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Business Times
2 days ago
- Business
- Business Times
Asia's coal-reliant steel giants stall green transition: panellists
[SINGAPORE] Asia's steel giants are slowing the global green transition, as top producers China and India drag their feet on decarbonisation amid high costs and weak market demand – stalling progress in one of the world's top-emitting industries. During a panel discussion at Singapore International Ferrous Week last week, Claire Chong, senior analyst at shipbroker Thurlestone Shipping, said the steel industry's carbon-cutting efforts are being 'significantly delayed' largely due to the market's continued preference for cheap, low-grade iron ore over higher-grade alternatives essential for cleaner production. 'In the longer run, we are expected to move towards the higher grades. But right now, we are still not really seeing that demand very significantly… especially from China. I think their emphasis is still on cost-cutting,' she added. China, the world's dominant steel producer accounting for more than half of the global output, has been delaying its decarbonisation commitments. It continues to rely on coal-dependent blast furnaces and prefers cheap, low-grade iron ore over the high-grade variety essential for less carbon-intensive steelmaking. Jitendra Nanda, managing partner at Polish trading firm Balta, noted in a panel discussion that India, the world's second-largest steel producer, imported 5.1 million tonnes of metallurgical coke in 2024, up 35 per cent on the year. While the steel industry is responsible for 10 per cent of human carbon dioxide emissions, about 70 per cent of the global steel today is still produced by coal-fired blast furnaces, said Dr Lars Schernikau, shareholder of Germany-based commodity trading firm HMS Bergbau in his keynote speech last week. A NEWSLETTER FOR YOU Friday, 12.30 pm ESG Insights An exclusive weekly report on the latest environmental, social and governance issues. Sign Up Sign Up Alongside this, tepid demand for premium-priced green steel in Asia and the steep capital outlay required to overhaul production methods are further dimming prospects of cleaning up one of the world's most carbon-intensive industries. Industry players told The Business Times that Chinese buyers, a critical market force, have become increasingly 'price-sensitive' and are willing to buy low-grade ore as long as the price is attractive. This has driven up the supply of low-grade iron ore, and further stalled the already sluggish green transition. Not fired up by other options too Shifting to high-grade iron ore to enable steelmaking with cleaner energy sources, such as hydrogen, is widely seen as a viable path forward. The industry could also reduce emissions by recycling steel scrap through electric arc furnaces and capturing carbon from coal-based blast furnaces. However, China still lacks a carbon market, and the creation of one will not be happening anytime soon, highlighted Rodrigo Echeverri, director of Carbon Research. Since there is no penalty for the emissions, low-grade ore will be around for a long while, he noted. Meanwhile, replacing coal-powered furnaces to facilitate scrap recycling remains a costly hurdle, with the high capital expenditure proving prohibitive for many mills. Zhang Xinzhi, trader at Sino Crown International, pointed out that with Chinese steelmakers projecting declining margins, they are not willing to 'invest in air' and, hence, are delaying high-cost efforts that could result in lower returns. Dilemma is bad news for green goals The same story is being told about India. Amita Khurana, group chief of raw material procurement at Tata Steel, noted that relying on coal is still 'the most economical and optimal' way to produce steel. 'Coking coal is here to stay in the foreseeable future,' she said, highlighting the importance of coal for India's energy security and the need for a balance between decarbonisation and industry survival. Other parts of Asia have also been dealing with challenges related to the green transition. Hiromasa Yamamoto, executive vice-president of Japanese trading firm Hanwa, highlighted that securing a sufficient amount of quality scrap for recycling is another impediment given the current production needs. Meanwhile, the demand for green steel is also insignificant in Asia as major steel buyers are unwilling to swallow the premium prices, which could be more than US$200 per tonne. Yamamoto noted that while demand for green steel is high in Europe, it is still soft in the East, including Japan. He added that no country in Asia, except for Singapore, can afford the premiums for green steel.
