Stable EU HRC prices contrast with weak trading and CBAM-driven anxiety
EU domestic HRC prices have remained stable at high levels across the region over the past week, even as trading activity in both northern Europe and Italy continues to lag behind amid elevated stock levels and persistently slow demand.
Import offers have also remained relatively steady, with some suppliers attempting slight upward adjustments for cargoes on both CFR and DDP basis, yet actual trading has been close to non-existent due to ongoing CBAM-related uncertainties. Adding to the market’s hesitation, the European Commission has now approved the use of benchmarks and default emission values – key instruments for implementing CBAM – and the reaction among market participants has been sharply negative. For several origins, the newly adopted default values appear higher than those indicated in earlier leaked drafts, significantly increasing the projected cost of these imports.
Specifically, local mills in northern Europe have kept targeting €630-650/mt ex-works for new orders for January and February deliveries, the same as last week. Meanwhile, the tradable price levels for January delivery coils have been estimated at €610-630/mt ex-works, mainly for January delivery, up by €10/mt on the higher end of the range week on week.
Meanwhile, in Italy, mills have been targeting €620-630/mt for January delivery, up by €10/mt on the lower end of the range week on week, while the tradable price level for January delivery has been estimated at €600-620/mt ex-works, compared to €590-610/mt ex-works last week.
In the import segment, indicative offer prices for HRC have settled at €490-520/mt CFR, up by €5/mt on the lower end of the range, while HRC import offers including CBAM costs on DDP basis have been voiced at €595-610/mt levels, depending on the supplier, up by €15/mt on the lower end of the range week on week.
It is worth mentioning that import offers on CFR basis, excluding CBAM-related costs, have been notably scarce in the region this week, with most suppliers providing only indicative numbers. In particular, offers for ex-Indonesia HRC have settled at around $600/mt CFR, which translates to around €512/mt CFR, compared to €485-495/mt CFR last week. Besides, offers for ex-India HRC have been voiced at $575/mt CFR, which translates to around €491/mt CFR, the same as last week. However, according to sources, talk about an ex-India HRC deal signed for a big batch at an extremely discounted price of around $500-510/mt CFR, which translates to around €427-435/mt CFR Italy, has been circulating in the market this week, but this information has not been officially confirmed by the time of publication. Furthermore, ex-Turkey HRC offers have been voiced at around $610/mt CFR, or around €520/mt CFR, duty included.
In the meantime, most offers for imported HRC including CBAM costs have been voiced at €595-610/mt DDP southern Europe, with the lower end of the range corresponding to offers from Indonesia at €595-600/mt DDP. Offers from Turkey have been voiced at €600-620/mt DDP, while offers through traders from Thailand, Algeria and Japan have been estimated at €620/mt DDP Spain.
At the same time, it is worth mentioning that this week the European Commission has approved the use of benchmarks and default emission values – essential tools for rolling out the Carbon Border Adjustment Mechanism (CBAM). These measures establish the framework for the practical application of the CBAM regulation starting in January 2026. However, as of December 11, the benchmark and default values for the steel sector have still not been officially published in the EU’s Official Journal, while market participants have only shared draft annexes and technical implementing acts that outline the proposed benchmarks and default emissions values.
Using these draft figures, market insiders have already calculated the approximate CBAM costs, and the results have once again triggered a negative reaction among traders and, in particular, foreign suppliers. According to these preliminary estimates, the CBAM charge for HRC originating from Indonesia would exceed €500/mt, while material from India would face a cost of around €230/mt. For Vietnam and Turkey, the calculated CBAM burden is slightly above €80/mt.
“These calculations are based on the default values, which are extremely high. Indian mills are expected to complete third-party audits in line with EU requirements and submit their actual emissions data in about a month or so,” an Indian trader told SteelOrbis.
Klöckner & Co takeover offer confirmed as Worthington Steel enters negotiations
Klöckner & Co SE, Klöckner & Co., a Germany-based producer and distributor of steel and non-ferrous metals, has confirmed market rumors that it is currently in discussions with US-based steel producer Worthington Steel, Inc. about a potential voluntary public takeover offer for all outstanding shares of Klöckner & Co SE.
