Day: 17 November 2025

Long-anticipated draft provisional benchmarks for the Carbon Border Adjustment Mechanism (CBAM), seen by McCloskey late last week, potentially entail higher-than-expected costs for importers when calculating on default values.
The draft legislation and accompanying annex detail rules, formulae, and provisional benchmark values for the adjustment of CBAM emissions liabilities. Deductions are made in line with what free emissions allowances third country installations would be entitled to if operating under the EU Emissions Trading System (ETS) – the so-called Free Allocations Adjustment (FAA).
While calculating the FAA deductible from CBAM declarations using actual values requires detailed, verified production data, and yet-unseen implementing acts on both embedded emissions calculations and methodology, McCloskey has sourced a spreadsheet detailing provisional country-specific default values at the product level. Using these default values in combination with the drafts should allow importers to calculate their specific worst-case CBAM exposure with much greater certainty.

The Free Allocations Adjustment (FAA)

As detailed in an earlier article, CBAM imposes costs on emissions embedded in imports from third country productions, whereas the EU Emissions Trading System (ETS) manages emissions at the process level. Free allocations under the ETS are awarded on the basis of a domestic installation’s historic production rate, benchmark-adjusted to its top 10% best-performing equivalents within a product sector during a prior reference period.
In order to maintain the equivalence between ETS free allowances and CBAM liabilities for WTO-compliance, these ‘ETS benchmarks’ must be combined or transposed into ‘CBAM benchmarks’ at the product level, ensuring that cost obligations for both systems are operating on common factors as far as possible.
Both the ETS free allocation formula, and CBAM emissions liabilities are also subject to the same ‘CBAM factor,’ which starts at 97.5% from 2026 and reduces at an increasing rate until it hits 0% in 2034 – reducing free allocations to zero and making importers fully liable for embedded emissions.
The draft regulation on FAA calculation details the mechanisms behind this equivalence principle, seeking to maintain consistency not only in terms of cost benchmarking, but also as relates to data quality. Effectively, distinct CBAM benchmarks are to be referenced, depending on whether calculating on actual or default emissions.
Deriving the FAA to be deducted requires calculations as to the ‘specific embedded free allocations’ (SEFA) that a single ton of the import would have received as a result of its production process under the EU ETS. For declarations on actual values, said calculation must also be repeated recursively for each of the import’s constituent precursors in relation to relevant CBAM product-level benchmarks, specific to the processing stage, with the results combined into a total SEFA for the final imported good. For default values, specific all-in ‘default benchmarks’ allow calculation of the FAA in a single stage.

SEFA = CBAM factor x CBAM benchmark x Cross-Sectoral Correction Factor*
CBAM certificates = Total Embedded Emissions – Free Allocation Adjustment – Carbon Price Already Paid

*(The CSCF reduces free allocation across the ETS where demand exceeds supply. CSCF 2021-2025 = 1)

Multiplying the SEFA by the total mass of the imported goods gives the FAA, which is then deducted from the total embedded emissions to derive the number of CBAM certificates that must be surrendered, prior to further deductions for carbon prices already paid (t CO2e).
Total embedded emissions require verification when using actual values, with CBAM goods assumed by default to have been produced in the same year as the reporting period unless sufficiently evidenced otherwise. The draft defines this reporting period as 2026 at the earliest for both product and precursor emissions, meaning even Q1 2026 imports produced in 2025 will be assessed on the basis of physically verified 2026 levels to patch frictions between the transitional and definitive stages.

Provisional CBAM benchmarks, actual and default

The annex to the draft FAA regulation lists the provisional CBAM benchmark values required to make CBAM calculations, which are based on the current 2021-2025 ETS benchmarks. Notably the draft provisional benchmarks have been adjusted to projected revisions to be made to the underlying ETS benchmarks later in 2026, and are thus less likely to change prior to adoption than was previously suspected on benchmark update
timelines.

Due to the flexibility required in adapting ETS benchmarks to CBAM in assessing emissions at the border, there is no single catch-all CBAM benchmark value for a steel product, with relevant steel benchmarks instead divided by data quality, and production route.
Provisional benchmarks in the drafts are available at the product code level for CBAM’s covered goods, and are presented in two columns: the benchmarks in column A are limited to the specific process emissions for the production of the good and are to be mirrored to specific third country production processes when performing recursive actual values calculations, with simplified all-in product-level benchmarks for default values
calculations in column B.
When making CBAM declarations on actual emissions values, detailed information is required on the production processes of third-country producers in order to accurately map their specific production processes and product characteristics to the corresponding ETS benchmarks.

