European steel sector reels from carbon border tax hit
The European steel import sector is grappling with severe implementation challenges under the Carbon Border Adjustment Mechanism, with importers facing “excessive cost surprises” from regulations published at the last minute, EUROMETAL President Alexander Julius said in an interview.
Julius warned that the steel industry is confronting an unprecedented regulatory burden that threatens to accelerate European deindustrialization.
The European Commission published more than 1,600 pages of new calculation factors in December 2025, leaving most importers scrambling to understand compliance requirements that took effect Jan. 1, 2026.
“The complete steel-using industry is suffering from the final CBAM cost calculation components published by the European Commission last minute in December 2025,” Julius told Platts, part of S&P Global Energy. “Most importers and their steel-using partners will be faced by excessive costs surprises never assumed nor included in the original calculation done in the course contract closing in 2025.”
The timing has created a cascade of problems across the steel supply chain, with companies unable to properly assess compliance costs before contracts were finalized in 2025. Julius said most industry participants responsible for CBAM compliance had not begun reviewing the extensive new documentation before offices reopened Jan. 5.
Agricultural precedent
The steel sector’s struggles come as the European Commission has already signaled its willingness to provide relief to the agricultural sector just two weeks after CBAM’s entry into force. Under pressure from EU agriculture ministers, EU Commissioner Maroš Šefčovič indicated he may suspend CBAM requirements and reduce tariffs for fertilizers.
Julius expects similar political pressure to emerge from the steel sector, arguing that the justification for exemptions lies in the “unproportional costs and price increases resulting in steel based finished products being not competitive compared to products made outside of the EU and imported into the EU.”
The competitive disadvantage extends beyond imports, with EU exports also expected to decline as domestic production costs rise. “The logical consequence is an exponentially increasing deindustrialization in Europe,” Julius said. “This is not fiction, we know various manufacturing companies already announced those consequences.”
The new regulations could fundamentally alter sourcing patterns, potentially making certain origins uncompetitive and driving prices even higher when combined with broader EU steel import restrictions.
The implementation challenges are compounded by what industry participants describe as fundamental flaws in the CBAM framework.
Steel trader Gerber Steel has formally alerted the European Commission to “serious errors and inconsistencies” in default values, particularly for Taiwan’s stainless steel category, arguing the values appear copied from other origins rather than being based on country-specific data.
Julius characterized the default value system as “a mystery,” suggesting it was developed to meet the Dec. 31, 2025, deadline rather than being based on factual analysis. The rushed implementation has created additional complications around certification requirements, with certifiers not expected to receive accreditation from national bodies until July 2026.
“The biggest challenge lies with certifiers not being accredited by the national accreditation bodies before July 2026,” Julius said. “The next challenge then will be a timely certification by a small number of certifiers available for thousands of installations to be certified.”
This certification bottleneck is likely to force many importers to rely on default values, which are typically higher than actual emissions and therefore more costly. The European Commission’s “unrealistic time schedule” has effectively pushed importers toward the most expensive compliance option.
While it remains too early to observe definitive shifts in sourcing patterns, Julius suggested EU domestic steel producers may benefit from the import cost increases. “I guess the EU domestic steel producers can sit back, relax, and wait for the development of import prices and availability,” he said.
Eurometal has repeatedly approached the European Commission requesting a reliable basis for cost calculations well in advance of implementation, but Julius said those approaches “have been ignored by the Commission.” The organization argues the Commission is now penalizing importers and steel-using customers with “a framework of inflationary cost components and unrealistic verification timelines” that further weakens an already struggling industry.
Platts assessed domestic HRC at Eur630/mt ex-works Ruhr on Jan. 13 and Eur625/mt ex-works Italy, both unchanged day over day. Imported HRC was assessed at Eur500/mt CIF Antwerp and Eur495/mt CIF Southern Europe on Jan. 13, stable day over day.
European steel HRC prices stable on low demand, market caution
European prices for steel hot-rolled coil remained steady in the week to Wednesday January 14, with reports of low trading activity, while demand was also subdued, Fastmarkets heard.
Market participants remained sufficiently well stocked and were not looking to place big orders, according to trade sources, with most still waiting to assess the effects on imports of the EU’s Carbon Border Adjustment Mechanism (CBAM).
According to a Northern European source, several market participants that were “very much import-oriented” in the past were now refraining from taking additional risks linked with imports, instead focusing on domestic producers.
The CBAM, which came into full effect only on January 1, was expected to affect import flows, while also supporting domestic producers.
In Northern Europe, estimates of workable prices were heard around €630-650 ($741-765) per tonne ex-works, with no new bookings heard during the day.
