UK downstream manufacturer sees no support for tariffs
A UK downstream manufacturer has been rejected for government funds to modernise its operations, at a time when its exports to the US have been heavily impacted by the country’s new tariff regime, Kallanish learns.
Laurence McDougall, owner of All Steels Trading, has expressed disappointment with the lack of government support for his downstream steel manufacturing operations, which include two hot-rolling mill businesses in the West Midlands.
Special Steel Sections in Ettingshall and Bromford Iron in West Bromwich are both heavily export-oriented, with the US representing a significant market for the specialised products.
McDougall notes that some US buyers cannot afford to pay the 25% tariff, nor can they pass it onto their customers, while it is not financially viable for them to split the cost either. Around half of the customers have so far paid the 25%, which he says is creating huge inflation. The other half of his customers are “sat on the sidelines”, he adds.
“Our products are so bespoke, they haven’t got another source, there is no domestic supply,” he says.
McDougall also highlights the currently unimplemented UK-US trade deal that was previously agreed earlier in the year, with UK companies still facing the 25% tariff that was due to fall to zero.
His customers have indicated that the tariffs make costs unsustainable, threatening the viability of their own businesses.
Bromford Iron has already closed one of its two rolling mills, while Special Steel Sections is evaluating its future. McDougall has had his proposal for funds to modernise Bromford Iron’s remaining mill rejected by the government.
The proposed scheme involved upgrading the mill to modern, energy-efficient technology, converting from gas-fired furnaces to electric induction heating. This comes despite the government putting aside up to £2.5 billion ($3.37 billion) through the National Wealth Fund (NWF) for the sector as part of the Steel Strategy.
He has engaged with local MPs and government bodies, including Prism, without success.
The mills also support domestic steelmakers, historically purchasing 25,000 tonnes/year of feedstock from British Steel and 7 Steels for its rolling mills.
All Steels Trading was willing to fund over half of the total investment, with the induction heater and cooling system, being sourced from UK-based Inductotherm, representing the largest expense.
Government feedback indicated that the plan “ticked all the boxes” in terms of efficiency, carbon reduction, and supporting local jobs. However, officials advised that because the project only required £1m of funding, which was well below the £20m minimum threshold, it would not be considered.
McDougall adds that trading imports would be more profitable than manufacturing in the UK. He says he understands the government’s focus on supporting large domestic steel producers, but stresses that a downstream consumer base is critical for the future of UK steel.
In addition to this, the energy costs in his rolling mills are set to rise by 30% from 1 October, further straining margins in the sector.
Carrie Bone UK
German steel representatives react to government energy paper
Germany’s Ministry of Economy and Energy has published the “Monitoring report on the energy transition” paper, which lists ten key measures for reforming the transition process. These include pragmatism in making progress with hydrogen by reducing bureaucracy and expanding renewables and grid capacity with an emphasis on local flexibility.
In a statement by steel federation WV Stahl, its managing director Kerstin-Maria Rippel reiterated the plea for a reduction of energy costs for energy-intensive industries. Also, “in order to safeguard electricity supply in times when the wind does not blow and the sun does not shine, sufficient back-up capacities need to be available,” Kallanish hears from Rippel.
Mechanical engineering association VDMA issued a joint statement with union IG Metall. The union and VDMA section VDMA Power Systems had earlier commissioned a study of their own, which they say they see as complementary to the government’s monitoring report. Among other things, they criticise the ministry for giving too much weight to the cost factor of the transition.
“The government should not only look at the costs, but also at the preservation of jobs and the value added in Germany and Europe,” says Jürgen Kerner, deputy chairman of IG Metall. “The cost of the grid expansion will go up, and we need financial support for it in the long term.”
Christian Koehl Germany
Deadlock in EU HRC trading amid slow demand; CBAM rules still under discussion
In Northern Europe, trading was muted and mills failed to seal offers at €600 ($702) per tonne ex-works and above in deals due to slow demand.
Transactions for November-delivery HRC were reported at €580 per tonne ex-works in Germany and at €570-580 per tonne ex-works in the Benelux area, in line with buyers’ estimations of tradeable values.
“Mills’ official offers are €600-630 per tonne ex-works, but they are actually selling coil at lower levels to fill order books,” one buyer in Germany told Fastmarkets.
Buyers claimed they had sufficient tonnages of HRC in stock. They were also waiting for more clarity on Carbon Border Adjustment Mechanism (CBAM) implementation rules and new steel safeguard measures.
Sources familiar with the matter told Fastmarkets that new steel safeguards measures will be represented by the European Commission by mid-October.
But there was less clarity on CBAM rules, as reported by Fastmarkets.
Notably, emissions benchmarks and default values, methodology for recognizing carbon prices paid in third countries, and adjustment mechanisms for free emissions trading scheme allocations were heard to “remain under discussion, with publication likely only in early 2026.”
Fastmarkets’ calculation of the daily steel HRC index, domestic, exw Northern Europe was €577.71 per tonne on Friday, up by €2.71 per tonne from €575.00 per tonne on Thursday.
The Northern European index was down by €2.29 per tonne week on week, but up by €4.49 per tonne month on month.
Fastmarkets’ daily steel HRC index, domestic, exw Italy was calculated at €550.63 per tonne ex-works on Friday, up by €0.63 per tonne from €550.00 per tonne on Thursday.
The Italian index was up by €0.63 per tonne week on week and up by €10.63 per tonne month on month.