The draft annex dictates the rules on which production-route specific column A benchmark to adopt when using actual values:

• Scrap-EAF: “more than [50%] of mass of the crude steel produced or used is sourced from scrap.”
• DRI-EAF: “more than [50%] of mass of the crude steel produced or used is sourced from DRI.”
• BF-BOF: “more than [50%] of mass of the crude steel produced or used is sourced from a blast furnace or smelting reduction route.”
• “If neither of the three routes above contribute more than [50%] of the final steel, the production route is selected based on the component contributing the highest mass of the steel.“

Provisional CBAM benchmarks, default values

Column B’s ‘default CBAM benchmarks’ are only for use when making declarations on default values, making various assumptions in terms of the goods composition – such as steel alloy content – and are designed to be applicable across different origins. These benchmarks are then further split by process route, with separate benchmarks for scrap to electric-arc furnace (scrap-EAF); natural gas-based direct-reduced iron to EAF (DRI-
EAF); and blast furnace to basic oxygen furnace (BF-BOF) productions.
Yet unreleased draft implementing acts on methodology and embedded emissions calculations will further clarify which of these production route-specific default CBAM benchmarks are to be used – depending on product and precursor origin – to maintain methodological and data consistency between the default benchmarks and default emissions values for each country.

Provisional default values – contained in a separate file – are split by origin; product code; and direct and indirect emissions; and continue to be relatively elevated as a punitive measure to incentivize declarations on actual values. CBAM-liability for the definitive stage is currently limited to direct embedded emissions.
For example – assuming a CBAM certificate price of EUR80 – CBAM costs for an import of Indian-origin BF-BOF hot-rolled coil (HRC) would theoretically be calculated in reference to a default specific embedded emissions value of 4.27t CO2e/t, and a default benchmark value of 1.53t CO2e/t, giving a result of around EUR220/t.
Scrap-EAF Turkish-origin HRC – which has been booked by multiple service centers due to competitive EPDs of around 0.9t CO2e/t – when calculated on default values and benchmarks could see a CBAM liability of around EUR140/t.
Further examples are detailed in the table at the bottom of this article – it is important to remember that the specific production-route default benchmark value to be used is yet to be clarified by the Commission, with default routes for each origin to be set consistent with the methodology used to calculate the default emissions values.

Closing a DRI loophole

The draft regulation and annex make specific reference to natural gas-based DRI, explaining the need for DRI-specific benchmarks both for independent import, and as a precursor in EAF steelmaking.
DRI is currently included in the ETS hot metal benchmark, but was excluded from the benchmark update calculation for 2026-2030 to avoid artificially cutting the ETS benchmark for blast-furnace producers.
As such, if DRI-based steel was allowed to enter the EU on a CBAM benchmark tied to the ETS’ hot metal benchmark, it would receive an FAA in excess of its embedded emissions, negating any CBAM obligation for DRI-based imports and even making them more competitive than scrap-EAF based imports, which have their own underlying ETS benchmark reference.
To avoid this, separate actual and default benchmark values were created for DRI imports, and steel CBAM benchmarks have an intermediary value for DRI-EAF, “ensur[ing] that the reduction of the CBAM certificates to be surrendered stemming from the free allocation adjustment for primary natural gas-based DRI imports is higher than for primary blast furnace steel, but lower than for secondary steel.”
When calculating on actual emissions values, DRI has a provisional process-stage specific CBAM benchmark of 0.5t CO2e/t, and a default benchmark value of 0.723t CO2e/t.
Overall, the Commission’s drafts give a lot more clarity to the trade in terms of the worst-case additional costs when importing steel – and submitting CBAM declarations – on default values. Costs stemming from default value declarations will be very high if default benchmarks and values are implemented in their current form, incentivising either the use of complex actual values calculations, or tactical circumventions.

