Clearer government policies on "green steel" would help boost financing for steel decarbonization, industry experts said Sept. 30.

While many steelmakers share the same goal of reducing emissions, clean steel technologies such as hydrogen steelmaking are just emerging, creating uncertainty for capital providers. Policymakers must roll out long-term green steel incentives such as carbon pricing and subsidies to lessen financing risks, according to experts.

"We do recognize decarbonizing the steel industry is very challenging because the technology is evolving," Nandha Kumar Subramaniam, strategic program director of sustainability at Malaysia-based Maybank, said during a panel discussion at the ASEAN Policymakers Conference on Steel and 2025 ASEAN Iron and Steel Forum Sustainability and Construction in Kuala Lumpur, Malaysia.

"So from our perspective, things need to happen. Number one is clear and consistent policies," Kumar added.

An industry-wide collaboration to scale up technologies and a better financing structure that combines public and private capital would also help reduce financing uncertainty, Kumar said.

The China example

China, the world's top steel producer, has been described by industry experts as the leader in advancing decarbonization in the sector. But even China is facing financing challenges.

The total outstanding green loans in China only represent 12.6% of the nation's total corporate loans outstanding in 2023, according to Calvin Quek, an engagement director at Hong Kong-based think tank Transition Asia. Chinese steelmakers also rarely tap the bond market to finance green projects, Quek added.

China has not established national standards for sector-specific financing to help steelmakers transition from carbon-intensive processes. And although financial incentives from the government exist, they are mostly conditional, Quek said.

Despite its flaws, China has made strides in cutting steelmaking emissions. Data from the China Iron and Steel Association showed that 201 steel companies have completed an "ultra-low emission transformation," leading to significant improvements in air quality in 10 steel-producing cities. The efforts are part of China's broader plan to achieve carbon neutrality by 2060.

"Customers, policymakers, producers [in China] ... everybody is on board there," Rizwan Janjua, head of technology at the World Steel Association, said. "Of course it is China, but at least it provides an example for us on how we can really collaborate and get together."

United ASEAN

Southeast Asian nations should identify the green steel technology they want to pursue to guide investors, Nicola Patrizi, managing director of Danieli Vietnam, a metals equipment supplier said.

"I would like each government in Southeast Asia to create a team of senior specialists that can work together with the technological providers to identify the technologies that are consolidated and can be usable to decarbonize," Patrizi said, adding that this approach was adopted by Japan. "For sure, it will help investors understand which direction they should take."

Platts, part of S&P Global Commodity Insights, assessed SS400 HRC 3 mm at $467/mt FOB China on Sept. 30, steady day over day but down $2/mt from Sept. 26. HRC CFR Southeast Asia was assessed at $508/mt Sept. 30, unchanged day over day but down $1/mt from Sept. 19.