Dive Brief:
- U.S. steelmaker Steel Dynamics will supply Mercedes-Benz with at least 50,000 metric tons of reduced-carbon dioxide steel a year as part of a new deal.
- Mercedes-Benz will use the steel in all models built at its Tuscaloosa, Alabama, plant, with integration of the material beginning this month.
- The supply deal, which includes flat-rolled steel made of 70% recycled scrap content, builds on the two companies' work together dating back to 2015.
Dive Insight:
Steel Dynamics is one of many commodity suppliers benefiting from the recent push to nearshore production in light of the Inflation Reduction Act and changes in U.S. tariff regulations.
U.S. tariffs on China-made commodities — including steel in many cases — have reduced imports and increased domestic production, according to the U.S. International Trade Commission. The shift means companies like Steel Dynamics are well positioned to sign major supply deals.
The new Mercedes-Benz and Steel Dynamics agreement also underscores automakers' push to shorten their supply chains and lower their carbon footprint.
The company signed a similar deal with Swedish startup H2 Green Steel in June for 50,000 metric tons of carbon dioxide-free steel for the automaker's European press shops. The agreement also included plans to establish a green steel supply chain in North America and to use more than 200,000 metric tons of reduced-carbon-dioxide steel annually.
"Our ambition is clear: Together with our partners we want to make our entire fleet of new vehicles net carbon-neutral along the entire value chain by 2039," said Gunnar Güthenke, head of procurement and supplier quality at Mercedes-Benz Cars. "Following this strategy our agreement with SDI to procure more than 50,000 tonnes CO2-reduced steel annually is another important milestone to establish a sustainable steel supply chain in North America."
Other automakers have been signing steel supply deals to create local supply chains. In June, GM signed a supply deal with ArcelorMittal North America for steel made with at least 70% scrap material from its Ontario site.