Benjamin Steven  Journalist, Steel

opisnet.com

Bullish sentiment prevailed in the European heavy plate market in the week to 14 November, supported by an expected demand increase from infrastructure projects in 2026.

“Project expectation pretty good for next year especially in infrastructures and shipbuilding,” an Italian trader said.

European re-rollers also have been pushing for higher heavy plate prices as they need to cover rising costs for imported slab from next year, as the carbon border adjustment mechanism (CBAM) will come into force.

Slab offers from China have been reported at $520/t CFR Italy, from Vietnam at $515/t CFR and from Indonesia at $510/t. Semi-finished product from Libya was offered at $490/t CFR Italy, as the exporter was more focused on slab export sales due to technical issues on a production line, according to market sources.

Market participants estimated that CBAM duties for imported slab will be around EUR50/t.

Adding pressure on re-rollers, supply of imported slab will be reduced following implementation of the 19th round of sanctions against Russia adopted in the EU in late October including measures against Evraz PLC, a UK-headquartered company with core steel manufacturing and mining assets in Russia. Some re-rollers will have to find alternative slab sources, which most likely will be more costly.

Some sources expressed concerns that the current quota for Russian semi-finished steel imports adopted as part of the sanctions against Russia might not be extended, further reducing supply.

Italian re-rollers have been offering heavy plate at EUR670/t ex-works. Deals for this year’s rolling material with big buyers have been settled at EUR620-630/t ex-works and for smaller volumes some transactions have already been made at EUR650/t ex-works.

German mills have been offering plate at EUR710-730/t ex-works.

And offers from re-rollers in Benelux, Czech Republic and Denmark have been heard at EUR680/t ex-works, but the mills are targeting higher prices of EUR700/t ex-works.

Weekly European heavy plate, slab and green steel
	Unit	Term	14-Nov-25	Change
Weekly heavy plate
Northwest Europe ex-works heavy plate	EUR/t	EX-WORKS	710.00	0.00
Germany delivered heavy plate (Northwest Europe)	EUR/t	DEL	730.00	0.00
Italy ex-works heavy plate	EUR/t	EX-WORKS	645.00	0.00
Weekly steel slab
Italy CFR slab	$/t	CFR	510.00	0.00
Weekly green steel
Green heavy plate premium (scopes 1-3 CO2 under 1t)	EUR/t		25.00	0.00

 

Maria Tanatar Associate Director, Steel and Green Steel

Benjamin Steven  Journalist, Steel

opisnet.com

 

The European steel industry will have to decarbonise in the coming years, but challenges remain to doing this successfully, according to panellists at the Kallanish Green Steel Strategies conference in Brussels on 13 November.

Energy supply and price, hydrogen availability, and creating a level playing field are the key obstacles, they add.

“Europeans have decided we want to decarbonise. As members of the EU, I’m fine with that. We cannot deny climate change,” says Henrik Adam, executive chairman of Tata Steel Netherlands Holding BV.

One issue is energy supply. Even large-scale offshore wind has seen delays in permitting, grid connection and financing, notes Eldar Aghayev, director of transition mineral, metals and batteries at BNP Paribas. Nuclear capacity has the same issues but with added technological difficulties.

The energy problem also applies to hydrogen, another key material for decarbonisation, adds Erika Mink-Zaghloul, head of governmental & regulatory affairs at thyssenkrupp Steel Europe.

Decarbonisation and security need to both become central to policymaking so that policies can look at the whole economy, including raw material and energy supply and end user industries.
The impact of CBAM also risks deindustrialising Europe if it is not extended downstream, panellists warn. “If we have no steel industry, why should you build cars in Europe?” Adams noted.

However, the transition also provides opportunities. “I’m a green steel optimist, but I don’t wear green glasses,” said Stanislav Zinchenko, ceo of consultancy GMK Center. The outlook for small and new players in green steelmaking in Europe is better than a year ago, he adds. Larger players have been slower to take advantage of opportunities, however.

The improved outlook is in part because the discussion on green steelmaking has changed over the last five years, says Aghayev.

Recent events have made Europe far more conscious of the need to avoid dependencies on other regions and to keep production of key materials on the continent.
Steel companies have to adapt rapidly to this new reality.

“Decarbonisation strategies need to be refreshed,” Zinchenko notes, now that carbon costs are beginning to be factored into both domestic and imported supply from 2026.

