According to Çatan, European producers have not abandoned their carbon neutrality targets. However, high energy prices, limited availability of green hydrogen, and the absence of a strong price premium for low-carbon steel are forcing companies to reassess investment decisions more pragmatically. He points to transformation initiatives such as Salzgitter AG’s SALCOS program, Thyssenkrupp’s Duisburg transition project, and the decarbonization efforts of Saarstahl and Dillinger as reference projects shaping the sector’s transformation. Over the coming years, he expects a transitional phase in which Electric Arc Furnace (EAF), Direct Reduced Iron (DRI), and hybrid production models will coexist.
“The sector is not stopping investment—but it is becoming more selective”
Could you briefly introduce yourself? How did your career in the steel industry evolve, and what are your current responsibilities at Primetals Technologies?
Hello, my name is Deniz Çatan. I am a Metallurgical and Materials Engineer, and I have been working in the steel industry for nearly 20 years, both on the producer side and within technology supply companies.
I began my career in 2006 as a production engineer at Izmir Demir Çelik, where I worked on continuous casting machines and electric arc furnace projects. In 2012, I moved to Germany after receiving an offer from Siemens VAI. Following the company’s restructuring into Primetals Technologies, I held several different roles within the organization.
Since 2024, I have been serving as Head of Technology and Innovation – Electric Steelmaking at Primetals Technologies. In this role, I lead the department responsible for process development, technological design, performance criteria, commissioning, and R&D for electric arc furnaces, ladle furnaces, and vacuum systems.
From the earliest stages of projects, our teams are actively involved in technical design, process optimization, commissioning, and post-sales technical support. We also provide on-site and analytical support to help customers upgrade existing facilities, transition to new steel grades, and resolve complex process challenges.
“Europe has entered a phase of selective investment and cautious progress”
Some integrated plants in Germany are reducing capacity, while others are postponing transformation investments. What does the reality on the ground look like today? Are steelmakers investing or shifting into a wait-and-see mode?
The reality on the ground today is quite clear. The European steel industry has not reached a point where investments have completely stopped. However, it has clearly entered a phase of selective investment and cautious progress.
In other words, companies have not formally abandoned their carbon-neutrality targets. Yet the timelines, investment phases, and technology choices associated with those targets are now being reassessed much more pragmatically. The main drivers behind this shift are high energy costs, the limited availability of green hydrogen at competitive prices, insufficient price premiums for low-carbon steel, and rising geopolitical uncertainty.
In Germany specifically, the first wave of transformation projects reflected very strong ambition. Initiatives such as Salzgitter AG’s SALCOS project and the Power4Steel program led by Saarstahl and Dillinger are clear examples, with these initiatives also supported by substantial public funding and aligned with the long-term decarbonization strategies announced by major European producers. Across Europe, governments and EU institutions have also signaled their willingness to support the sector’s transformation through policy frameworks and financial incentives. So the transformation process has not stopped in Germany. However, after the initial momentum, we now see a much more cautious and capital-disciplined approach in the second and third phases.
This caution is particularly visible at ArcelorMittal. While the company reaffirmed its commitment to European decarbonization plans in November 2024, it also signaled a more phased approach. In June 2025, ArcelorMittal announced that it would not proceed with the planned DRI-EAF transformation projects at its Bremen and Eisenhüttenstadt plants and would therefore not utilize the €1.3 billion in German public funding originally allocated for the projects.
Thyssenkrupp, on the other hand, is following a slightly different path. While continuing its transformation project, the company is designing it not as a single scenario fully dependent on green hydrogen but as a phased and flexible model. Planning the direct reduction plant to operate initially with natural gas reflects a realistic response to current market conditions. “Without public support, hydrogen-based transformation is extremely difficult”
Can green steel projects remain financially viable without government support? To put it directly—can hydrogen-based transformation in Europe happen without public subsidies?
To speak frankly, achieving large-scale hydrogen-based transformation in Europe without public support is extremely difficult today.
The challenge is not limited to investment costs. The main issue is that hydrogen is not yet available in sufficient quantities at competitive prices on an industrial scale. Steel production is already an energy-intensive sector, and hydrogen-based processes require even more energy. Furthermore, if hydrogen is to be genuinely “green,” the electricity used to produce it must come from renewable sources, which significantly increases costs.
