The study Green Steel Horizons – 2026 Edition, published in September by SMS group and written by Thiago Campos, Tim Ochel and Christian Renk, examines the evolution of steel production processes through 2050, highlighting the continued importance of the blast furnace-basic oxygen furnace (BF-BOF) route. The findings indicate that steel decarbonization will proceed more slowly and follow more diverse pathways than previously expected, with competitiveness and resource availability shaping technology choices.
According to the German plant manufacturer, economic, infrastructure and regulatory barriers are prompting more cautious investment decisions, favoring upgrades to existing facilities and hybrid configurations over complete replacement.
“Our study shows that the path to competitive, low-emission steel production isn't the same for every location. The key lies in tailored, economically viable solutions that take regional conditions and existing facilities into account. In this way, Green Steel Horizons provides a solid foundation for strategic decisions and concrete transformation pathways”, commented Thiago Campos, global head of green steel at SMS group and co-author of the study.
Three scenarios through 2050
Based on information available as of September 2025 and simulations using SMS group's Plant Assessment Tool, the study presents three alternative scenarios without assigning a probability to any of them: incremental, gradual and accelerated transition. The analysis considers operating and capital costs, energy consumption and emissions across the value chain.
“The differences between the scenarios do not lie in the question of whether the change in technology will take place, but in its speed, the prioritization of economic efficiency versus climate protection, and the set-up of regional resource allocation,” the study states.
Under the incremental transition scenario, which places greater emphasis on growth and competitiveness, global steel production would reach approximately 2.65 billion mt in 2050. The BF-BOF route would retain a 61 percent share, compared with 27 percent for fully scrap-based electric arc furnace production and 11 percent for direct reduction-based routes.
Under the gradual scenario, which balances growth, resource constraints and decarbonization, production would total around 2.22 billion mt. The BF-BOF share would fall to 51 percent, while scrap-based EAF production and direct reduction-based routes would account for 34 percent and 14 percent, respectively.
In the accelerated scenario, characterized by tighter emissions constraints, global production would stabilize at approximately 1.92 billion mt. Fully scrap-based production would become the leading route, reaching 854 million mt and a 44 percent share, followed by BF-BOF at 33 percent and direct reduction-based routes at 21 percent, equivalent to 411 million mt.
The three scenarios point to a clear conclusion: “Global steel production is facing fundamental and irreversible structural shifts,” the study states.
Blast furnaces remain as upgrades gain importance
Even under the fastest transition scenario, blast furnaces would therefore not disappear. Compared with earlier studies, SMS group places greater emphasis on decarbonization strategies that upgrade existing facilities rather than replace blast furnaces outright. Options include hydrogen or syngas injection, electrification, and carbon capture, utilization and storage (CCUS).
Configurations combining modernized blast furnaces, electric arc furnaces and direct reduction plants would allow investments to be tailored to individual site conditions. However, the contribution of CCUS technologies will also depend on regulatory clarity and technical progress.
Scrap and pellet availability constrain new production routes
The expansion of lower-emission technologies remains dependent on access to high-quality scrap, competitively priced low-carbon electricity, hydrogen and high-grade iron ore.
For conventional direct reduction, the study highlights the risk of insufficient supplies of suitable pellets as early as the early 2030s. According to SMS group, ores with an iron content above 67 percent, generally required for these applications, represent only around four percent of global iron ore supplies.
This constraint is increasing interest in processes capable of using lower-grade feedstock. Options examined include combining direct reduction with an electric smelting furnace to produce hot metal for subsequent processing in a BOF, offering greater feedstock flexibility while retaining some downstream facilities.
Europe moves toward hybrid routes and imported DRI
At the regional level, Europe and North America will primarily be markets undergoing transformation, while India will be the main driver of demand growth. North America would benefit from a well-developed scrap supply chain and competitive energy prices.
In Europe, fully scrap-based EAF production could account for almost 70 percent of output by 2050 under the accelerated scenario. However, access to high-quality scrap and affordable green electricity would remain the main constraints on expansion.
Meanwhile, the Middle East and North Africa could strengthen their positions as production and export hubs for direct reduced iron (DRI) and hot briquetted iron (HBI), supported by access to natural gas and renewable energy potential. For European producers, this could mean greater reliance on imports of these materials, further separating ironmaking and steelmaking geographically.
Flexibility and innovation for a competitive transition
According to SMS group, the ability to reduce emissions while preserving competitiveness will therefore depend on the combination of technologies, existing assets and local resources. The transition will be driven by players that act decisively while remaining willing to learn and adopt new approaches: “Success is created where climate targets and competitiveness can be brought into a sustainable relationship.”