Tomas Gutierrez UK

kallanish.com

Voestalpine has landed the largest-ever order in the group’s high bay warehouse segment, executives announced on Wednesday.

From the end of this year, the Austrian group will implement a major project for a logistics service provider in Turkey, it says without naming the customer. “This will be a hall of 200 metres length, 60m wide, 40m high, using 10,000 tonnes of beams,” chief executive Herbert Eibensteiner said during a virtual conference monitored by Kallanish.

He also announced the completion of a project by the Metal Forming division in the USA – the expansion of a production hall for the manufacture of longitudinal truck beams in Jeffersonville, Indiana. Production here is scheduled to start in July 2026, and 100 of the 110 new employees have already been recruited.

A milestone for the Railway Systems business unit in Austria is the impending opening of the “Koralmbahn” railway in December. The Koralm Tunnel – the world’s sixth-longest railroad tunnel – represents a role model for further rail infrastructure projects, and a flagship achievement for Austria, Eibensteiner said. Voestalpine equipped the project with premium rails and high-tech turnouts, fastening systems, as well as signalling and safety technology.

For its railways activities, the group remains optimistic for the near future. The more problematic sectors, mechanical engineering, construction, and consumer goods, are expected to remain at least stable at their current level, the group says.

In terms of regions, low economic growth is expected to continue in Europe throughout the rest of the group’s business year – to March 2026. In North America, most economists expect economic growth to continue over the course of the business year, which will benefit voestalpine’s sites in the USA. In Brazil, industry has been weighed down by high interest rates, US tariff policy, and an influx of Chinese-origin imports.

China, on the other hand, has maintained its growth trend, particularly in the industrial sector, and this is unlikely to change significantly in the remainder of the business year, voestalpine says.

Christian Koehl Germany

kallanish.com

Domestic Northwest European coil prices increased in the week to 14 November despite a slowdown in trading activity after restocking. 

The price rise was supported by an anticipated reduction of import availability due to the new stricter quotas system and increased import prices due to the implementation of the carbon border adjustment mechanism (CBAM) in 2026.

Trading activity has slowed after active restocking over the past couple of weeks. Although European mills still have room to fill in their order books, they chose to focus on negotiations of long-term contracts for next year with the automotive industry and other end-users.

“The mills do not have full order books, but they are focused on long-term contract negotiations instead of spot trading. The steelmakers are trying to decouple the spot business and long-term contracts,” a German distributor said.

In Northwest Europe, hot-rolled coil (HRC) prices have been reported in a wide range of EUR590-650/t ex-works. But the both ends of the range represent special deals, while the average transaction level was heard at EUR610-630/t ex-works. And the region’s mills have been offering the material at EUR650/t ex-works.

Prices for downstream coil, particularly for cold-rolled coil (CRC), have increased more significantly over the week. European mills have been traditionally avoiding sales of commodity grades CRC due to higher costs related to energy and buyers have been heavily relying on more competitive import material. But as the upcoming regulation changes will both reduce the overseas supply and add CBAM duties to import prices, European buyers have to source more CRC from domestic suppliers.

Some sources even reported CRC prices above those for hot-dipped galvanized coil (HDG).

“There is a concern in the market that we might see a shortage of CRC next year due to effects from the new quotas and unwillingness of the European mills to sell it. EU producers prefer to sell HRC or HDG produced from HRC, as costs for CRC are higher,” a distributor said.

Prices for CRC have been heard at EUR700-730/t and for HDG – at EUR710-730/t, both ex-works Northwest Europe.

Italy prices hold stable         

In Italy, domestic prices remained unchanged despite steelmakers’ attempts to achieve an increase. Offers have been heard at EUR620-630/t delivered, the equivalent of EUR600-620/t ex-works Italy.

But steelmakers have been giving discounts to fill their December rolling, and deals were reported at EUR570-580/t ex-works. And for January, transactions have been settled at EUR580-590/t ex-works.

Market prepares to import under CBAM

Availability of lower priced imported HRC decreased as buyers prefer to book material from traders with CBAM risks covered. Only some big buyers, like pipemakers, have been willing to acquire coil on CFR basis and to take risks related to CBAM duties.

