The European steel market is on the brink of a significant shift, as environmental standards are expected to play a decisive role in the coming years in determining which materials are used in construction projects.
Low-carbon steel, until now seen mainly as a competitive advantage, is on course to become a basic requirement for certain categories of projects.
As SIDMA general manager Michalis Samonas tells Euro2day.gr, carbon footprint is becoming a third key criterion in construction, alongside cost and delivery time. This is creating new demands for suppliers, but also significant business opportunities for those who secure early access to low-emissions products.
New rules set to reshape the market
European legislative initiatives are playing a pivotal role and are expected to affect both prices and the specifications for construction materials.
Of particular importance is the European Commission’s proposal for the Industrial Accelerator Act, presented in March and currently under negotiation. It provides for at least 25% of the steel used in public contracts and publicly supported projects to be low-emissions, for projects starting on 1 January 2029.
“For those working on public projects, low-emissions steel will soon be a tender requirement, not just an advantage,” Mr Samonas says.
Meanwhile, the European Energy Performance of Buildings Directive, which has already been adopted, requires the carbon footprint across the entire life cycle of new buildings larger than 1,000 square metres to be calculated and declared from 2028. The requirement will be extended to all new buildings from 2030.
The new landscape also includes the Carbon Border Adjustment Mechanism, known as CBAM. From 2027, importers will buy certificates covering emissions from products brought in from non-EU countries, and imported “grey” steel is expected to incur an additional cost of €50 to €100 per tonne.
The risk of raw material shortages
However, rising demand for green steel raises an important question about the availability of raw materials.
According to Mr Samonas, one of the biggest challenges concerns high-grade iron ore, which is essential for producing direct reduced iron (DRI), a technology being developed worldwide to cut emissions in steelmaking.
He says 54 related projects have already been announced worldwide, with a combined capacity of about 134 million tonnes a year. If they go ahead, demand for suitable iron ore could rise from about 48 million tonnes today to 190 million tonnes.
At the same time, only 30% of today’s supply of this iron ore is freely available on the market, which could intensify competition for raw materials.
Mr Samonas says green steel therefore risks becoming a scarce and strategically important resource, making access to the supply chain crucial to companies’ competitiveness.
How much more does green steel cost?
The shift to low-emissions steel comes with additional costs that construction companies and investors need to factor in.
“For flat products the premium is currently about €100 to €200 per tonne, depending on the supplier and the technologies it uses. That is around 10–20% more than conventional steel, depending on the product and how low its footprint is. The difference is smaller for long products, which are already made mainly from scrap in electric furnaces. Prices in Greece are at similar levels to those in the rest of Europe,” Mr Samonas explains.
The cost looks different, however, at building level. “Green steel costs more per tonne, but in a typical steel-framed building the additional cost is around 1% of the total project cost.”
He expects the gap to narrow gradually in the coming years. “It will narrow from both sides. Conventional steel will become more expensive because, from 2027, importers will pay CBAM charges while free emissions allowances for European steelmakers are being reduced. Green steel will become cheaper as new production comes on stream. But I do not expect the gap to disappear for the products with the lowest footprint, because raw materials for those products will be scarce.”
According to Mr Samonas, demand will not be driven solely by environmental considerations. Companies’ emissions-reduction targets, new regulatory requirements, easier access to financing for projects with a lower carbon footprint and end-customer requirements are all expected to increase the commercial importance of these products.
He also expects project specifications in the coming years to include specific emissions categories for steel, in much the same way as they now include mechanical specifications.
SIDMA and the Ellinikon example
This shift is already taking shape in the Greek market. One notable example is the integrated resort with a casino being developed by Hard Rock at Ellinikon, which is being built by GEK TERNA.
For the 200-metre, 44-storey tower, the podium and the conference facilities, 11,000 tonnes of green steel supplied by SIDMA and ELASTRON are being used.
“Green steel is not something that will arrive in Greece one day. It is already here, in one of the country’s largest projects, with a Greek supply chain,” Mr Samonas says.
For SIDMA, low-emissions products still account for a small share of its business, but that share is growing. The Ellinikon project showed that demand exists when a project itself calls for it. “We work with ArcelorMittal, as I imagine the other large steel service centres in the country do, with the aim of having certified products available by the time public tenders start requiring them,” he says.
The example highlights the growing importance of steel trading and distribution companies in the new landscape, as the ability to secure certified low-emissions products is expected to become a significant point of differentiation.
The question for the Greek market now is how quickly demand will spread from large, high-profile construction projects to the wider building sector, and which companies will be able to meet the new requirements.