CBAM export impact concerns EU steelmakers: Federacciai

The transitional phase of the EU’s Carbon Border Adjustment Mechanism (CBAM) will begin on 1 October. As the implementation approaches, market participants in Europe are discussing the new system and its challenges. Steelmakers remain concerned for the future of steel exports.

Flavio Bregant, director general of Federacciai, the Italian steelmakers’ association, confirmed in a webinar on Thursday attended by Kallanish that the main problem for steelmakers is CBAM’s impact on their exports once the transitional phase is completed. CBAM’s full implementation is scheduled from January 2026.

“At the moment, CBAM only covers imports. We are happy to hear from the European Commission that they will look into the issue of exports in 2025, but we have explained the problem multiple times already and until now we have received no answers,” Bregant lamented.

From the beginning of 2026, free allocations of Emissions Trading System (ETS) certificates will be phased out, further increasing costs of production for European steelmakers to ensure the low-emission transformation takes place. This is set to make European steelmakers less competitive in the international steel market, hence the difficulties in exporting if fiscal support is not secured from the European Commission.

“Personally, I see exports of European steel products falling to zero once CBAM is fully implemented. This will result in the need for European steelmakers to reduce output at their mills, while keeping the doors open to imports,” Bregant explained. “I see exports falling, not imports.”

Other representatives of the steel supply chain, on the other hand, are concerned by the potential reduction in EU imports as a result of CBAM implementation (see related articles).

In 2022, European steelmakers exported over 16 million tonnes of finished steel products. This figure is over 10mt below the record levels registered in 2012-2016.

Emanuele Norsa Italy

Unions warn of possible Acciaierie d’Italia production shutdown

Acciaierie d’Italia (ADI)’s trade unions are seeking a meeting with the government to address the troubles the company is going through, Kallanish learns from a Fim Fiom Uilm union source.

“ADI is experiencing a phase of abandonment and dangerous decline destined in a very short time to deliver it to an irreversible state of shutdown, with very serious occupational as well as industrial consequences. This is without considering the numerous incidents that occur daily in the workplace and which put at risk the safety of workers,” the union says in a note.

Despite government funding, ADI management is not keeping any of the commitments made on production volumes and investments, or paying contractors and starting renovations on long-idled blast furnace no.5 at Taranto, the union says.

Unions representing ADI’s subsidiary in Cornigliano, near Genoa, also warn of a possible production shutdown due to a lack of maintenance work, which is causing accidents and the need for new components for the outdated equipment.

Earlier this year, the Italian finance ministry authorised the payment of €680 million ($724m) to ADI, the joint venture between state company Invitalia and ArcelorMittal. This year, the plant in Genoa should see a revamping of the tinplate re-rolling lines, while Novi Ligure will see a revamp of the coating line. ADI will also boost the Racconigi warehouses’ automation. In the second half of 2023, the steelmaker also vowed to start the refurbishment of BF no.5 and begin construction of an electric arc furnace (see Kallanish 1 February).

The company confirmed its forecast of producing at least 4 million tonnes at its Taranto steelworks in 2023, with the aim of reaching 5mt in 2024. Sources who spoke to Kallanish however believe it will reach about half of that amount.

ADI did not comment before press deadline.

Natalia Capra France

Poland’s first offshore wind farm secures financing

The European Investment Bank (EIB) has agreed to loan up to €610 million ($649m) for the construction of the first offshore windfarm in Poland and one of the largest in the world.

Wind power is touted to be a critical supplier of the energy required for steel industry decarbonisation as well as a major future steel demand driver. Offshore wind is an entirely new market in Poland but with huge prospects thanks to its Baltic Sea access, Kallanish notes.

The Baltic Power offshore windfarm operation will comprise 76 wind turbines for an overall capacity of 1,140MW, with construction set to be completed by mid-2026. This is the first offshore windfarm to reach financial close under the new Polish Offshore Wind Contracts for Difference (CfD) regulatory regime.

The project is of strategic importance and will also contribute to the objectives of the REPowerEU Plan, by rolling out clean energy capacity to support EU energy independence and its security of supply, the bank says.

“Financing for Baltic Power will support the first offshore wind farm project in Poland and will certainly open the way for the green transformation and other future offshore wind energy projects,” says EIB vice-president Teresa Czerwińska.

Baltic Power is a company owned by PKN ORLEN (51% of ownership) and Northland Power (49% of ownership). “Despite the recent challenges for the offshore wind sector in some markets, Northland continues to find a way to advance large-scale offshore wind projects with attractive economics,” says Northland chief executive Mike Crawley.

Construction of Poland’s first offshore wind farm is to start this year, with 18GW of offshore production expected by 2040, Poland’s environment minister, Anna Moskwa, said earlier this week (see Kallanish passim).