As part of this process, Worthington Steel has already begun conducting due diligence on the German company.
According to Klöckner & Co SE, there is no certainty at this stage regarding whether the negotiations will lead to an official takeover bid or what terms such an offer might include. The company emphasized that several conditions remain open, and the process is still in an early and exploratory phase.
Worthington Steel in a formal statement also confirmed that discussions are ongoing. The company noted that no investment decision has been made and highlighted that the talks may ultimately conclude without a transaction.
EU updates TARIC system to integrate CBAM ahead of full implementation in 2026
The European Commission has issued detailed guidance on the integration of the Carbon Border Adjustment Mechanism (CBAM) into the EU’s TARIC customs system, setting the operational foundations for the mechanism’s full entry into force on January 1, 2026.
The update introduces new certificates, revised import conditions and explanatory notes to ensure clarity for customs operators, while preparing EU systems for a shift from transitional reporting to full CBAM enforcement.
During the transitional period from October 1, 2023, to December 31, 2025, importers of CBAM goods have had to submit quarterly reports detailing embedded direct and indirect emissions, product quantities and carbon prices paid in the exporting country.
Until the end of 2025, measure type 775 appears in TARIC to indicate that imports fall under CBAM’s product scope. However, no certificates are required in this phase. Instead, footnote TM967 explains transitional reporting duties and clarifies temporary exemptions.
Mandatory certificate-based clearance for CBAM goods
From January 1, 2026, the system will change substantially. TARIC measure 775 will carry mandatory conditions that determine whether CBAM goods can legally be released into free circulation.
A set of certificates governs the admissibility of CBAM goods at customs. Certificate Y128 records the CBAM account number of the authorized declarant and is the basis for standard imports. Certificates Y134 and Y135 cover exemptions relating to special geographical territories or military-use goods, whereas Y136 verifies that electricity or hydrogen were produced in the continental shelf or exclusive economic zone of an EU member state. Certificate Y137 allows the 50-mt de minimis mass exemption to apply, while Y237 identifies goods produced in the EU and therefore excluded from CBAM obligations. Certificate Y238 is introduced for operators whose applications for CBAM declarant status are still under consideration, allowing importation until a decision is delivered. If none of these certificates apply, condition Y060 blocks the importation of CBAM goods.
Different rules for different CBAM product groups
Distinct operational rules for different CBAM product groups were also established. Cement, fertilizers, iron and steel, and aluminum are subject to both declarant-based and mass-threshold conditions, reflecting the new 50-mt annual de minimis exemption for each importer. Electricity and hydrogen are treated differently. These products cannot benefit from any mass-based exemption and are always fully subject to the CBAM requirements, meaning that only certificates related to authorized declarant status or other specific exemptions allow clearance.
New footnotes provide legal clarity and support enforcement
The updated TARIC introduces new explanatory footnotes to reinforce the customs architecture of CBAM.
Footnote CD01023 explains the conditions under which the de minimis mass exemption applies. Footnote CD01024 clarifies that CBAM does not apply to EU-origin goods, including processed goods re-imported under inward processing. Footnote CD01025 establishes temporary import arrangements for operators awaiting a decision on their declarant authorization application. In addition, TM967 is updated to clarify prohibited import situations and to reflect exemptions.
Luciano Giua: European steel market threatened by sluggish demand, high energy costs and import surge
At the 20th SteelOrbis “New Horizons in Steel Markets” Conference held on Tuesday, December 9, in Istanbul Marriott Hotel Asia, Luciano Giua, economist and policy analyst at the Organisation for Economic Co-operation and Development (OECD), presented an overview of situation in the European steel market in 2025.
Global steel excess capacity
The first point Mr. Giua covered in his intervention was global steel excess capacity. In Europe, capacity is expanding at a rapid pace, but demand is not following. This will lead to a capacity of over 700 million mt by 2027, particularly in countries that are already experiencing overcapacity.
Another factor that drives excess capacity are subsidies, such as grants, below-market financing, tax breaks and subsidized energy, that keep unprofitable firms in the market. “China’s subsidisation rate is around ten times higher than in OECD countries,” he noted.
