The post Covid-19 drive for sustainability has reinforced the dynamic of higher steel prices amid costs and other obstacles to decarbonisation. China’s rumoured steel output cuts should meanwhile materialise in the second half of the year, providing a boost to global steel margins observed participants at last week’s Kallanish Europe Steel Markets 2023 conference in Amsterdam.

Steven Vercammen, senior expert at McKinsey & Company, spoke of a “new normal” of sustained higher prices and greater volatility, which was referenced by participants repeatedly throughout the event.

The challenges to fulfilling decarbonisation ambitions fall under three categories. One is investment, which involves potential bottlenecks at equipment contractors amid a surge in new direct reduced iron capacity additions. The supply chain area will also pose problems, as producers will be fighting amongst each other to secure high-quality DR pellet and limited scrap supply. Technology will meanwhile pose the final challenge, with treatment of lowerquality ore being necessary, as well as upgrading of scrap, Vercammen observed.

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