Traders have been offering HRC from Turkey and Asia at EUR580-600/t DDP, including CBAM duties.

HRC from Indonesia has been offered at EUR470-480/t CFR, excluding CBAM duties which the importer will have to cover.

Several sources said that importing steel from India was too risky as if the EU authorities use high default values for the country in their duty calculations instead of actual values for a mill, the duties would be too high. Therefore, until all the regulations are in place and working they would avoid the material.

Market participants estimated that average CBAM duties were EUR50-80/t for HRC.

Green steel market 

Interest in green steel has remained limited as buyers have been more focused on how the new regulations will affect traditional steel trading. Some buyers, however, said that as free emission allowances will decrease in the coming couple of years the market will shift towards green steel.

“There is interest for green steel from end users, but without support and initiative from the EU authorities the buyers will keep choosing not to pay premium. The market is not in the best shape now so any additional costs are unlikely, unless there is a budget for a particular project,” a service center said.

Buyers have estimated an achievable premium for green HRC with CO2 content of around 0.7t at EUR50-80/t.

Weekly European steel coil
EUR/t	Term	14-Nov-25	Change
Weekly Northwest Europe steel coil
Northwest Europe ex-works HRC	EX-WORKS	620.00	5.00
Northwest Europe ex-works CRC	EX-WORKS	715.00	20.00
Northwest Europe ex-works HDG	EX-WORKS	720.00	10.00
Weekly South Europe steel coil
Italy ex-works HRC	EX-WORKS	580.00	0.00
South Europe CIF HRC	CIF	560.00	0.00
Source: McCloskey by OPIS.		© 2025 Dow Jones Energy Limited.

 

Weekly green steel
EUR/t	Term	14-Nov-25	Change
Green Northwest Europe HRC premium (scopes 1-3 CO2 under 0.8t)		70.00	-5.00
Green Northwest Europe ex-works HRC (scopes 1-3)	EX-WORKS	690.00	0.00
Green HRC premium (scopes 1-2 CO2 under 0.5t)		70.00	-5.00
Green Northwest Europe ex-works HRC (scopes 1-2)	EX-WORKS	690.00	0.00
Green HRC reduced carbon price (scopes 1-3)		44.45	-0.03

 

Maria Tanatar Associate Director, Steel and Green Steel

Benjamin Steven  Journalist, Steel

opisnet.com

SteelOrbis talked to Alessandro Sciamarelli, EUROFER director of economic research and market analysis about the factors affecting EU steel market.

How would you describe the current steel demand trends in the EU steel market across major sectors (construction, automotive, machinery, etc.)?

The current trend in EU apparent steel consumption, despite two modest consecutive rebounds over the last two quarters – driven by comparison with very low volumes recorded a year earlier – continues to reflect weak demand conditions. These conditions originated in the second quarter of 2022 due to war-related disruptions, coupled with unprecedented increases in energy prices and production costs. This negative cycle has persisted until the third quarter of 2024, mainly as a result of growing global economic uncertainty, higher interest rates – before eight policy rate cuts were implemented, overall manufacturing weakness and growing uncertainty surrounding US tariffs.

The consequences of the conflict in Ukraine and the energy shock on steel-using industries, along with the worsened overall economic outlook, triggered a severe recession (-8%) already in 2022. These protracted downside factors further impacted apparent steel consumption, resulting in two other consecutive annual drops in 2023 and 2024 (-6% and -1.1%, respectively). In 2025, contrary to earlier expectations of a more favourable industrial outlook and improving steel demand, apparent steel consumption is set to decline again, albeit more moderately than previously foreseen (-0.2%, compared to -0.9% formerly). This will be driven by the expected – albeit difficult to quantify – impact of US tariffs and the resulting uncertainty and trade-related disruptions. In 2026, apparent steel consumption is projected to finally recover (+3.1%, previously set at +3.4%), conditional on a positive evolution of the industrial outlook and an easing of global tensions, both of which remain unpredictable at this stage.

In the first quarter of 2025, apparent steel consumption increased year on year (+2.2%) for the second time in a row (+0.5% in the preceding quarter, after three consecutive quarters of declines). The total consumption volume in the first quarter of 2025 stood at 33.8 million metric tons.

