12 September 2022 – Is the green transformation finally coming to German steelmakers? Yes, but only low-CO2 steel and with big reservations. And only if there are billions in subsidies. Otherwise it won’t. Base metals on the LME are friendly at the start of the week. Nickel over $ 23,000 per tonne. And demand for long steel products in Europe is high. Prices are rising.
Base metals start the week on a positive note
Base metals on the London Metal Exchange (LME) have started the week on a positive note. Zinc, copper and aluminium in particular are up at the start of trading. Nickel is currently at more than $ 23,000 per tonne.
Demand for long steel high
European demand for long steel products had already started to increase significantly at the end of August. Likewise, prices for long products continue to rise. Domestic producers are also spreading the word in the market that they would consider an additional increase in surcharges of up to $ 300 per ton.
Low-CO2 steel from Germany only with reservations
thyssenkrupp Steel Europe is planning to build one of the largest hydrogen-based direct reduction plants with an annual capacity of 2.5 million tonnes for the production of low-CO2 steel. For 2 billion Euros. With reservations, of course. Because without taxpayer funding, unfortunately, nothing happens at the German steel giant.
Playing around with scope emissions
The press release quickly reveals that nothing has changed in the plans to reduce CO2 emissions by 30% by 2030. Which seems strange when you look at the German steel manufacturer’s advertising for its own “blue” low-CO2 steel brand with a supposedly already 70% reduced CO2 footprint compared to conventional steel. In the end, it’s all just clever number-crunching of Scope emissions, isn’t it?
Who actually pays for the non-existent EAF for low-CO2 steel?
In any case, one thing is clear. The hydrogen-based direct reduction plant is to feed downstream melting units (EAF) with Direct Reduced Iron (DRI) or Hot Briquetted Iron (HBI) and thus replace thyssenkrupp Steel Europe’s outdated coal-based blast furnaces. Who will pay for the electric arc furnaces (that’s all it is in the end), which apparently don’t exist yet either, is left open by the company.
At least they are now going one step further and want to part with their coal-based blast furnaces. When this will happen remains an open question. Because DRI/HBI can of course also be remelted in conventional blast furnaces.
Green hydrogen? No trace of it
And where the hydrogen needed to operate the plants is supposed to come from also remains completely open. However, since the press release completely refrains from mentioning green hydrogen, it is unlikely that it will be available, or only in homoeopathic quantities. Neither the plants for the production of more than 720.000 MT of green hydrogen nor the 3,800 wind turbines that thyssenkrupp claims it needs have been built so far.
Taxpayers have to foot the bill
So once again there is only a call for taxpayers’ money. And the social democratic part of the current German government had already promised 8 billion Euros for the German steelmaker during the last election campaign.
So the only part of the whole plan to cut CO2 emissions by 30% by 2030 that has probably changed is that the use of Russian natural gas has to be dispensed with and instead hydrogen, which is not really produced in a green way, or perhaps liquefied natural gas (LNG) has to be used. Surprisingly, the green or low-CO2 steel plants can usually burn more than one fuel.
- Nickel jumped +8.5% – Rally on the commodity exchanges
- Stainless steel rebound continues to gain momentum
- Asian spot prices for stainless steel continue to rise
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