German steel giant Thyssenkrupp is investing US$1.9 billion in a hydrogen-powered direct-reduction system that can create high-quality steel without needing the rare, high-grade iron ore required by most green steel processes. This could open the floodgates.
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But the technology to make green steel is well understood and already in use. You stop using fossil-fired blast furnaces to release the oxygen from iron ore, and you stop using baked coal, or coke, as a reductant to add the critical small percentage of carbon to your iron. Instead, you use green hydrogen in a direct reduction process, both as your reductant and to power an electric arc furnace to supply the heat. Instead of tons of carbon dioxide, this process emits water.

Eoin Treacy's view

Electric arc furnaces require scrap steel to function so there is a heavy reliance on recycled supply. Using hydrogen to make the process more efficient and to avoid buying costly carbon credits is a bonus if it can be achieved effectively.

This graphic from Bloomberg Intelligence highlights steel production as a significant growth avenue for hydrogen. Nevertheless, the time to develop supply that complies with green regulation and the construction of new smelters suggest this is a post recession growth story.

ThyssenKrupp is back testing the 2020 lows and a sustained move above the trend mean will be required to even begin to signal support building.