SteelOrbis talked to Philip K. Bell, president of Steel Manufacturers Association, about 2024 review and 2025 expectations.
The global steel industry in 2024 continued grappling with big challenges, including excess steelmaking capacity, market distorting behaviors and decarbonization. Perhaps the biggest challenge was how to defend national steel markets in the face of an estimated 100 million tons of exported Chinese steel in 2024. That total exceeds the record for Chinese exports set in 2015, and it exceeds the annual steel production of any other country, save India. Many steel-producing nations enacted or strengthened tariffs on heavily subsidized steel imported from China and other countries. Some, such as the United States, are seeking to close loopholes in trade rules and improve trade law enforcement. It is unclear if these measures will be enough to avoid serious disruption in steel markets.
Most analysts expect steel demand in the US to improve slightly in 2025, supported by the infrastructure bill, the CHIPS Act and the Inflation Reduction Act. Over the last five years, American steelmakers have invested $20 billion in the decarbonization, electrification and innovation of their steel industry. Domestic producers are poised to meet any increase in demand and pursue new markets. There is also optimism that the incoming Trump administration will adopt policies that create a favorable tax environment, promote fair trade and provide regulatory certainty for steelmakers.
When it comes to climate policy, the US has been careful not to burden its domestic steel industry with an experimental regulatory framework that penalizes rather than supports domestic steelmaking. Therefore, the chances are extremely remote that the United States would adopt a carbon border adjustment mechanism, or CBAM, like the European Union’s. Instead, there is growing support for a foreign pollution fee on imported steel products based on their emission levels. Under such a program, American steelmakers could benefit from the fact that they are already global leaders in emissions efficiency.
Other concerns about trade shaped 2024 and will probably remain influential in 2025. For starters, a sensible steel market depends on the free and fair trade of raw materials. Attempts to classify ferrous scrap as hazardous waste threaten to make it harder to buy and sell this valuable raw material on the worldwide market. For recycling-intensive steel industries in the United States, Turkey, Italy and other countries, getting the right grades of ferrous scrap in the right amounts at the right time is fundamental to success. Constraints on the trade in scrap could cause long-lasting harm. What could that harm look like? It could slow the global transition to electric arc furnace-based production and other low-emissions processes, which is a key part of global efforts to reduce carbon emissions in steel manufacturing.
Decarbonizing the steel industry will require more than conversion from BF-BOFs to EAFs, but there is no doubt that steelmakers and policymakers everywhere see EAF adoption as a crucial step in the green transition. That’s because EAF steel production has less than half the carbon intensity of integrated production, and the EAF process has proven itself over many decades of successful use. According to the GMK Center, steelmakers in Europe have secured €14.5 billion in so-called green subsidies since January 2023 for EAF production (90 percent for DRI-EAF and 10 percent for scrap EAF). Europe is not alone in its efforts to adopt or expand EAF production, as companies in North America and other parts of the world idle coal-fired furnaces and build, expand or improve EAFs. In other words, now is not the time to introduce counterproductive restrictions on the scrap trade. It is time, however, to agree on a single standard for low-emissions steel.
The debate on a standard for low-emissions steel will continue dominating conversation at steel industry meetings around the world in 2025. The SMA believes that a single standard for low-emissions steel, regardless of production process, makes more sense. The Steel Climate Standard created by the Global Steel Climate Council, for instance, uses a science-based, third party–verified approach to certifying the carbon intensity of a given steel product. That makes it easy for customers to compare the emissions of the steel they buy.
A single standard for low-emissions steel also makes it easy to see the harm that excess steel production will cause not only to steel markets but also to global decarbonization efforts in 2025. With an estimated 600 million tons of excess steelmaking capacity worldwide, the global steel industry has an opportunity to drastically reduce emissions by idling mills that have the highest carbon intensity. This would accelerate the end of high emissions-steel production, making the planet habitable for our children and grandchildren, all while making steel markets more rational, steel companies more profitable and national economies stronger.