To address this critical issue, the Global Forum on Steel Excess Capacity (GFSEC), a multilateral platform established by the G20 in 2016 that brings together 28 major steel-producing economies, has identified three key areas where there is the need for coordinated action:
- Monitoring: deepen the work on non-market policies and practices to understand economies outside the GFSEC.
- Boosting effectiveness of trade actions: exchange experiences on matters like melt and pour, detection of circumvention, sharing data and methodologies to strengthen trade actions.
- Collective actions: developing a comprehensive framework by June 2026.
Mr. Giua stressed the importance of cooperation, stating, “The goal now is to move from diagnosing the problem to finding solutions that will support the global steel environment. No single economy can face overcapacity on its own.”
Demand in Europe expected to remain weak in 2025
The OECD official then proceeded by stating that European producers do not expect demand to recover in 2025. While in Asia manufacturing activity is continuing to expand, in Europe demand is still very weak across most of the key sectors (mechanical engineering, automotive, etc.) and the situation in the US is quite volatile.
Because of this decline, prices will most likely be low in the coming months. In early 2025, sentiments began to weaken, while getting worse by the second half of the year.
High energy costs contribute to decline in Europe’s steel production
According to OECD data, EU crude steel production declined by about 23 percent between 2011 and 2024, and by 3.4 percent year on year in the first ten months of 2025. EU steelmaking capacity fell by 16 percent between 2008 and 2024.
These figures do not only reflect sluggish demand, but also high energy costs, which are one of the main factors undermining the competitiveness of the European market. Meanwhile, in countries where these costs are much lower, and often subsidized, crude steelmaking capacity has increased by 70-75 percent since 2010. In particular, energy costs in the MENA region are ten times cheaper than in Europe.
Steel exports down, steel imports up
As far as exports are concerned, Mr. Giua warned that Europe faces a structural decline: exports have fallen by 18 percent between 2020 and 2025. On the contrary, Chinese exports have increased by 128 percent in the last five years.
On the other hand, it is important to note that Europe is becoming more and more reliant on imported steel, with a 22 percent increase in imports since 2020. Such a sharp increase has triggered a rise in trade actions. For example, in 2024 the European Union initiated four antidumping actions, against China, Japan, Egypt and Vietnam, while in 2025 it initiated five, against Japan, India, Turkey, Taiwan and Vietnam. Still, Mr. Giua stated that the European Commission should further tighten its safeguards.
To sum up, the European market is facing weak demand, falling prices and declining production. In this context, global overcapacity is out of control and is driving export surges, particularly from China and the ASEAN region. Commenting on the worsened trade position of Europe, Giua stated, “It cannot be explained by domestic factors: it is shaped by the global dynamics that are putting additional pressure on its market.”
The EU Committee has approved the new carbon emission values for CBAM
The European Union has reached a significant milestone in defining the new emission coefficients that are critical for the implementation of the Carbon Border Adjustment Mechanism (CBAM).
The committee composed of member state representatives has approved the technical document containing product-specific default values and provisional benchmark carbon-intensity figures following a formal vote. With this decision, the file now moves to the final stage — the European Commission’s official endorsement, scheduled for 16 December.
The updated technical documents revise the direct and indirect emission coefficients for a wide range of products, from iron and steel to cement, fertilizers and aluminum. In the country-specific tables for Albania and Algeria that you shared, the total emission values for each product are listed alongside the mark-up increases of 10%, 20% and 30% that will apply respectively in 2026, 2027 and from 2028 onward.
For example, the total carbon intensity of grey clinker originating from Albania is set at 0.87 tCO₂/t, rising to 1.131 tCO₂/t by 2028. For grey Portland cement from Algeria, the initial value of 1.30 tCO₂/t gradually increases to 1.69 tCO₂/t.
The iron and steel section covers a broad range of products, including pig iron, agglomerated products, ferro-alloys such as ferrochrome and ferrosilicon, iron ore, semi-finished products (7207), hot- and cold-rolled flat products, stainless steel and alloy steels. For instance, the default direct emission factor for semi-finished products under CN 7207 has been set at 3.00 tCO₂/t.