Domestic deliveries mirrored the evolution in demand and increased year on year in the first quarter of 2025 (+1.4%, after -2% in the preceding quarter). In 2024, they decreased overall (-2.8%), reflecting persistently weak steel demand.

Imports into the EU – including semi-finished products – decreased slightly (-0.6%) in the first quarter of 2025, after a marked rise in the preceding quarter (+6.3%). It is worth noting that in absolute volumes the share of total imports in apparent consumption remained considerably high in historical terms up to the first quarter of 2025, standing at 25 percent (27% in the preceding quarter). In the full year of 2024, the share of imports stood at 27 percent. In the second quarter of 2025, total imports continued to decrease (-3%).

Apparent steel consumption is set to indicate another drop (-0.2%, more moderate than the previous forecast of -0.9%). In 2026, apparent steel consumption is finally projected to rebound (+3.1%, formerly +3.4%), conditional on a positive evolution of the industrial outlook and easing trade and global geopolitical tensions, which are all unpredictable at the moment. The overall evolution of steel demand remains subject to very high uncertainty. Apparent steel consumption is not expected to improve substantially before the first quarter of 2026, and consumption volumes are expected to remain far below pre-pandemic levels.

In the first quarter of 2025, the Steel Weighted Industrial Production index (SWIP) dropped sharply for the fifth consecutive quarter (-3.2%, after -4.6% in the preceding quarter). Until the end of 2023, EU steel-using sectors’ outputs continued to show resilience and grow, albeit at a slower pace, despite the prolonged impact of Russia’s invasion of Ukraine, overall manufacturing weakness, and global geopolitical tensions – with trade-related issues emerging more recently, weighing on industrial confidence and business investment.

The positive trend of the overall SWIP started after the pandemic, continued up to the fourth quarter of 2023, in spite of soaring energy prices impacting production costs, component shortages and lower output that began to take their toll on total production activity in steel-using sectors in the second half of 2022. The deterioration of the economic and industrial outlook in the EU – particularly due to high inflation and the subsequent interest rate hikes by the European Central Bank (ECB) – had only a limited impact on steel-using sectors’ outputs up to the end of 2023, with the exception of the construction sector. As the industrial and economic landscape in the EU turned even gloomier throughout 2024, the evolution of the SWIP index reflected the continued downturn in the construction, mechanical engineering, domestic appliances and metalware sectors – and particularly in the automotive industry, which is most exposed to volatility in global trade and to supply chain disruptions.

Due to the US tariffs – both announced and implemented – ongoing economic uncertainty is likely to intensify, weighing on growth also in the coming quarters. This is expected despite the monetary easing by the ECB, which implemented eight consecutive 25 basis point policy rate cuts between 2024 and 2025, the effects of which will not be fully visible in the short term.

Despite persisting downside factors, steel-using sectors’ outputs continued to grow in 2023 (+1.7%, revised from +1.6%), albeit with wide differences across individual European economies and sectors. This was largely driven by the better-than-expected performance of the construction sector in some EU countries. However, SWIP resilience came to an end in 2024, and the growth of steel-using sectors’ outputs contracted year on year (-3.6%, revised from -3.7%). This was mainly due to drops in construction and automotive outputs (-2% and -9.8%, respectively). Due to growing uncertainty following US tariff announcements, another recession – albeit a more moderate one – is anticipated in 2025, (-0.7%, formerly -0.5%), before a moderate rebound (+1.8%) in 2026.

How are high energy prices affecting output, investment and competitiveness?

During 2025, energy prices have generally been cooling, particularly the Dutch TTF gas price index, which had reached a three-year peak in January, exceeding the threshold of €50 per MWh, before stabilizing at around €30 per MWh since April. This decline has largely reflected weak energy demand due to subdued manufacturing activity and overall economic uncertainty. Earlier rises in the gas price index were driven by higher demand expectations following a colder-than-expected winter, despite reduced industrial consumption amid the economic slowdown and lower electricity generation from wind power and other renewables. The ongoing transition from Russian pipeline gas to shipborne liquefied natural gas (LNG) from other suppliers, mainly the US, continues. The continuing war in Ukraine and the tensions in the Middle East, along with other global geopolitical downside factors, have so far not triggered increases in gas and oil prices, due to weak energy demand and subdued global economic activity. However, uncertainty remains regarding future developments in energy prices.