Another fundamental challenge is that traditional integrated iron and steel production still accounts for roughly 60% of global output. In other words, the transition is not simply about replacing one technology with another, but about transforming a production structure that remains dominant worldwide. For producers supplying demanding segments such as the automotive industry or manufacturing electrical steels, shifting toward electric arc furnace-based routes is technically possible, but significantly more complex and much harder to make economically viable. In these segments, metallurgical precision, raw material quality, and process stability are critical, which makes the transition far more challenging than it may appear in general discussions about decarbonization.
Feasibility therefore depends largely on which markets a company serves and which product segments it operates in. The steel industry is highly competitive, and margins can often be measured in just a few dollars per tonne. In such an environment, even a $50 increase in production costs per tonne could pose a serious commercial risk for many producers.
However, in high-value sectors such as automotive, steel represents only a small portion of the final product’s total cost. This makes it easier to absorb moderate increases in material costs. Consequently, the grade of steel produced and the target market become critical determinants of project feasibility.
Ultimately, while the industry’s decarbonization goals are clear, achieving them sustainably will require simultaneous progress in both energy infrastructure and market conditions.
“Industrial transformations are usually driven by demand, not technology”
Hydrogen-based steelmaking is widely discussed, yet the energy infrastructure is not ready. Which side is more challenging: the technology or the energy supply?
The main bottleneck in hydrogen-based steel production is not technology—it is energy.
There is already significant progress in technologies related to direct reduction and hydrogen usage, and many solutions are technically feasible. However, the energy infrastructure required to operate these systems at industrial scale is not yet in place. Moreover, the challenge is not only the quantity of energy required but also ensuring that the energy itself is genuinely green.
A simple calculation illustrates the scale of the issue. Producing one tonne of steel requires roughly 55 kilograms of hydrogen. Global blast furnace production currently exceeds 1.3 billion tonnes of hot metal per year. Converting all of this production to hydrogen-based processes would require approximately 72 million tonnes of hydrogen annually.
To generate that amount of hydrogen, roughly 500 GW of electrolyzer capacity and around 4,000 TWh of electricity would be required—electricity that would also need to come from renewable sources to maintain carbon neutrality.
In other words, this is not merely about developing a new steelmaking technology; it is about rebuilding an entire global energy ecosystem.
Another important aspect is that the choice of technology in steelmaking has always been closely linked to the type and cost of energy available. For decades, the blast furnace route dominated global steel production largely because coal was abundant and economically competitive. As the industry now moves toward low-carbon production, the same fundamental logic still applies. The technologies themselves may already exist, but their widespread adoption will ultimately depend on whether renewable electricity and hydrogen become available at sufficient scale and at economically viable prices.
At the same time, it is important to remember that industrial transformations usually begin not with technology but with demand. If strong and sustained demand emerges for low-carbon steel, energy infrastructure and technological investments will likely accelerate rapidly. However, for that to happen, energy must become significantly more affordable and accessible.
“Digitalization is not just a necessity—it is a driver of efficiency and profitability”
Digitalization and automation are often described as no longer optional. Do they truly improve profitability in measurable terms, or are they mainly driven by regulatory pressure?
Before discussing digitalization, it is important to understand the broader industrial context in which European steel producers currently operate. High energy costs, increasing environmental requirements, and growing global competition have intensified the pressure on European producers. While there is frequent discussion about the possibility of relocating production outside Europe, the reality is more nuanced. Steel plants represent long-term industrial investments that are deeply integrated into regional supply chains, infrastructure, and skilled labor networks. For this reason, rather than abandoning Europe, most companies are focusing on improving efficiency and competitiveness within their existing production base.
Digitalization and automation in the steel industry are indeed no longer optional—but not primarily because of regulation. The deeper reason is that the nature of production itself is changing.
Historically, many critical decisions in steelmaking relied heavily on operator experience. Managing the process was almost intuitive, and performance could vary significantly between shifts even within the same plant.
Today, however, technology allows us to measure, analyze, and manage processes in a data-driven way. Digital systems can detect even very small process variations that may go unnoticed by operators, enabling more stable and optimized operations.
Another key benefit is the digitalization of knowledge. The expertise accumulated over years no longer resides solely in individuals but is embedded in systems, ensuring continuity when experienced staff retire or new operators enter the workforce.