Yahoo
4 days ago
- Business
- Yahoo
Iron ore pessimism subsides despite looming Simandou supply
By Amy Lv and Hongmei Li SINGAPORE (Reuters) -The prospects for iron ore prices are improving thanks to a lower than expected global surplus this year, analysts and traders say, though looming new supply from the giant Simandou project in Guinea remains a long-term downside risk for prices. Analysts and traders have cut their oversupply forecasts for this year to between 20 million and 30 million metric tons, from 50 million tons earlier this year, according to more than a dozen interviews at the flagship Singapore International Ferrous Week conference this week. That is because demand has been surprisingly resilient so far this year thanks to robust steel exports as buyers stocked up amid signs of an escalating global trade war, while cyclones disrupted supply in major producer Australia. In the first four months of 2025, China's iron ore imports slid 5.5% year-on-year while its crude steel output ticked up 0.4%, official data showed. Iron ore prices have held well above $90 per ton, below which high-cost miners struggle to break even, despite trade tensions between the world's top two economies that have fueled concerns about the outlook for steel demand. That has led analysts and traders to revise up their bearish-case pricing scenarios to between $80 and $85 per ton versus $75 or lower at the start of the year. Medium term demand for iron ore should remain firm because China's young fleet of blast furnaces will require iron ore for at least another decade, said analysts. "There won't be any big reduction in the number of blast furnaces in China by 2035 from the perspective of the life cycle of the currently running equipment, meaning that iron ore procurement will hover at a relatively high level," Long Hongming, a professor from Anhui University of Technology, told the conference on Tuesday. SIMANDOU Simandou, one of the world's largest high-grade iron ore mines, will start shipping ore in November, and its entry into the global market is expected to aggravate the supply glut starting 2026. However, the increasingly hostile attitude of Guinea's military government, which recently cancelled 129 minerals exploration permits and is locked in a standoff with Emirates Global Aluminium, raised concerns among traders, miners, analysts and steel mills at the conference in Singapore. Participants questioned whether the government's activist stance could affect how smoothly the project will be able to ramp up to its full production of 120 million tons a year. Simandou is a joint venture between Rio Tinto, the world's largest iron ore miner, and Chinese companies including China Baowu, the world's largest steelmaker by output. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
TimesLIVE
6 days ago
- Business
- TimesLIVE
Green steel is distant and expensive, but teal steel is coming
By There is a conundrum in plans to decarbonise the steel sector. It's feasible with current technologies, but also unlikely because of the huge cost of deploying them. The steel chain, from iron ore mining to finished products, accounts for about 8% of global carbon emissions and reducing this impact is often viewed as vital to combating climate change. If there was consensus at the gathering of the iron ore and steel industry this week at Singapore International Ferrous Week, it's that cutting emissions from steelmaking is possible. But what was also obvious is that while miners and steelmakers are in the early stages of transitioning, the process will be slow and hugely expensive. The problem with this is nobody is sure who is going to pay. Australia's iron ore miners, who supply about two-thirds of China's imports, are capable of building a green iron supply chain, which would use solar and wind energy to create green hydrogen, which would then be used to beneficiate iron ore into direct reduced iron (DRI) and hot-briquetted iron (HBI). Using HBI cuts out about 80% of the emissions created in the steelmaking process by eliminating the practice of using coal to turn iron ore into pig, or crude, iron by removing oxygen and other impurities. But the iron ore miners won't invest the billions of dollars needed to build green iron plants unless China, which makes about half of the world's steel, and other major producers such as South Korea, Japan and India, commit to using the cleaner product. At the heart of the problem is cost. Using hydrogen to make green iron and an electric arc furnace to turn that into steel can reduce the emissions from about 1.8 tonnes of carbon to 200kg per tonne of steel. While estimates of the cost vary, the consensus is even a green steel supply chain built at scale would result in a near doubling of the cost of making a tonne of steel compared with the coal-intensive method of using a blast furnace and a basic oxygen furnace (BF-BOF). It's likely that steel mills will be unwilling to see their costs rise so dramatically, as it would be challenging to pass the higher prices fully on to consumers. The iron ore and steel market dynamics illustrate the scale of the challenge. Chinese steel mills are struggling for profitability and one way they try to cut costs is to increase the share of low-grade, and cheaper, iron ore in their production. This lowers the cost of the steel produced, but also raises the carbon intensity to about 2.2 tonnes per tonne of steel produced, up from about 1.8 tonnes if high-grade iron ore is used in the BF-BOF process. In other words, green steel ambition is likely to be sacrificed on the altar of economics. It is possible to lower the carbon intensity of steel by going somewhat greener. Using natural gas to reduce the iron ore instead of coal could trim the amount of carbon to about 1.1 tonnes per tonne of steel and if the gas can be secured at a cheap enough price this becomes a viable and economic option. Producing hydrogen using natural gas is often referred to as blue hydrogen and using this fuel to beneficiate the iron ore means steel could be considered teal, one of the shades between blue and green. Brazil's Vale is building what it calls mega-hubs in three Middle East countries with the aim of using cheap natural gas to produce DRI and HBI for export to steel mills in China. This product would also help steel producers comply with the EU's planned carbon border adjustment mechanism, which is slated to be introduced next year, though it may be delayed. There are several points to note, first that while the 80-million tonnes of iron ore a year that Vale is believed to be planning on processing in the Middle East sounds substantial, it's not even one month's worth of imports by China, which buys about three-quarters of global seaborne iron ore. Natural gas isn't a viable option for Australia's iron ore sector, as it is too expensive and the available supply in Western Australia, home to most iron ore mines, is already spoken for by the domestic sector and the liquefied natural gas producers. This means teal steel will make a bit of a difference but not the step-change needed to decarbonise steel. That will require government legislation and regulation to incentivise or punish steelmakers through measures such as subsidies or carbon taxes to the point where green steel becomes viable. Teal steel is an example of the cliché to not let perfect be the enemy of good.
