Green steel: not a fad, but a necessity

WITH a growing propensity to producing what is called green steel, America’s steel industry seems to be today less reluctant to act in producing steel that is low in carbon emissions, which is the chief determinant in the evaluation of environmentally-friendly steel production process.

Most steel executives of steel-producing companies have been saying, whenever there is a debate, that the US steel industry is one of the world’s cleanest steelproducers, particularly when the debate turns to supplies from China, India and other ‘environmental sinners’.

Industry pundits noticed a shift in the steel industry with a growing lean towards low carbon steel production. Various studies point to this shift among steel producers, the latest being one issued by the Ohio River Valley Institute, a think tank, which concentrated on US Steel’s Mon Valley Works, using it as a potential model to show the shift from traditional carbonintensive steelmaking to green steel that relies on green hydrogen which is produced using renewable energy, and a renewablypowered electric arc furnace.

According to the ORVI report, nonfossil fuel steel production could radically transform a declining regional steel industry stuck with the old 20th century technology, uplift the quality of air and also quality of life, besides considerably reducing the region’s carbon footprint.

These factors, coupled with the region’s skilled workforce and a century old existing steel-producing infrastructure, abundant water resources, availability of iron ore and untapped potential for wind energy in the neighbouring Appalachian Mountains, offer a strong basis for a new generation of steelmaking in the United States.

The world’s iron and steelmaking sector is said to contribute some 7% of greenhouse gas emissions and a quarter of industrial carbon emissions. The International Energy Agency has set the bar for reducing emissions from the steel industry by 50% by the year 2050 in order to meet global climate goals. With the worsening of the climate crisis, there is also public, political and market pressure on steel producers to intensify their decarbonization efforts.

Indeed, these pressures are having a strong impact on steel producers who are now looking at ways and means to considerably reduce emissions. In its report entitled ‘Roadmap to 2050’, US Steel,

*US correspondent, Steel Times International for instance, has been emphasizing its commitment to reduce carbon emissions even though it has yet to indicate its commitment to new investments needed for the purpose.

But Jessica Graziano, the company’s chief financial officer, stated recently at an event in Pittsburgh that ‘being green means that you make green’ and that ‘we’ll be part of the solution’.

The conventional process of steel production resorts to the use of carbonrich coke for melting iron ore in large blast furnaces before making it, finally, into steel. US Steel uses this process at its Edgar Thomson Works in Braddock. On the other hand, a non-fossil fuel direct reduced iron (DRI) process, fueled by hydrogen made from renewable solar and wind energy, using electric arc furnaces powered by renewable electricity, is the ‘most viable option near-term for achieving zero-emission primary steel production’, according to the report.

A New York based metals analyst dismissed talk in some quarters that ‘green steel is a fad’. “Green steel is not a fad … it is becoming a necessity and will help us save resources such as iron ore, and use

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environmentally less harmful processes, thus contributing to decarbonization,” he said.

US Steel recently announced that it has pioneered a version of electrical steel that is wider and thinner than other steel varieties; but it is also, according to the company, lighter, stronger and better for electrical environments, besides being corrosion resistant. This steel is said to be ideal for electric motors and its announcement is also timely because the nation is trying to increase automotive production at home.

At the recent Ceres Global conference in New York City, US Steel senior vice president and chief strategy and sustainability officer Richard L. Fruehauf unveiled the company’s InduX electrical steel product during the Corporate Climate Leadership panel – Ceres Global brings together institutional investors, corporate executives, policymakers, and other capital market influencers to accelerate action on the world’s most urgent sustainability threats – and emphasizes that ‘we are doing our part by collaborating to find new business approaches and to develop new technologies’. ‘Moreover, steel’s adaptability and near-infinite recyclability make it the ideal material to build safe, modern, and sustainable societies,’ Fruehauf said.

InduX electrical steel will be manufactured at Big River Steel in Osceola, Arkansas. The line construction is currently in progress and will be capable of producing up to 200kt of InduX electrical steel per year once it becomes fully operational.

Meanwhile, the prices of iron could fall by as much as 28% by the end of 2023 triggered by a decline in Chinese steel demand and production, according to Morgan Stanley analysts who say that iron ore prices will decline amid the production slowdown in China, the world’s biggest steel-producing nation which is now turning to using steel scrap. Despite the country’s post-Covid re-opening, China’s steel production or demand is not likely to reach its pre-pandemic levels – at least not in the short term.

Global steel demand is forecast to rebound by 2.3% from the previous projection of 1% to reach 1.82 billion tonnes in 2023, and will see a further growth of 1.7% to 1.85 billion tonnes in 2024, according to the latest short-range outlook for 2023 and 2024 released by the World Steel Association on 18 April.

The World Steel Association (worldsteel) said that steel production in the 63 countries reporting to it was up by 1.7 % in March 2023, compared to March 2022.

The 165.1Mt produced this March represent a dramatic 15.9 % increase from the prior month, when just 142.4Mt of steel was made globally.

While extra work days likely contributed to increased output in the United States, healthy demand also could have played a role in US steel output growing by 11.7 % in March compared with the prior month.

Whereas US producers made 6Mt of steel this February, they were able to churn out 6.7Mt in March.

The strong post-pandemic rebound of the US economy has run its course with the Federal Reserve’s steep interest rate hikes to contain inflation. Growth in 2023-2024 is expected to be subdued by recessionary pressure. Furthermore, as of writing this update, experts are still monitoring the full impact of the recent Silicon Valley Bank bankruptcy on the economy and the steel industry.

Rising interest rates as well as land and material costs are putting negative pressure on construction, particularly for the residential sector, while recovery in the nonresidential sector is expected to continue.

Recent legislation such as the 2021 infrastructure law and the Inflation Reduction Act (IRA) will provide a much-needed shot in the arm for US infrastructure. Steel demand in the energy sector is also expected to benefit from expanding energy production.

US manufacturing sector activity has slowed from the strong post-lockdown rebound. Rising car prices, high gasoline prices, and interest rates have put downward pressure on US auto sales, with sales of light vehicles declining by a further 8% in 2022. They are expected to recover by 8% in 2023 and an additional 7% in 2024 with a potential decline in interest rates. However, sales will only reach 94% of 2019 levels.

After a fall of 2.6% in 2022, US steel demand is expected to grow by 1.3% in 2023 and then by 2.5% in 2024. �