24 May 2023 – A green steel clash between steel producers seems increasingly likely. This is because BF/BOF and EAF producers have very different motives, which is also becoming increasingly evident in their green steel initiatives and certification. And the US Department of Commerce has proposed extensive changes for Trade Remedies.
US Commerce for extensive Trade Remedies changes
The US Department of Commerce has launched a draft of Regulations Improving and Strengthening the Enforcement of Trade Remedies Through the Administration of the Antidumping and Countervailing Duty Laws in May 2023.
Focus on: Subsidies
This is primarily concerned with strengthening trade laws relating to subsidies made by states in third countries – such as the Chinese government’s Belt and Road Initiative. But also enforcement of laws relating to human rights, labour rights, environmental protections, and intellectual property.
Is China the main target?
The proposed amendments suggest that China in particular should be countered here, as it repeatedly undermines legal measures, especially in the eyes of the United States. But it could also affect economies that rely heavily on Chinese inputs in their production.
BF/BOF vs. EAF: Is the Green Steel Clash Coming?
Green Steel and Green Stainless Steel have a huge problem. A real standard or legal framework defining “green” steel does not yet exist. An official seal, such as the EU organic seal for food, does not exist. Thus, manufacturers are trying to pin a green steel medal on their own chest.
BF/BOF vs. EAF: Two competing approaches
With Responsible Steel and the Global Steel Climate Council (GSCC), there are attempts in the industry to give themselves a green coat of paint, but in terms of the basic problem, two systems clash that could hardly be more different. While Responsible Steel focuses on the blast furnace route, the manufacturers in the GSCC round have identified the electric arc furnace and scrap as the most important components for CO2 reduction.
EAF not worthy of support?
The battle that is brewing here between the producers is evident simply from the fact that, for example, the largest EU steel producer, Germany, produces its more than 40 million tons of steel per year primarily with the BF/BOF route, and this is seen by many critics as the main problem in CO2 reduction. However, the scientific advisors of the German Federal Ministry of Economics and Climate Protection have classified the EAF as an exhausted technology and not worthy of support and recommend rather to support the BF/BOF route.
This European focus on the BF/BOF route and the obsessive attempt to maintain it is also evident in the different approach that is causing problems for EAF manufacturers, e.g. with the European Carbon Border Tax CBAM or with Responsible Steel certification: The EAF route, which in principle already produces significantly less CO2, is to be put on an equal footing with the BF/BOF route. Which simply cannot work.
Particularly in the case of stainless steel, opinions differ
Particularly in the case of stainless steel, opinions are divided, or else no one wants to put on their hat and make a decision here. Because actually stainless steel, which is produced almost exclusively with the EAF route, becomes CO2 free in the EU from a use of 70% stainless steel scrap. Of course, the envy of the BF/BOF manufacturers is not long in coming. Or has anyone found anything in the CBAM drafts, which are supposed to be based on the specifications of the EU for Best Available Technology (BAT) or the regulation for CO2 certificate trading?
Nobody wants to burn their fingers?
Decisions on the handling of stainless steel, but also steel from EAF production, are often referred to the political decision-makers, as they do not want to burn their fingers here. In their ignorance and lack of understanding, and steered by the steel lobbies, they are supposed to decide in favor of the BF/BOF manufacturers.
The fight between EAF and BF/BOF has just begun
And this battle between BF/BOF and EAF manufacturers will continue to increase. Because the future of steel and stainless steel production is at stake and which companies will receive which billions in subsidies. With two contrasting approaches to the definition of “green” steel, the likelihood is increasing that the customer and the taxpayer will end up footing the bill again. And it also shows that neither the steel manufacturers nor the legislators have thought the issue through to the end and are once again just relying on blind actionism.
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Disclaimer: Many things here represent our opinion. Others are information from the Internet. We can therefore never claim to be correct or complete. And never base a business decision solely on the news you receive from us.
