Sustainable steel could become reality with ‘green iron’ nudge from Canada at $430 per tonne – SteelWatch

Sustainable steel could become reality with ‘green iron’ nudge from Canada at $430 per tonne – SteelWatch
Published by:Paul Lim<>,Shu Yi Zheng<>
22 May 2025 @ 07:14 UTC

Sustainable steel could flourish if green iron can be produced at $430-520 per tonne, according a report on the Strategic decarbonization of the Canadian iron and steel industry published by SteelWatch – a global group pushing for sustainable practices in steelmaking. The report says Canada’s green hot briquetted iron (HBI) provides a near-zero emissions, environmentally-sound alternative to traditional steelmaking raw materials and its use could act as a catalyst for decarbonizing the global iron and steel industries.
Canada’s natural resources and infrastructure offer significant advantages for green HBI production… while helping trading partners to decarbonize their [own] iron and steel industries, the report says.
Ingredients for success Canada can combine its large reserves of iron ore and its enormous potential for generating renewable energy, such as Hydro-Quebec’s extensive hydropower network and the country’s growing onshore wind power capacity to drive down the cost of green HBI to $430-520 per tonne – right at the low end of the International Energy Agency’s projection that $430-$700 per tonne will be the workable price range for green HBI production in China, India, the United States and the European Union.
The implications of this cost competitiveness could be profound, according to the report..
And with the global push for decarbonization intensifying, steelmakers are increasingly looking toward cleaner production routes, primarily through using direct reduced iron (DRI) powered by renewable energy and green hydrogen to produce green steel, various industry sources have told Fastmarkets in the past.
Green HBI has typically been seen in recent years as a vital feedstock for DRI-based electric arc furnaces (EAFs), offering a pathway for global steelmakers to drastically reduce their carbon footprints compared with the traditional blast furnace-basic oxygen furnace (BF-BOF) route.
Major Brazilian miner Vale has embraced the challenge already with its green briquette megahub projects in the Middle East, the United States and Brazil, where it is looking to build iron ore concentration and briquetting plants with local partners.
The SteelWatch report highlights the substantial economic benefits of Canada embracing green HBI production.
Should all the iron ore exported in 2023 (57 million tonnes) be domestically reduced and sold as green HBI (38 million tonnes), and assuming that the price of green HBI on world markets would be set by the most expensive production (marginal pricing), this transition would increase the annual value added within Canada by more than $18 billion, if all domestically produced iron ore were reduced before exporting, the report says.
“If the global market price were lower, say at $500 per tonne, the increase in value added would exceed $10 billion. While it is more likely that a share of iron ore would be used for reduction and a remaining share used for other low-carbon steelmaking routes, this calculation shows that there is a significant potential to increase [added value] while cutting emissions, through hydrogen direct reduction, the report adds.
Global HBI prices have hovered around $310-338 per tonne CFR recently, with transactions taking place in Asia at $330-338 per tonne CFR for Middle Eastern material based on offers at $335 per tonne CFR, while prices in Italy were closer to $310-330 per tonne CFR.
Fastmarkets’ price assessment forhot-briquetted iron, cfr Asia was $330-338 per tonne on May 9, falling from $340 per tonne on April 25.
HBI plants in Asia are still lossmaking at this stage, because there are abundant alternative metallics, such as ferrous scrap and pig iron from sanctioned countries being sold into the region, a Chinese trader source in Singapore told Fastmarkets.
The transition to green HBI production would potentially provide an annual reduction equivalent to 16% of Canada’s total domestic carbon dioxide emissions, Fastmarkets understands.
More power needed But more power would be needed to facilitate the full-scale shift to hydrogen-based green HBI production, which SteelWatch estimates at around 115 terrawat-hour (tWh) annually – more than half of Quebec’s current total electricity generation.
While the analysis indicates that, even with the cost of new onshore wind power at 7.80 Canadian cents per kilowatt-hour (kWh), Canadian green iron production remains competitive, [but] such a surge in demand could put upward pressure on energy prices, the report says.
The transition will therefore require substantial investments in renewable energy infrastructure, particularly in Québec, Newfoundland and Labrador, to power the electrolyzers for green hydrogen production and for the DRI furnaces.
Financing such large-scale developments also presents a political hurdle, according to SteelWatch, because concerns over potential increases in energy costs for households could drive less-favorable political opposition, as seen in other regions grappling with the energy transition, such as the US.
HBI, scrap flows shift to Southeast Asia As the steel industry aims to transition from traditional carbon-intensive production to low-emissions alternatives, balancing environmental goals with economic feasibility remains a critical challenge.
China, the world’s largest steel producer, has significantly reduced its appetite for imported metallics, such as pig iron, in recent years, mainly due to sluggish demand for steel, which has also put pressure on steelmaking profits, market participants told Fastmarkets.
So while Fastmarkets price assessment for pig iron, import, CFR China averaged $404.52 per tonne in 2023, in 2024 the average price was $373.60 per tonne and fell further in the first quarter of 2025 to $328.33 per tonne.
Chinese buyers are currently relying on domestically produced pig iron to produce lower-cost steel billet, so imported scrap and HBI are not attractive due to their relatively high costs, a Hebei-based steelmaker said.
With China’s steelmakers prioritizing cost efficiency, HBI shipments from the Middle East and scrap shipments have been increasingly targeting South Asia and Southeast Asia, a Beijing-based trader said.
Amid lingering uncertainty over potential steel production cuts in China, it is likely that Chinese steelmakers will continue to be cautious about procuring high-grade iron ore feedstocks such as pellets and HBI, but lower-cost products, such as Canadian green HBI, could gain traction and have a competitive advantage in the wider Asian market, market participants said.
In conclusion, the emergence of green HBI represents a pivotal shift in the global steel industry’s pursuit of decarbonization. As a low-emissions, high-quality feedstock, green HBI offers a credible and increasingly cost-competitive pathway to drastically reduce the carbon footprint of steel production, according to the report.
While challenges remain, particularly around scaling renewable energy infrastructure and managing energy costs, the significant environmental and economic advantages of green HBI, highlighted by the SteelWatch report, mean that countries like Canada, that have abundant clean energy potential, are well positioned to become leaders in this crucial transition.
The global appetite for sustainable steel is growing and the SteelWatch report suggests that green HBI is likely to play a key role in forging a path to a cleaner, more sustainable future for this critical industry.