New Straits Times
7 days ago
- Business
- New Straits Times
Steel industry doubts China will enforce output cut plans
SINGAPORE: China says it wants to cut crude steel output this year but traders and steelmakers are betting Beijing won't follow through as industry profitability improves and trade tensions weigh on the economy. The world's largest steel producer in March unveiled plans to cut output and restructure its giant steel sector to address overcapacity which has long plagued the industry and is spilling over into export markets and angering trade partners. But at the flagship Singapore International Ferrous Week conference, conversations with fifteen traders, steelmakers, analysts and hedge funds all had the same message: the cuts are unlikely to be enforced. Profitability is improving across the industry driven by unexpectedly strong demand, undercutting some of the logic of reining in output in the first place, they said. In the year to April industry profits hit 16.9 billion yuan (US$2.35 billion), versus a loss of 22.2 billion yuan in the same period last year. Participants bet the turnaround will make Beijing less likely to crack down, especially as the trade war with the United States makes policymakers sensitive about maintaining economic growth. There's even less incentive for the local governments where many of these steel mills are an important contributor to the growth targets officials are assessed against. "When mills could make some money after grappling with survival in the past two years, no one has the motivation to slash output," said a manager from a medium-scale Chinese steelmaker on condition of anonymity. Chinese crude steel output rose 0.4 per cent between January and April this year. In China, the absence of public orders from Beijing since the March announcement was a sign for many at the conference that the output cuts will be limited or only halfheartedly enforced. Chinese consultancy Fubao said in late April that while provincial targets for output cuts had been finalised, there were doubts about whether steel mills would actually follow through. "Some provincial governments will rely on steel to help with GDP," said Mengtian Jiang, chief ferrous metals analyst of Harizon Insights. "Steel mills are making money especially with domestic coking price having almost halved, so I do not see that China's steel output will be down much." Steel exports may fall 3 per cent-4 per cent this year, but that will not impact China's steel output much, she added. ($1 = 7.1976 Chinese yuan renminbi)
Mint
7 days ago
- Business
- Mint
China Steel Woes Deepen as Rebar Prices Fall to Eight-Year Low
Prices of a key Chinese steel product used in construction were at their lowest since 2017 as the world's biggest market for the metal grappled with a massive glut. Reinforcement bar — or rebar for short — is a benchmark for China's traditional steel markets because it's used to strengthen concrete in buildings and infrastructure. The eight-year low in Shanghai highlights the demand struggle facing steelmakers due to a prolonged downturn in the country's property sector. The China Iron and Steel Association reiterated at a conference this week that controlling capacity expansion is a focus and had earlier said that Beijing is 'actively deploying and promoting' a crude steel production mandate. Rebar prices have dropped 11% so far this year, while iron ore is down about 6%. The bigger drop in prices of domestic steel compared with raw materials suggested that 'consolidation and rationalization in China are needed to boost prices', analysts at Bloomberg Intelligence wrote in a note. For iron ore, prices might ease toward $90 a ton by October on seasonal softness and rising supply, 'though cost support and policy easing could limit downside.' The ongoing annual Singapore International Ferrous Week is marked by a guarded outlook. Eric Bretting, head of ferrous trading at Macquarie Group, said that despite expectations of China rolling out more stimulus to counteract tariff pressures, it's unlikely such measures will come. Rebar contracts in Shanghai traded at around 2,955 yuan as of 11:43 a.m. local time. Iron ore futures in Singapore dropped for a fifth day to $96 a ton. There's also some 'nervousness' around iron ore supply from non-traditional regions next year, according to Joel Parsons, portfolio manager at Drakewood Capital Management. 'Even if you exclude geopolitical risk, there is risk technically,' in terms of supply coming online later or slower than previously anticipated, he said. This article was generated from an automated news agency feed without modifications to text.
