving faster or slower than this time last year? “Faster... once it arrives (late), it goes right back out.” “Faster due to lack of availability and bullwhip buying.” “Inventory is moving faster this year than last because demand is stronger than last year and many of our competitors don't have as much steel to offer.” “Inventory is moving faster with supply chains so lean.” “Inventory is moving at a good clip. Just based on costs/spends, we're stocking less sheet, coil and plate though.” “Plate inventory is moving at a much faster pace year over year due to several factors.” “Faster due to a shortage of supply plus added demand.” “About the same.” Are President Trump's tariff policies helping your business? Buyers were split this week, with 44% believing the tariffs are helping their business and 44% saying they are not. The remaining 11% were unsure how the policies will impact them. Comments included: “Yes for now. Prices are very high, which causes people to buy before prices get higher.” “Yes, I credit Trump's policies and data centers for improving demand.” “Yes, inventory values continue to go up.” “They are helping on the sell side and hurting on the buy side.” “No, they are creating shortages and increasing the cost of steel.” Are you seeing evidence of manufacturing reshoring to the US because of Trump's tariffs? The slight majority of respondents (39%) reported they have seen some evidence of reshoring, a higher rate compared to recent surveys. A third said it is too early to say, and 28% answered they are not seeing any signs of reshoring. Comments included: “Yes. Perhaps reshoring has added to the increased demand in 2026.” “Yes, with machining and turning.” “Yes, capacity versus demand in North America is creating pressure to reshore products.” “Too early to say. There have been a lot of announcements, but steel availability has limited immediate moves.” Are imports more attractive than domestic material? “Imports are more attractive on a pricing front and an availability standpoint, but lead times are extended.” “Imports are attractive in both price and because they offer additional availability. Whether or not they show up and or as offered is another issue.” “Imports are certainly attractive. They're coming in in earnest, so this run will peter out early next year.” “Attractive due to price and availability.” “Attractive, domestic tons are unavailable.” “Yes on light gauge painted.” “Without quotas, yes, the price is more attractive. But if you get caught with the quota, pricing is very high.” “Not to us, but we are hearing more about affordable imports.” “Plate imports are only slightly more attractive than domestically produced plate.” “Not yet, shipping lag is still too large.” “No due to tariffs.” What's something that's going on in the market that nobody is talking about? “What is the latest on SDI/BlueScope? I had heard it was back on the ‘front burner’ but all is quiet now. Maybe that means a deal is getting close?” “Will the US bring a trade case against South Korea over imports spiking?” “Busheling scrap prices are flat, while hot roll continues to rise. The scrap gap is increasing.” “How will the next administration handle tariffs that have so limited our steel supply?” “Mill discipline in production capacity.” “Coke pricing levels due to demand and supply.” “Shipbuilding.”