Last week, European Commission president Ursula von der Leyen pledged support to the EU’s wind power industry, promising a European Wind Power package, a move welcomed by Eurofer.

Last month, Poland’s Industrial Development Agency (ARP) broke ground together with its partners, Spain’s GRI Renewable Industries and Poland-based Baltic Towers, on a new offshore wind tower factory in Gdansk. The plant will be capable of producing towers for the largest, 15MW capacity wind turbines.

For wind turbines, over 90% of total material requirements are steel and concrete. Steel requirement is projected to fall from 140 tonnes/MW to 110t/MW by 2050 for gearbox turbines, and from 400 t/MW to 320 t/MW for direct-drive turbines, according to Energy Transitions Commission research.

Adam Smith Poland

European steel beams market narrows downward on poor demand

The price ranges for steel beams in European markets narrowed downward in the week to Wednesday September 20, with several orders placed but demand still weak amid persistently low consumption by the construction sector.

Fastmarkets’ weekly price assessment for steel beams, domestic, delivered Northern Europe, was €720-760 ($770-812) per tonne on Wednesday, narrowing downward by €20 per tonne from €720-780 per tonne a week earlier.

Similarly, Fastmarkets’ weekly price assessment for steel beams, domestic, delivered Southern Europe, was also €720-760 per tonne on Wednesday, narrowing downward by €30 per tonne week on week from €720-790 per tonne.

Fastmarkets heard that mills have been pushing for prices to rise as high as €770 per tonne, but market sources said that stockholders were not accepting such increases “because [end-user] selling prices are too low.”

Meanwhile, scrap feedstock prices in the bellwether Turkish market moved up in the week after fresh bookings that came because some steelmakers were replenishing their stock levels.

Fastmarkets’ calculation of its daily index for steel scrap, HMS 1&2 (80:20 mix), North Europe origin, cfr Turkey, was $372.41 per tonne on Wednesday, up by $2.17 per tonne week on week from $370.24 per tonne.

Published by: Holly Chant

Steel mills selling ‘below cost’ in Northern European long steel markets

An almost-complete absence of demand in the Northern European steel rebar and wire rod markets continued to weigh on sentiment in the week ended Wednesday September 20, Fastmarkets heard.

Customers remained resistant to restocking significant tonnages because they expected further price declines.

Mills asserted, however, that further price drops were not feasible because it would mean selling below cost.

Mills have begun to reduce their output to manage the depressed market conditions, Fastmarkets heard.

Fastmarkets’ weekly price assessment for steel reinforcing bar (rebar), domestic, delivered Northern Europe, was €560-580 ($599-620) per tonne on Wednesday, down by €20 per tonne week on week from €580-600 per tonne.

Bearish sentiment and weak demand resulted in minimal trading in the Northern European rebar market, Fastmarkets heard.

“The market is not moving at the moment. Mills want to increase prices but buyers are not accepting this. Import offers are at a similar price, so there is zero demand for imports at the moment,” a trader source in Germany said.

“There is no trading activity. Input costs such as scrap have risen, but customers still expect discounts,” a buyer source said.

“I am out of the market now, and I am not buying. Prices are not moving because there is so little market activity,” a buyer source from Austria said.

Producers cannot reduce their prices any further without hitting the cost line, industry sources said.

Fastmarkets’ weekly price assessment for steel wire rod (mesh quality), domestic, delivered Northern Europe, was €580-590 per tonne on Wednesday, narrowing downward week on week by €10 per tonne from €580-600 per tonne.

Current downward price pressure in the Northern European market has prompted wire rod producers to cut their output, Fastmarkets heard.

Producers have raised their offer prices to €600 per tonne delivered, but the market has not yet accepted this.

“Prices have to increase because mills are losing money, so if price rises are not accepted, production cuts are unavoidable,” a wire rod trader in the region said.

“Customers are only restocking minimum tonnages because they think prices will continue to go down,” the same source added. “Cut-and-benders are dragging prices down because they are selling at unworkably low prices and attempting to restock at low prices. But prices around €570 per tonne delivered are not workable for producers.”

Published by: India-Inés Levy

European steel hollow sections prices widen down amid weak end-user demand

Steel hollow sections prices in Europe widened downward in the week to September 20, with demand lower than usual for this time of year, sources said.

Fastmarkets’ weekly price assessment for steel sections (medium) domestic, delivered Northern Europe was €750-800 ($802- 855) per tonne on Wednesday, widening downward by €20 per tonne from €770-800 per tonne on September 13.

Similarly, Fastmarkets’ weekly price assessment for steel sections (medium) domestic, delivered Southern Europe was €750-800 per tonne on Wednesday, widening downward by €20 per tonne week on week from €770-800 per tonne.