Benchmarks aligned with the EU ETS
According to information shared on the process, the benchmark values to be used under CBAM are being developed in alignment with the EU Emissions Trading System (ETS). ETS benchmark methodologies are currently being finalized by the Commission and member states, and CBAM benchmarks are expected to be based on these standards. This alignment aims to ensure that the carbon accounting of imported goods is comparable to production standards within the EU.
The role of default values and the phased transition
CBAM default values represent the estimated carbon emissions assigned to certain imported goods depending on their country of origin. These values will serve as mandatory reference points, particularly for companies unable to provide verified, installation-level emissions data.
Under the new framework, default values will be applied with annual mark-ups of 10% in 2026, 20% in 2027, and 30% from 2028 onward.
This structure is designed to increase cost pressure gradually, encouraging importers to submit verified actual emissions instead of relying on higher default factors.
Financial obligations begin in 2026
Since CBAM is currently in its transitional phase, importers are required to report embedded emissions but do not yet incur any financial obligation. The definitive financial phase begins on 1 January 2026, after which importers will be financially liable based on the carbon content of their imported goods.
With the committee vote now complete, the technical foundation of CBAM has largely been clarified. The European Commission’s formal decision on 16 December will activate the new default and benchmark values and accelerate preparations for the financial implementation phase beginning in 2026.
CBAM expectations weaken purchasing decisions in the steel market
Price movements in the European steel market have remained limited as of December, with market focus increasingly shifting toward the European Union’s Carbon Border Adjustment Mechanism (CBAM), which will enter its definitive phase in 2026.
Market sources indicate that uncertainties surrounding CBAM are having a direct impact on buyer behaviour, particularly slowing decision-making processes among companies planning to build inventories or enter into long-term supply agreements.
Scrap availability in Europe is reported to be below normal levels due to expectations surrounding CBAM’s implementation in 2026, providing limited upward support to scrap and flat steel prices. However, continued caution on the end-user side has prevented prices from establishing a clear upward trend.
CBAM Uncertainty Continues to Pressure Pricing and Contract Structures
According to market participants, CBAM continues to create pressure on pricing and contract negotiations. While goods will enter the EU in 2026, carbon payments are scheduled for 2027, making it difficult for importers to accurately project costs at this stage. In addition, the lack of verified, plant-level emissions data has pushed default values to the forefront of cost calculations, while fluctuations in EU ETS carbon prices have increased the risk associated with fixed-price steel contracts.
In this environment, a significant share of buyers has opted to postpone purchasing decisions until January. Although the EU CBAM Committee approved revised default and benchmark carbon intensity values on 9 December, sources say the impact on market activity has been limited. The continuation of the phased penalty mechanism—set at 10% in 2026, 20% in 2027 and 30% from 2028 onward—has reinforced the market’s cautious stance.
European Prices Remain Close to Stable Levels
As of December, flat steel prices across Europe are generally moving within a narrow range. In Germany, HRC prices are reported at €610–620 per tonne EXW, CRC at €710–720 per tonne EXW and hot-dip galvanized (HDG) at €710–735 per tonne EXW. In Italy, HRC prices are seen at €595–600 per tonne EXW, while CRC and HDG prices are reported in the €710–720 per tonne EXW range.
Market sources note that CRC prices in particular have found relative support due to tighter domestic availability and production schedules that are largely filled ahead of the year-end period. Nevertheless, high inventory levels and CBAM-related cost uncertainty continue to discourage buyers from committing to large-volume purchases, keeping price increases limited.
Import Offers Remain Competitive, but Transactions Are Limited
On the import side, prices continue to appear competitive compared with domestic European levels. Market sources report that offers for Turkish-origin hot-rolled coil to Italy are being quoted at $585–595 per tonne CFR, excluding anti-dumping duties.
Chinese-linked offers have also drawn attention, with Sumec reportedly offering hot-rolled coil to Northern Europe at $460 per tonne CFR, cold-rolled coil at $535 per tonne CFR and wire rod at $455 per tonne CFR, with shipment planned for 10 February. However, market participants stress that such low-priced import offers are being approached cautiously by buyers until CBAM-related costs become clearer, resulting in limited transaction volumes.