In Italy, integrated mills and re-rollers were offering November-delivery HRC at €570-580 per tonne ex-works. But such levels were not sealed in deals.
One buyer reported a bid at €540 per tonne ex-works, but said the seller rejected the bid.
“We’re in a trading dead-end. Mills do not want to sell lower than €570 [per tonne ex-works]; we do not want to buy at these levels,” a buyer told Fastmarkets.
Another mill source confirmed that it was impossible to close deals above €550 per tonne ex-works yet.
“The market is stable and not moving anywhere yet. Mills do need to sell, but not at the scale when they need to lower prices and buyers are not in a rush to book [HRC] because stocks are sufficient,” a trading source said.
Meanwhile, the market for imported HRC was also very quiet. Buyers were cautious to book new tonnages with delivery in the first quarter 2026 due to uncertainties surrounding CBAM implementation.
“The final parameters of CBAM [benchmarks, default values] will not be published until the first quarter 2026, so all imports for 2026 [delivery] is just gambling,” a second buyer in Italy said.
Still, several sources reported a large-size transaction of 40,000 tonnes of Indonesian HRC, for arrival in December, being done at €510 per tonne DDP – customs cleared, CBAM paid. Another source reported the same deal at €470 per tonne CFR.
As Fastmarkets previously reported, some Asian suppliers were heard offering to cover CBAM risks for buyers to stimulate buying appetite.
Meanwhile, offers from Turkey were heard at €520-530 per tonne CFR to Italy including the duty.
EU steel industry warns of legal gaps as Commission closes CBAM consultations
The European Commission’s three linked consultations, launched on August 28, addressed key issues including default values, benchmarks, recognition of third-country carbon pricing, and the adjustment mechanism for free EU Emissions Trading System (ETS) allocations.
Consultations closed at midnight Brussels time on September 25.
The Commission is expected to present a final draft of the CBAM regulations to be implemented in the fourth quarter of 2025.
Industry sources highlighted widespread concern about the balance between administrative burden and financial exposure. “Early preparation on data systems, verification processes, and supply-chain coordination will be crucial to manage compliance risk and competitiveness,” one distributor said.
The first consultation covered the methodology for calculating embedded emissions. Businesses will need to decide whether to provide actual plant-level data or rely on default values. While actual data can potentially lower the costs if carbon emissions are well managed, it also requires robust monitoring and verification systems. Treatment of indirect emissions, especially electricity, and the potential use of Power Purchase Agreements and Energy Attribute Certificates were key issues.
The second consultation dealt with adjusting CBAM certificate obligations in line with the free allocation of EU ETS allowances. The central debate was focused on how generous such adjustments should be, how quickly they should be phased out, and whether they might undermine the carbon price signal. Industry stakeholders tend to favor smoother, more protective transitions, while non-governmental organizations highlighted the risk of weakening climate ambition.
The third consultation concerned recognition of carbon prices already paid in third countries. Potentially, importers may claim reductions in CBAM obligations if they can prove equivalent payments abroad, Fastmarkets understands. However, verification requirements, exchange rate rules, and the treatment of rebates remain uncertain. The business challenge is ensuring documentation is accepted, to avoid paying for carbon emissions twice.
Overall, companies face tensions between the administrative complexity of CBAM and huge financial exposure.
Legal uncertainty persists
According to a notice from European steel distributors’ association EUROMETAL, emissions benchmarks, default values, and methodologies are unlikely to be published before early 2026. This leaves buyers negotiating 2025/26 contracts without a legal framework, creating risks of speculation, contractual disputes, and distortions in the single market.
In its letter to the Commission, EUROMETAL urged Brussels to:
• publish provisional benchmarks and values immediately;
• clarify the scope of downstream product coverage;
• accelerate communication on the export adjustment mechanism;
• consider a pre-payment or provisional charge at the border to stabilize markets;
• issue an EU-wide statement to reassure stakeholders before final texts are adopted.
“CBAM is not only a tax or customs issue but also a question of trade, competition and Single Market integrity,” EUROMETAL said, stressing the need for coordinated handling across Commission services.
Market impact
Looming uncertainty around CBAM rules and implementation have affected business activity in the EU flats market over the past several weeks.
Notably, demand for imported hot-rolled coil (HRC) remained quiet, with buyers taking a wait-and-see stance and assessing risks.
“Third-country imports are ruled out at the moment, no matter the offer price, because long lead times create a high risk of these goods being customs-cleared only after January 1, 2026 [when CBAM is phased in officially],” a mill source in Northern Europe told Fastmarkets.
A trading source in Italy confirmed that there was no interest in bookings of imported material at the moment owing to CBAM risks.
Some Asian suppliers were heard offering to cover CBAM risks for buyers to stimulate buying appetite.
Notably, several industry sources pointed out that Asian suppliers were normally ready to pay CBAM risks up to a certain threshold – for example, a maximum of €35 per tonne ($41).
“So, at the end of the day, you have no clue what the final import price [for HRC] will be,” a buyer in Italy said.
Some industry sources expressed hope that a lack of viable import options will result in stronger reliance on domestic coil and support a domestic price rebound.
Fastmarkets’ calculation of the daily steel hot-rolled coil index, domestic, exw Northern Europe, was €575.00 per tonne on September 25, stable day on day.
The Northern European index was down by €5.50 per tonne week on week, and down by €1.25 per tonne month on month.