Safety is also an important dimension. Steel production involves extremely high temperatures and heavy equipment. Robotic solutions and automation reduce the need for people to work in hazardous environments, significantly improving occupational safety—an important but sometimes overlooked benefit of digital transformation.
“Much of the Turkish steel industry is concentrated in similar product segments”
Having worked in Türkiye’s steel industry and now closely with European producers, what differences do you observe between the two countries in terms of production culture, technology adoption, and competitive strategy?
There are several structural differences.
From a technology perspective, the global steel industry still produces roughly 65–70% of steel via the blast furnace–basic oxygen furnace route. Türkiye presents almost the opposite structure. With only three integrated ore-based plants, most of the country’s production takes place in electric arc furnaces.
In that sense, the Turkish steel industry is actually far ahead of the global average in terms of electrification. Many transformation topics currently being discussed worldwide are already embedded in Türkiye’s production model.
However, a large portion of the Turkish sector is concentrated in similar product groups—particularly lower value-added products such as rebar. This creates intense competition and naturally puts downward pressure on margins.
Germany’s production structure is quite different. The shift toward higher value-added and specialty steel grades occurred much earlier. Even when standard carbon steels are produced, they are typically manufactured in highly efficient plants with well-established downstream markets.
Another critical issue for Türkiye is scrap dependency. The country is one of the world’s largest scrap importers, purchasing more than 18 million tonnes annually. As global steelmaking transitions toward more scrap-based production, demand for scrap is expected to increase significantly. If major exporting countries begin restricting scrap exports to support their own industries, countries heavily dependent on imports could face significant risks.
In addition, global competition for scrap is already intensifying. Large emerging producers such as India are expected to significantly increase their scrap imports as they expand electric arc furnace capacity. In situations where high-quality scrap becomes limited, steelmakers often need to supplement the charge mix with alternative iron units such as hot briquetted iron (HBI) or pig iron to maintain product quality and process stability. This dynamic could further increase raw material competition in the coming years.
Energy is another critical factor. Türkiye relies heavily on imported natural gas, and electric arc furnace production is highly energy-intensive. If scrap demand rises further, energy costs and competitive pressure could also increase.
At the same time, Türkiye has a significant advantage: a young and dynamic workforce. While European countries—particularly Germany—face increasing challenges in attracting young talent to heavy industry, Türkiye still has strong potential in this regard.
The key area for development is strengthening a more systematic and technical production culture. Producing higher value-added steels requires deep expertise in process control and metallurgical optimization.
“The next few years will be a transition period with multiple technologies”
Looking ahead 3–5 years, which technology will emerge as the winner in Europe: EAF, hydrogen-based DRI, or hybrid models? Where is Primetals focusing its investments?
It is difficult to give a single definitive answer.
In an industry as capital-intensive as steel, a 3–5-year timeframe is relatively short. Over the next few years, rather than seeing a single “winning technology,” we are more likely to witness a transition period in which multiple solutions coexist.
Electric arc furnaces will continue to play an important role in electrification. DRI technologies and hydrogen-based production will define the industry’s long-term strategic direction, but energy supply constraints and costs make widespread adoption in the near term unlikely.
For many existing integrated steel plants, this transition will likely take the form of hybrid production structures. Instead of replacing the entire production route at once, companies may gradually combine different technologies—for example integrating direct reduction units alongside existing operations while expanding electric steelmaking capacity over time. Such hybrid approaches allow producers to reduce emissions step by step while maintaining operational stability and supply security during the transition period. At the same time, several pilot initiatives are already exploring hydrogen-based production routes, including collaborative projects such as the voestalpine and Rio Tinto hydrogen-based ironmaking program in Austria.
For the next few years, the focus will largely be on completing projects that have already begun and observing their first results. Ultimately, energy prices, hydrogen availability, and the market’s willingness to pay a premium for low-carbon steel will determine which technologies become dominant.
When we look at Primetals Technologies’ investment focus, we see the same balanced approach. The company continues to strengthen its position in EAF technologies while also investing in DRI and hydrogen-based ironmaking solutions.
Technologies such as EAF Ultimate, DRI solutions, collaborations with Midrex Technologies, and hydrogen-based fine-ore reduction technologies like HYFOR illustrate this strategy. Rather than betting on a single technology, Primetals is positioning EAF and DRI solutions that make today possible alongside hydrogen technologies that will define tomorrow.
Comments
No comment yet.