The Steel Industry's Green Revolution: Why Alleima's Electric Heat Tech is the Next Big Thing

The global steel industry is on the brink of a seismic shift. With climate regulations tightening and ESG mandates skyrocketing, the race to decarbonize iron production is no longer optional—it's existential. Enter Alleima (ALMQ), a Swedish materials giant partnering with engineering titan Danieli to electrify a critical bottleneck in steelmaking: the direct reduced iron (DRI) process. Their game-changer? The Prothal® DH electric process gas heater, a disruptive innovation that could slash emissions by over 30% in natural gas-based DRI plants and eliminate them entirely when paired with green hydrogen. This isn't just a tech upgrade—it's a license to print cash in a $2 trillion industry going green.

The Problem with Steel—and How Alleima is Solving It

Steel production accounts for 7% of global CO₂ emissions, with DRI plants being one of the dirtiest culprits. Traditional DRI heaters rely on fossil fuels to superheat gases, spewing carbon and pollutants. Enter the Prothal® DH system, which replaces combustion with electric heating. Using Alleima's proprietary Kanthal® alloy heaters, it achieves temperatures up to 1,100°C without flames, slashing emissions and future-proofing plants for hydrogen.

The partnership with Danieli—a leader in DRI plant design—means this tech isn't just a lab experiment. By 2027, they're targeting full-scale industrial deployment, retrofitting existing plants and building new “green DRI” facilities. The first commercial unit is already en route to Emsteel's UAE plant, with delivery slated for early 2026.

Why This is a Multi-Billion Opportunity

The math here is staggering. The DRI market is projected to hit $120 billion by 2030, fueled by demand for cleaner steel and hydrogen infrastructure. Alleima's alloys aren't just a niche play—they're the lubricant of this transition. Consider:
- Kanthal® alloys are used in 90% of electric heating systems globally. Their high-temperature stability and corrosion resistance make them irreplaceable in extreme industrial environments.
- ESG tailwinds: The EU's Carbon Border Adjustment Mechanism (CBAM) will penalize high-carbon imports, creating a premium for companies like Alleima that enable compliance.
- Scalability: The Prothal® DH can run on any fuel—natural gas, hydrogen, or a blend—meaning it's future-proof as energy mixes evolve.

Risks? Yes. But the First-Mover Payoff is Massive

Critics will cite scalability risks. Building hundreds-of-megawatt electric heaters at scale is no small feat. But Alleima and Danieli's partnership is no gamble:
- Proven tech: The system has already been tested at pilot scale.
- Danieli's design expertise: They've built over 50 DRI plants, giving them the blueprints to integrate Prothal® DH seamlessly.
- ESG credibility: Alleima's Life Cycle Assessments (LCA) and third-party validations (like their 81% lower carbon footprint for Sanmac 316L steel) build investor trust.

The biggest risk? Missing out. By 2030, 60% of new steel capacity will require decarbonization tech. Alleima's early leadership here could lock in long-term contracts and pricing power.

Buy Alleima Now—Here's Why

• Valuation: Alleima trades at 15x forward earnings, a discount to peers like Sandvik (SAND.ST) (20x) and Outokumpu (OUTD.ST) (18x). Its materials division (where Kanthal resides) is growing at 12% annually—faster than the steel sector overall.
• Catalysts: The UAE pilot (2026) and commercialization (2027) are near-term milestones that could drive multiple expansion.
• ESG upside: As investors demand greener supply chains, Alleima's role in enabling “green steel” will attract ESG funds, boosting demand for its alloys.

Target Price: 12 Months = SEK 400 (Up 35% from Current Levels)

Alleima is undervalued relative to its growth trajectory. If Prothal® DH adoption hits just 20% of DRI plants by 2030, revenue from this segment alone could hit SEK 10 billion annually—more than doubling current sales. Factor in margin expansion from premium pricing on green tech, and a target of SEK 400 is conservative.

Final Call: Go Long on the Future of Steel

The world isn't just demanding cleaner steel—it's paying extra for it. Alleima isn't just a materials supplier; it's a platform company enabling the $120 billion DRI market to go green. With Danieli's muscle and Kanthal's tech, this is a rare chance to bet on a first-mover in a trillion-dollar transition.

Action Item: Buy Alleima (ALMQ) now. Set a price target of SEK 400 within 12 months. This isn't a stock—it's a stake in the future of industry itself.