The EU is still, currently, an economic area whose manufacturing sectors face higher energy (and thus production) costs compared to other comparable economic regions. This has largely been contributing to the continued downturn in the outputs of the manufacturing and steel-using sectors, particularly in the output of the automotive industry, which is the most exposed to volatility in global trade and to supply chain disruptions.

What are the effects of geopolitical developments on trade routes?

As a result of the across-the-board tariffs (blanket 50% on steel and derivatives) imposed by the US, we expect two major effects in the shorter term:

• considerable deflection of steel products from third countries previously exported to the US to the EU market, which remains much more open;
• a further reduction in the trade surplus of the EU versus the US, which is already an ongoing trend we have seen for some years.

What are your expectations for steel demand and prices in the short to medium term?

On the steel demand outlook, we see the trade deflection mentioned in the first part of the answer to the previous question.

On price developments, we prefer not to make any forecast or assumption. We note, however, that during past rebounds in demand (i.e., the post-Covid period in 2021 to early 2022), prices rose everywhere globally and not only in the EU, and we broadly expect that, when demand will finally pick up, steel prices will react according to market dynamics, with no “overshooting”.

Are you optimistic or cautious about the EU steel sector’s medium-term competitiveness?

It largely depends on the effectiveness of the steel action plan and the extent to which the newly-proposed EU steel measure (replacing the safeguards from July 2026) will be implemented. Other key factors will be, as already set out, the level of energy prices, a pick-up in the industrial outlook and in steel demand (particularly from the automotive sector), and the level of investment towards decarbonization, which must not undermine the EU steel industry’s competitiveness.

Do you think current EU funding mechanisms are sufficient to support the green transition in steel?

We call for further support for green transition towards decarbonization as it requires massive investment.

How do you see the balance between environmental targets and global competitiveness?

This is indeed challenging. CBAM, which is very often seen as a trade measure but indeed is an environmental and climate change tool, has some loopholes which may not help preserve the competitiveness of the EU industry while pursuing the EU’s environmental goals. In this respect, tackling global excess capacity is a key issue. As the OECD has repeatedly pointed out, global excess capacity and environmental targets cannot coexist, as long as the EU – whose steel production is much less CO2 intensive – is flooded by steel with higher carbon content from third countries.

steelorbis.com

The incoming Carbon Border Adjustment Mechanism (CBAM) presents an opportunity for traders and importers who can shield their customers from the administrative burden it brings, panellists said during the Kallanish Green Steel Strategies conference in Brussels.

Alexander Julius, managing partner at MacroMetal, said the policy “was not rocket science in principle” and his organisation already has data in hand from the initial reporting stage of CBAM started for scope 1 and scope 2 emissions. He said it was not a complicated issue but rather an additional burden to deal with.

Julius highlighted the transparent relationship he has with his suppliers and customers in the supply chain for this data. It is a potentially existential matter for some companies’ cross-border commerce, he noted.

“Do you want to survive in the future as a European importer or not?” Julius asks. “It’s a USP [unique selling point] actually. Many are capable, [but] they don’t want to do it. Our customers don’t want to have anything to do with [it]; they say we don’t care about CBAM and safeguards.”

Alessandro Fossati, managing director of Gamma Trade, shared this sentiment. “In the short term, it is an opportunity since importing is becoming harder,” he said.

However, Fossati warned that trade barriers are increasing and do not cover steel-containing manufactured products. “Nobody is taking care of manufacturers, end users. Since 2015, [there has been] a wall that every year is higher made of tariffs, now CBAM.”

CBAM and the safeguards “stimulate the imports of end products”, he said. “Killing [the] customers of mills is not the way to protect mills in the long term.”

Jordy Galvez, trade manager for southern Europe at Steelforce, said customers are worried about uncertainty, and the market needs to accept it and live with it.

“We can use this as an opportunity to provide extra service to our customers,” he noted. “CBAM is not fully clear, the safeguard is not fully clear.”

Gabriel Rozenberg, founder and chief executive at Cbamboo, commented: “The differential between high carbon and low carbon products will be massive … There will be this massive business advantage for some companies, disadvantage for others.”

Carrie Bone UK

kallanish.com