Fastmarkets’ daily steel hot-rolled coil index, domestic, exw Northern Europe, was €641.25 per tonne on January 14, up by €2.92 per tonne from €638.33 per tonne on January 13.
The index was up by €10.25 per tonne week on week and by €19.58 per tonne month on month.
There were no major changes in the Italian market, either.
According to a local market source, demand was still weak, although the source said that prices were “destined to increase” when import offers become too risky with the implementation of the new trade rules.
Estimates of workable prices were heard within the range of €620-630 per tonne ex-works, while offers for March delivery were heard around €630-650 per tonne ex-works.
Fastmarkets’ daily steel hot-rolled coil index, domestic, exw Italy, was €630.00 per tonne on Wednesday, up by €0.73 per tonne day on day.
The index was up by €6.00 per tonne week on week and by €18.75 per tonne month on month.
EU steel import quotas for some steel products have been reached full capacity
In the EU’s quota period of January 1–March 31, 2026, China, Türkiye and India filled some product quotas for steel products.
According to SteelRadar’s weekly quota assessment compiled from European Commission data, initial quotas for various steel product groups have been fully exhausted, reducing the “remaining quota” to zero. China, Türkiye, and India reached 100% utilization rates across multiple product categories.
China origin 4B metallic coated sheets completely used up their 126,937 ton quota. Similarly, the 15,559 ton quota for organic coated sheets imported from Türkiye also reached full utilization. China’s quota for commercial bars and light sections, totaling 138,863 tons, was fully filled, while India’s 31,416 ton quota for stainless bars and light sections was likewise exhausted.
Quotas for China origin sheet piling products were rapidly consumed, with the entire 6,929 ton allocation used up. India fully exhausted its 5,821 ton quota for seamless stainless steel pipes, while China origin other seamless pipe products also saw their 34,005 ton quota completely utilized.
India’s hot rolled coil (HRC) quota was also fully consumed, with the 222,829 ton allocation closing at 100% usage. Türkiye fully utilized its 83,109 ton quota for hollow sections, and the 14,782 ton quota for large welded pipes imported from Türkiye was likewise completely exhausted.
Meanwhile, some quotas recorded utilization rates exceeding 80%. South Korea used 81.97% of its 70,318 ton quota for organic coated sheets, while Taiwan reached 99.14% utilization for the same product group. China used 83.30% of its 7,992 ton quota for other welded pipe products.
ArcelorMittal develops low-quality scrap upgrade, metal recovery system
ArcelorMittal’s Global Research and Development unit in Spain is developing a new system for improving the quality and value of ferrous scrap through mechanical friction processing, the company tells Kallanish.
The financing of the so-called FRICHATEAF project is part of Spain’s strategic l recovery and resilience plan (Perte), and responds to the current operational and environmental challenges of the steel industry, especially in the context of ArcelorMittal’s decarbonisation plans, the firm notes.
The project aims to transform low-quality scrap metal, whose current use is limited, into raw material suitable for the production of high-added-value steel. “FRICHATEAF will enable the on-site treatment of fragmented ferrous materials, aligning scrap recovery with electric arc furnace steel production processes and reducing dependence on iron ore,” ArcelorMittal says.
The new technology will significantly improve scrap quality, optimising the efficiency of smelting processes and reducing energy consumption, waste generation and CO₂ emissions.
The project also includes the separation and recovery of metals such as copper, aluminium, chromium and organic materials for reuse in other industrial processes.
Rising freight prices throttle Alpine rebar trade
Rebar cut-and-benders in Austria and southern Germany are hesitating to buy Italian material, because increasing transport costs make delivered prices across the Alps unattractive.
The apparent spread between rebar base prices in Italy and in northwestern Europe can be as much as €70/tonne ($82), with prices at €280-290/t in Italy and at €340-350/t in Germany. Northwestern European buyers are nevertheless still staying clear of ordering Italian. According to a Ruhr-based manager, transport to there would “easily cost €50, more likely €60”.
“Freight costs have risen significantly lately, for road trucks and for trains,” he tells Kallanish. Citing mill sources, he says that rail freight rose by 20%, and for some routes by up to 50%.
His view for the Ruhr region is shared further south, where sources confirm this trend. Austrian buyers have to calculate with delivery fees of €50, maybe more, rather than the €40 they have been used to, one source says. He points at a detail often overlooked, that Italian base prices are quoted ex-works for the domestic market, while northwestern mills quote delivered.
Austrian buyers therefore easily end up with offers of €330-340/t delivered, which makes little difference to domestic or German quotes. He also notes that Italian mill prices for northern markets differ from those offered in Italy. “They try to reach for prices they think they can achieve here. After all, Austria for them is a complementary market, targeted only if the opportunity nets more money,” he believes.