Market Outlook: Transaction Volumes Under Pressure
Overall, as CBAM’s definitive phase approaches, the European steel market is experiencing a slowdown in transaction volumes rather than sharp directional price movements. While many buyers prefer to wait until January and February, when cost structures are expected to become clearer, producers are focusing on maintaining supply discipline and defending current price levels.
In the short term, the European steel market is expected to continue displaying a cautious, low-volume profile, with prices fluctuating within a narrow range and only limited upside or downside movements.
Romanian rebar prices rise under CBAM pressure, wire rod stable as demand still low
This week, Romania’s rebar segment has seen upward price movement, as both the sole domestic producer and rebar spot traders increased their offers compared to last week.
The adjustments are largely influenced by CBAM-related expectations and rising prices from other EU suppliers. However, the wire rod segment has not followed this trend, with prices remaining unchanged due to persistently weak demand. Market participants report that overall demand continues to be limited, particularly in the wire rod segment, where activity is described as very low. The rebar market is performing slightly better, with a modest uptick in inquiries following the recent increases. Even so, sources highlight growing uncertainty: with the end of the year approaching and holiday-related slowdowns already visible, business activity is expected to soften further. Given these conditions, combined with ongoing liquidity constraints, many sellers question whether the current upward price attempts can be sustained, as buyers remain cautious and highly price-sensitive.
As a result, domestic rebar prices have moved higher, with the country’s sole producer raising offers to €560-565/mt ex-works, compared with €550-555/mt previously. In the retail segment, traders have also adjusted their prices upward to €570-590/mt ex-warehouse, up from last week’s €550-565/mt ex-warehouse.
In contrast, the wire rod market has remained quiet, with weak demand limiting any price movement. Traders report that offers continue to stand at €560-570/mt ex-warehouse, unchanged from the previous week.
On the import side, trading activity has remained limited as the end of the year approaches and many Romanian buyers are waiting for January arrival cargoes rather than committing to new bookings. Offers from EU suppliers continue to reflect CBAM-related adjustments, and Bulgarian mills have raised rebar prices to €600-610/mt CPT, up from last week’s €585-605/mt CPT. Moldovan suppliers, meanwhile, have paused new offers due to internal issues and are currently absent from the market.
Among non-EU origins, Egyptian mills have kept their levels unchanged, offering rebar at €485-490/mt CFR and wire rod at €490-495/mt CFR. Turkish suppliers, by contrast, have slightly reduced the lower end of their range, now quoting at €495-515/mt CFR for January shipment, down from €500-515/mt CFR last week, based on an exchange rate of €1 = $1.17 and freight costs of €15-20/mt.
Draft CBAM default values act clarifies revision logic
Default values relating to the impending definitive stage of the Carbon Border Adjustment Mechanism (CBAM) were approved by the European Commission’s CBAM committee in the week beginning 8 December, with a draft act on default values detailing the principles behind recent revisions.
McCloskey exclusively and extensively covered the latest values in an article coinciding with the affirmative vote.
The draft implementing regulation “laying down rules […] as regards the establishment of default values” details the principles and processes behind these revisions, giving some clarity to what some industry participants characterize as “illogical” or “unrepresentative” data.
McCloskey previously outlined that the default values – speculated by market participants as due to insufficient emissions data collected during CBAM’s transitional stage – were based on a model from the EU’s Joint Research Centre (JRC), pulling from public datasets like those of the International Energy Agency (IEA), and industry associations in creating the now-revised and approved default values.
In reality, the CBAM regulation always intended to base the default values on publicly available data, as described in Annex IV:
“Default values shall be determined based on the best available data. Best available data shall be based on reliable and publicly available information”
As detailed in McCloskey’s aforementioned article, the originally circulated default values were almost unanimously criticised by steel market participants across the value chain, leading the Commission to update the dataset on the basis of what transitional stage data was available in the CBAM registry.
While there has been extensive debate on the default values for specific product categories and origins, the positions of the steel value chain in Europe can be relatively neatly summarised as ‘steelmakers thought they were too low,’ particularly for China, and ‘importers thought they were too high’ especially as relates to recently disruptive origins like Indonesia.
The review process seemed to favour the steelmaker position, as where more than 30 transitional stage data points could be consolidated for a product category origin, the value at the 90th percentile of the range was adopted as a new default value – where said value was higher than the JRC’s original default value, and the respective import market share exceeded 3%.
