The Price of 'Green' Steel Becomes a Major Challenge for ArcelorMittal's New Plant

ArcelorMittal may face difficulties in establishing higher prices for metal products produced at its new low-carbon plant in Dunkirk, which costs €1.3 billion. This situation highlights the main dilemma of European metallurgy: how to reduce harmful emissions while maintaining competitiveness and profitability.

This was reported by Dilo, citing data from the Financial Times.

ArcelorMittal's flagship electric arc furnace, scheduled to launch in 2029, is expected to reduce greenhouse gas emissions per ton of steel by two-thirds compared to traditional blast furnaces. However, the production costs for such manufacturing are significantly higher.

Bruno Ribo, CEO of ArcelorMittal France, noted that the company does not have a clear understanding of the growth rate of demand for 'green' steel and the willingness of buyers to pay higher prices. According to him, the company had made certain assumptions regarding prices for deliveries to European automakers, who are among the largest consumers of steel, but the level of uncertainty surrounding these estimates remains extremely high.

The production of ecological steel is typically 20-30% more expensive due to large initial capital investments in new capacities and high electricity demand. Additionally, the decarbonization process requires a higher share of secondary raw materials, necessitating the adaptation of technologies to the changing chemical composition of scrap metal.

The decision to build the furnace in Dunkirk was made after prolonged lobbying by the industry to protect the market from cheaper imports. According to the Eurofer association, the share of imported rolled products from outside Europe increased from 20% in 2016 to 26% in 2025, while steel production within the EU decreased from 69.3 million tons to 57.3 million tons.

To curb pressure, the European Union introduced a cross-border carbon adjustment mechanism (CBAM) and reduced duty-free import quotas by 47% compared to 2024 levels starting July 1. Furthermore, Brussels postponed the abolition of free emission allowances within the cap-and-trade system by four years.

To meet the energy needs of the Dunkirk plant, ArcelorMittal signed an agreement with the French group EDF for the supply of electricity at a guaranteed price from the Gravelines nuclear power plant and received state subsidies under the French energy certificate scheme.

The overall improvement in market conditions has supported the stock prices of metallurgical companies: Thyssenkrupp's shares have risen by 55% this year, Salzgitter's by more than 30%, and ArcelorMittal's by nearly 70%. However, the underlying problems in the industry remain unresolved, leading several producers to suspend decarbonization programs:

• Scale of changes: the Dunkirk project is a scaled-down version of the original €1.8 billion plan, which included two electric furnaces and a direct iron reduction facility, while a similar project in Germany was completely canceled;
• Delays in plans by other players: due to the lack of expected subsidies and hydrogen infrastructure, German Salzgitter, Czech Třinecké Železárne, and Swedish SSAB have postponed their projects;
• Competitor issues: German Thyssenkrupp halted negotiations in May to sell a stake in its steel division to Indian Jindal Steel due to changing fundamental market conditions and pension obligations of approximately €2.7 billion;
• Incompleteness of protective measures: according to former head of ArcelorMittal's European office Gert Van Poelvoorde, the CBAM mechanism does not apply to finished components, such as auto parts or electric vehicle components, which risks redirecting steel imports to finished products.

Analysts at BloombergNEF also warn that excessive optimism among producers and increased output could lead to market oversaturation and falling prices if demand remains weak and import volumes stay high.

It is worth noting that ArcelorMittal previously reported an increase in revenue to $32.2 billion. In the first half of 2026, ArcelorMittal increased its revenue by 4.9% to $32.2 billion, and EBITDA by 8.8% to $3.74 billion. The net profit after interest, taxes, and depreciation amounted to $1.26 billion.

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