He adds that Austria’s only rebar mill, Marienhütte, may extend its winter break for the modernisation of its cooling bed (see Kallanish 7 May 2025).
Rising scrap, coil pressure French buyers
French long steel transaction prices remain mostly stable compared to December as the market slowly resumes after the winter break. Activity is being dominated by uncertainty and low visibility, with end users and customers unwilling to pay increases, Kallanish notes.
Coil derivatives are meanwhile ticking up, driven by pressure on coil prices and diminished exports. Sources say they expect a €20/tonne ($23.37/t) increase in January for sheets and strips, and a steeper hike on tubes.
However, a source notes that passing increases downstream remains challenging. Italian re-rollers were reported being particularly firm in December, refusing to grant concessions. One large buyer says he rejected these terms and instead sourced tubes from other European countries. At present, before further expected increases, hot rolled sheet prices are heard at around €700/t delivered in France.
In the longs sector, no hikes have yet been formally announced, though some are expected for merchant bar. Local prices are heard at €220-230/t base delivered. Mills, particularly Spanish suppliers selling into France, are said to be considering increases of €20-30/t.
Customers remain reluctant to accept hikes amid downstream resistance and weak demand. One longs buyer says he would accept a modest €5-10/t increase compared with pre-holiday levels, but no more.
Slight upticks are also expected for beams, potentially in the region of €10/t. First-category sections in France continue to trade at around €730/t delivered on average.
In December, some orders for French rebar were concluded at largely stable prices of €580-600/t delivered and prices remain stable for the moment.
French scrap values are increasing in line with the rest of Europe as new contracts are being signed. Scrap price increases are said to be significant this month, exceeding €15/t.
Indian coil exports hike despite CBAM, quota headwinds
Indian hot rolled and cold rolled coil export prices to Europe are marginally up on-week, supported by stable Indian domestic prices but capped by EU quota exhaustion and regulatory uncertainty, sources tell Kallanish.
The $2-5/tonne w-o-w increase reflects limited cost-driven upside rather than any improvement in demand. Market participants remain reluctant to take on new risk as they seek clarity over the European Commission’s latest CBAM announcements, tight quota availability and slow post-holiday EU activity.
Indian HRC offers are up by $2-5/t w-o-w to $570-575/t cfr Antwerp, or $510-515/t fob Mumbai, for S235 grade, February/March shipment.
Comparatively, local EU HRC prices are at €620-650/t ($723-758) cfr Italy base ex-works.
“[India’s] HRC quota is almost full,” one market participant says. Sellers add that near-full utilisation of the HRC quota is now the main constraint, limiting their ability to place further volumes.
A trader says sentiment remains cautious as participants assess the implications of CBAM. The Commission’s proposed safeguard quota overhaul could meanwhile materially curb India’s coil exports to the EU from July 2026, reinforcing buyer hesitancy in the spot market.
According to TARIC data compiled by Eurometal, HRC category 1A imports from India are fully exhausted as of 12 January, effectively removing near-term availability.
CRC activity remains limited, with offers stable w-o-w at $710-715/t cfr Antwerp, or $655-660/t fob Mumbai. Ongoing anti-dumping investigations continue to dampen buying interest, despite the CRC quota still being 86% available, with 5,100 tonnes awaiting allocation.
In the coated segment, HDGI offers are up $10-15/t on-week to $780-795/t cfr Antwerp. PPGI continues to command a premium of around $200-220/t over HDG. Plate offers are heard at $690-695/t cfr Antwerp. Freight remains stable at $60/t.
Metal-coated category 4A quota was 97% available with 800t awaiting allocation, while 4B was 99% available with 200t awaiting allocation. The organic-coated quota stood at 23%, with 100t awaiting allocation as of 12 January.
To markets outside Europe, prices remain broadly rangebound. Market participants add that Indian mills are holding back more aggressive offers into Asia and the Middle East, while gauging what volumes Europe can absorb as trading resumes post-holidays.
In Vietnam, India-origin HRC offers are heard at $487-492/t cfr Ho Chi Minh City or $475-480/t fob Mumbai, end-February shipment.
In the GCC, India-origin HRC offers are heard at $505-506/t cfr GCC ports, or $488-489/t fob Mumbai, end-February shipment.
Last week, an India-UAE HRC deal was heard concluded at $490-495/t cfr Jebel Ali, or $473-478/t fob Mumbai, for around 15,000-16,000t, end-February shipment, for 2mm+ SAE 1006 grades (see separate article).
Market participants say this booking indicates a price floor rather than signalling a broader recovery, with the absence of low-priced Indian offers helping to stabilise export levels.
Sources expect Indian coil export prices to remain broadly rangebound in the near term, with limited upside amid weak overseas demand and quota constraints.