The draft implementing act on default values explains further – and is understood by McCloskey to have been approved via comitology in its current form – as to the principles dictating their formation.
The default values are subject to a phased-in mark-up of 10% in 2026; 20% in 2027; and 30% in 2028, which according to the draft act is “[t]o avoid immediate disproportionate impacts on prices of goods, and to give economic operators time to adapt.”
The Commission alludes to capacity issues with verifiers, stating “[t]his phase-in, is also necessary as the number of verifiers may increase in the first years following the end of the transition period, in particular in 2026,” and seems to anticipate heavy use of default values in the “first years” of the definitive stage:
“CBAM declarants should therefore be able to use default values in those first years, and rely on actual emissions subsequently.”
Also in the draft act is a new anti-circumvention provision relating to precursors where the country of production is not known – most relevant to mixed methodology CBAM declarations referencing a combination of actual and default values – intended to deter “operators that use a precursor produced in a third country for which a high default has been set from claiming that the country of production of a precursor is unknown in order to avoid being subject to that high default value.”
These default values for precursors of unknown origin are said at the default value of the origin with the “highest emission intensities for that precursor.”
Additionally, the draft act clarifies the Commission’s intended timeline for reviewing the default values and mark-ups as “December 2027 at the latest.”
The draft implementing act on default values states: “[t]he Commission should make all necessary efforts, in close collaboration with the Member States and based on a systematic and holistic review, to ensure that a revision of the default values can already be carried out in 2026.”
The JRC is currently conducting another two year study into global industrial emissions, which is scheduled to complete in June 2026. McCloskey’s sources are generally pessimistic about the likelihood of a revision of the default values in 2026, despite the Commission’s best efforts, and seem resigned to a culture of uncertainty in the EU steel markets for the foreseeable future.
While steel industry sources close to the drafting and approval process for the CBAM default values understand that the data has been approved in its latest form, McCloskey’s review of the acts and annexes reveals some discrepancies, as Thailand and Vietnam are missing CN code listings for stainless steel products, North Macedonia lacks a production route classification, and not all origins have iron and steel listings at all – though the unanimous availability of iron and steel default values across origins has never explicitly been suggested as intended, and relevant origins would instead reference fallback data for “Other Countries and Territories.”
ArcelorMittal Spain tests new BF restart solution
ArcelorMittal is making a new attempt to restart blast furnace B at its Gijón plant in Spain. The facility has not produced pig iron normally since last summer’s maintenance shutdown.
After the failed start-up at the end of September, the company began a new BF ignition operation using a complex method.
“On Tuesday, we reintroduced oxypropane technology into the blast furnace,” ArcelorMittal’s spokesperson tells Kallanish. “We are simultaneously usimg two burning bars in two ports to extract the solidified pig iron from within the facility and we will have to wait a couple of days to see the result.”
This process causes significant wear and tear on the facility, as it requires drilling into the furnace crucible.
According to workers’ representatives, BF B production could stabilise between the end of January and the first week of February, if the start-up is successful, with the first pig iron smelting taking place at the end of December.
At a recent meeting with trade unions, the company’s management denied it was planning to carry out the cooling and subsequent emptying of BF B, citing the high costs involved and the length of the process, which would take at least three months.
German states demand ‘green’ steel in car production
The minister-presidents of 11 German states have written to European Commission President Ursula von der Leyen regarding the use of low-emission steel in automobile production.
At the instigation of Saarland and Lower Saxony, they are demanding that carbon-reduced steel production and automobile production be strengthened by means of a regulatory coupling between the two sectors.
The 11 premiers suggest that the use of “green” steel be counted towards the average emissions values of new vehicles, Kallanish understands. The self-declared goal of the initiative is to consider the CO2 emissions of the entire vehicle. The current limits refer exclusively to vehicle emissions, without considering the circumstances of manufacturing. This means that carmakers lack the incentive to produce climate-friendly cars, the premieres argue.
German steel association WVStahl has welcomed the move. “We need a regulatory environment that supports these investments and links the strategies of the domestic steel and automotive industries,” says managing director Kerstin Maria Rippel.
