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DEEP RESEARCH · HYDROGEN STEELMAKING

Hydrogen-Reduction Steelmaking: What It Takes to Reach KRW 2,500/kg Hydrogen

A report on green steel, government price support, HyREX, the value chain, and related companies.

Published: 2025-12-07 · Industry/policy deep dive · Naver Blog source

Investment decisions are your responsibility. This material is research and is not a recommendation to buy or sell.

0. Bottom line first

For hydrogen-reduction steelmaking, KRW 2,500/kg is not symbolic; it is the economic threshold. The source's core point is that hydrogen must be supplied below about USD 2/kg, or roughly KRW 2,600/kg, for the process to approach competitiveness with blast furnaces.

Official fact: The source at the Naver Blog original covers hydrogen-reduction steelmaking, government policy, POSCO/Hyundai Steel, and logistics players.

Interpretation: A KRW 2,500 supply price is unlikely to come from market-price declines alone. Contracts for difference, public infrastructure, overseas production, ammonia shipping, and steelworks pipelines need to move together.

KRW 2,500/kg hydrogen equationCost reduction across production, transport, storage, and use
UpstreamOverseas blue/green hydrogen
MidstreamAmmonia shipping
InfrastructurePorts, pipelines, terminals
SteelHyREX and ESF
The key is reducing price risk enough for steelmakers to commit capex.

1. Why KRW 2,500 matters

CBAM and global automakers' supply-chain decarbonization demands are forcing green-steel transition. But hydrogen-reduction steelmaking requires large capex and opex. The source states gray hydrogen costs about KRW 2,000-3,000/kg, while clean green hydrogen exceeds KRW 10,000/kg.

  • KRW 2,500/kg is the upper bound of the break-even range where green steel can compete after carbon-tax savings.
  • If hydrogen stays above that level, green-steel prices may exceed what the market can accept.
  • Steelmakers are simultaneously dealing with Chinese oversupply, weak global demand, output cuts, and margin pressure.

2. Government roadmap and price support

PhaseTimingStrategyPrice structure
Phase 12025-2030Overseas import bases, port terminal/pipeline design, HyREX demo plantMarket price + R&D subsidy; effective burden in mid-KRW 3,000s
Phase 22030-20351mn-ton commercial furnace, CCfD, CHPS linkageKRW 2,500/kg fixed, with government covering the difference
Phase 32035-2050Dedicated pipeline network, lower overseas production cost, full conversionMarket price below KRW 2,500, self-sustaining competitiveness

The most realistic mechanism is hydrogen-price contracts for difference, derived from carbon CfDs. If delivered hydrogen costs KRW 4,000 and steelmakers pay KRW 2,500, the KRW 1,500 gap would be covered by climate funds or emissions-trading revenue.

3. Value chain: production to steelworks

Production

POSCO International

With E&P assets such as Myanmar gas and Australia's Senex Energy, it can lead blue-hydrogen or renewables-linked green-hydrogen projects.

Transport

Hyundai Glovis, HMM, Pan Ocean

The key route is converting hydrogen to ammonia for liquid transport; ammonia carrier orders and operation can become a growth driver.

Storage

Terminals and pipelines

Gwangyang and Pohang LNG terminals can be expanded or converted for hydrogen/ammonia, while large pipelines lower logistics costs.

The source argues that a vertically integrated structure, like POSCO Group's production, transport, and use chain, is best positioned to reduce double margins and reach KRW 2,500/kg. Blue hydrogen likely supports the early phase, with green hydrogen from Australia and the Middle East rising later.

4. HyREX process: hydrogen instead of carbon

Hydrogen-reduction steelmaking replaces coal/coke in the blast furnace with hydrogen, producing water as the byproduct. POSCO's HyREX is described as a fluidized-bed process that directly uses fine ore.

HyREX process flowFrom fine ore to molten iron
Fine oreNo pelletizing
Fluidized bedContact with hydrogen
Gas recycleRemove steam, reuse H2
ESFMelt DRI
Feedstock cost, hydrogen utilization, and renewable power decide economics.
  1. Raw material preparation: fine ore is used directly, avoiding pelletizing costs and emissions.
  2. Multi-stage fluidized-bed reactor: high-temperature hydrogen removes oxygen from iron ore and produces direct reduced iron.
  3. Hydrogen gas recycling: off-gas is cleaned of dust and steam, then reheated and reused.
  4. Electric smelting furnace: solid DRI is melted and slag is separated.

Official fact: The source gives the reaction as Fe2O3 + 3H2 -> 2Fe + 3H2O. It describes the ESF as equipment for melting solid reduced iron at scale and separating slag.

5. Technical moat and alternatives

TechnologyCore ideaRisk/limit
HyREXFine ore, fluidized bed, ESFSticking prevention, heat balance, and slag control
Shaft furnacePellet-based route led by SSAB, ArcelorMittal and othersPellet cost and supply constraints
EAFCommercial route melting scrap; more than 70% of US steel outputImpurity control for high-grade steel and high-quality scrap availability
CCUS blast furnaceCurrent blast furnace plus carbon capture/storageCapture cost and storage-site availability

The HyREX moat lies in preventing sticking at 700-900C, maintaining heat balance in the endothermic hydrogen-reduction reaction, and controlling large volumes of slag in the ESF.

6. Related companies and final checklist

  • POSCO Holdings: direct owner of HyREX technology.
  • POSCO International: can extend LNG terminal and energy procurement capabilities into hydrogen terminals and power.
  • Hyundai Steel: building a low-carbon electric-furnace route through Hy-Cube.
  • Hyundai Glovis: can own the logistics role for hydrogen/ammonia shipping.
  • Lam Research and TEL analogy: Scope 3 management shows why steel competitiveness will require carbon-footprint tracking from mining through transport.

My conclusion has three checks. First, Korea needs a legally enforceable CfD-style mechanism for KRW 2,500/kg. Second, ports and pipelines must be ready around the 2030 hydrogen-reduction furnace timeline. Third, the HyREX demo plant should prove fluidized-bed stability and ESF efficiency by 2027.

Sources

Naver original