Global Green Steel Market Report Analysis, Research Studies- JFE Steel Corporation, Nucor Corporation, Nippon Steel Corporation and SSAB

India, 17th Aug 2024 - The global green steel market is poised for an unprecedented expansion, with its size projected to grow at a compound annual growth rate (CAGR) of 142.3% over the forecast period from 2024 to 2031. Starting from a valuation of US$ 456.35 million in 2023, the market is expected to skyrocket to an astonishing US$ 513,409.32 million by 2031, driven by surging demand for low-carbon steel across diverse industries and increasing emphasis on sustainable production methods.

Green Steel: The Future of Sustainable Manufacturing

Green steel, defined as steel produced through environmentally friendly and sustainable processes, represents a significant advancement in reducing the carbon footprint associated with traditional steel manufacturing. The green steel process typically involves lower resource consumption and reduced carbon emissions, making it a key player in the global transition towards a low-carbon economy.

According to the World Steel Association, the global steel industry produced approximately 1,860 million tonnes of steel in 2020, leading to average daily emissions of 1.851 tonnes of CO2. These alarming figures have galvanized industries and governments worldwide to seek more sustainable alternatives, with green steel emerging as a crucial solution.

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Market Drivers: The Push for Low-Carbon Steel Across Industries

The automotive industry, particularly leading automakers such as General Motors, BMW, and others, has been at the forefront of adopting green steel. These companies are increasingly utilizing low-carbon and recycled steel in their manufacturing processes, setting a trend that is likely to have a profound impact on the future demand for green steel. In 2022, Nucor Corporation, a major American steel company, launched Econiq, a line of net-zero steel products tailored for General Motors. Similarly, BMW has begun integrating green steel into its global manufacturing operations, signaling a strong shift towards sustainability.

Government initiatives further bolster the green steel market. In 2021, the Indian government launched the National Hydrogen Mission to advance its energy transition goals. By 2025, automakers like BMW are expected to use green steel sourced from Swedish steel firm H2 Green Group, potentially cutting greenhouse gas emissions by up to 95%. Such initiatives underscore the growing importance of government support in driving the adoption of green steel.

Market Restraints: High Production Costs Remain a Challenge

Despite the promising outlook, the green steel market faces significant challenges, primarily related to the high production costs associated with green steel technologies. Traditional steel production methods, particularly those using blast furnaces, benefit from economies of scale and established infrastructure, making them more cost-effective. In contrast, green steel technologies, such as hydrogen-based direct reduction and electric arc furnaces powered by renewable energy, require substantial capital investments and are still in the early stages of commercial development.

Bloomberg New Energy Finance (BNEF) has noted that green steel production can cost up to 40% more than conventional methods. This cost disparity poses a significant barrier to widespread adoption, particularly in a highly competitive industry with narrow profit margins. However, ongoing advancements in technology and infrastructure are expected to reduce these costs over time, potentially making green steel 5% cheaper than fossil fuel-based alternatives by 2050.

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Market Segmentation by Type: Hydrogen-Based Green Steel Leads the Way

Hydrogen-based green steel is rapidly gaining traction, with the segment valued at US$ 49.70 million in 2023 and expected to reach US$ 53,538.74 million by 2031, growing at a CAGR of 140.2% between 2024 and 2031. The use of hydrogen in steel production has garnered significant attention due to its potential to drastically reduce carbon emissions. Swedish startup H2 Green Steel has already begun hydrogen-based green steel production in Boden, Sweden, leveraging a 700 MW hydrogen production facility. The startup aims to produce 5 million tons of green steel annually by 2030 and is exploring new production sites in North America and Europe.

Emerging economies are also making strides in green steel production. In March 2024, the Indian government announced its plans to develop indigenous hydrogen-based green steel production technology, further highlighting the global shift towards sustainable practices.

Market Segmentation by Production Process: Electric Arc Furnaces (EAF) Dominate

Electric Arc Furnaces (EAF) are set to dominate the global green steel market, with the segment valued at US$ 139.96 million in 2023 and projected to reach US$ 215,740.36 million by 2031, growing at a CAGR of 151.6% from 2024 to 2031. EAFs, which primarily use electricity to melt scrap steel, offer a more environmentally friendly alternative to traditional blast furnaces. By relying on renewable energy sources such as wind, solar, and hydropower, EAFs significantly reduce greenhouse gas emissions, aligning with global sustainability objectives.

EAFs are also integral to the circular economy, as they enable the recycling of scrap steel, thereby reducing waste and the need for virgin raw materials. Continuous technological advancements in EAFs, including process optimization, automation, and digitalization, further enhance energy efficiency and minimize emissions, solidifying their role in the future of green steel production.

Market Segmentation by End-User: Building and Construction Industry Drives Demand

The building and construction industry is expected to be a major driver of demand for green steel, with the segment valued at US$ 68.96 million in 2023 and anticipated to reach US$ 53,966.08 million by 2031, growing at a CAGR of 130.9% from 2024 to 2031. The World Steel Association forecasts a 1.7% increase in global steel demand in 2024, largely driven by continued investment in infrastructure development in emerging markets such as China and India.

Public infrastructure projects, residential real estate development, and the growing adoption of recycled steel in construction are key factors contributing to the increased demand for green steel. However, the relatively high cost of green steel remains a challenge, particularly in residential construction, where affordability is a critical concern.

Market Segmentation by Geography: North America Poised for Significant Growth

North America is set to experience significant growth in the green steel market, with the region valued at US$ 112.58 million in 2023 and expected to reach US$ 111,528.94 million by 2031, growing at a CAGR of 137.9% from 2024 to 2031. Stringent environmental regulations, including carbon pricing mechanisms and renewable energy incentives, are driving the adoption of green steel production processes in the region.

The U.S. steelmaking industry, bolstered by substantial government support and private equity investment, is making significant strides towards reducing its carbon footprint. In March 2024, the U.S. Department of Energy announced a US$ 6 billion fund for companies developing new green steel projects. Additionally, steelmakers Cleveland-Cliffs and SSAB each received US$ 500 million to support their hydrogen-based green steel initiatives.

Competitive Landscape: Leading Companies Expand Market Presence

The global green steel market is highly competitive, with the top five companies holding a combined market share of 77.19% in 2023. Nippon Steel Corporation leads the market with a 25.60% share, followed by SSAB with 18.65%, Nucor Corporation with 13.21%, and JFE Steel Corporation with 11.23%.

These companies are focusing on sustainability, technological advancements, and strategic partnerships to strengthen their market positions. For instance, Nippon Steel Corporation, the largest steel manufacturer in Japan, continues to expand its global presence while investing in research and development to enhance its green steel production capabilities.

As the global green steel market continues to evolve, companies are expected to embrace new technologies and forge strategic alliances to stay competitive. The ongoing transition towards sustainable practices and the growing demand for low-carbon steel are set to reshape the steel industry, positioning green steel as a cornerstone of the global economy.

Other competitors are H2 Green Steel, Tata Steel Ltd., ArcelorMittal, Voestalpine, Boston Metal, Nucor Corporation, SSAB, Nippon Steel Corporation, JFE Steel Corporation and Salzgitter AG.

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