“We are not placing very large orders at this moment,” one trader in Northern Europe said.

Sources in Northern and Southern Europe said trading was very limited in the past seven days amid slow demand and high raw material prices.

Hot-rolled coil feedstock prices fell in the week, however, with trading at low levels and buyers postponing restocking.

Fastmarkets’ daily calculation of its steel hot-rolled coil index domestic, exw Northern Europe was €634.88 per tonne on Wednesday, down by €7.20 per tonne from €642.08 per tonne a week earlier.

Traders said sections stock levels have been quite low, with buyers only purchasing limited volumes.

One market participant in Southern Europe said traders that don’t currently need to buy material are waiting until the start of the next EU safeguarding import quota period on October 1.

They added that they expect imported sections to be on offer at a €50-100 per tonne discount, depending on size and thickness.

But a second market participant in northern Europe said they don’t think sections imports will be flooding the market in October due to weak end-user demand and long — three to four-months — lead times.

Published by: Holly Chant

HRC buyers in Europe continue holding back from trading

European buyers of hot-rolled coil remain focused on reducing their stock levels amid slow downstream sales, with prices still under pressure, sources told Fastmarkets on Thursday September 21.

Fastmarkets calculated its daily steel hot-rolled coil index domestic, exw Northern Europe at €633.75 ($677.43) per tonne on September 21, down by €1.13 per tonne from €634.88 per tonne the previous day.

The index was down by €7.50 per tonne week on week and by €0.83 per tonne month on month.

Buyers estimated tradeable price levels at €620-650 per tonne ex-works.

Offers from integrated mills in the region for HRC with lead times of five to six weeks were heard between €630-670 per tonne ex-works.

A re-roller from the Benelux area was heard offering HRC to the region at €625 per tonne delivered.

In general, trading remained quite thin in the European HRC market, despite some lower offers available and short lead times.

Slow sales to end-users led to destocking at stockholders, steel service centers and slower purchasing in the upstream market as a result.

“The main problem is the lack of demand. Our sales [to end-users] are down 15-20% on-year,” a distributor in Northern Europe said.

“We are not in a hurry [to book HRC], we do not even inquire mills about prices,” a second distributor in the region said. “Stock level is not high, but more than enough for the current demand levels,” he added.

At the same time, producer sources said that any steep HRC price drops were unlikely due to rising production costs.

“Rollover [of domestic HRC prices] is the most likely scenario for October. I don’t think import volumes that are waiting in ports and will be released to the market in October will pressure the domestic HRC market significantly,” a mill source said. “Those bookings [for import HRC] were done in the end of the second quarter, when the gap between domestic and import prices was over €100 per tonne. Since that time, domestic prices have dropped so the gap won’t be that dramatic.”

Meanwhile, Fastmarkets’ calculation of its daily steel hot-rolled coil index domestic, exw Italy was €622.50 per tonne on Thursday, up by just €0.42 per tonne from €622.08 per tonne on Wednesday.

The Italian index was, however, down by €5.83 per tonne week on week, and down by €7.50 per tonne month on month.

Buyers’ ideas of a tradeable price level for HRC in the nation were generally no higher than €610-630 per tonne ex-works.

An offer from an integrated mill in the region for late-October delivery coil was heard at €650 per tonne delivered, which nets back to about €635 per tonne ex-works.

Italian buyers had a similar attitude and were not chasing for new orders, focused instead on destocking.

Import HRC offers to Europe from Asian countries were reported at €585-610 per tonne CFR to Italy for January-arrival, with the lower end available from Vietnamese suppliers.

Indian mills were reportedly out of the market in the week to September 21.

The demand for imported coil remained low due to long lead times and the relatively small gap with domestic prices.

“The prices for import [HRC] should be way below €600 per tonne CFR, maybe at €540-550 per tonne [CFR] maximum, given safeguards quota risks and dull market in general,” a buyer in Italy said.

Published by: Julia Bolotova

CBAM risks political backlash, hits Asian suppliers: WoodMac

The Carbon Border Adjustment Mechanism (CBAM) could add $275/tonne of cost for some key finished steel exporters to the EU, while the increased domestic production costs could lead to a political backlash, according to Wood Mackenzie.

In 2022, the average import price of steel products covered by CBAM was around $1,450/t. The CBAM fees could increase the cost of delivered steel to the EU by about 56% for India and about 49% for China in 2034, by which point all CBAM costs are planned to have been fully phased in, the consultancy notes.

One initial response for exporters to the EU is likely to be a reorganisation of sales to direct lower-emissions steel to the European market, while higher-emissions production is diverted to markets without carbon fees. The EU plans to monitor and address these strategies, but it does not have a concrete action plan to prevent them, Wood Mackenzie says.

Steel producers with lower production carbon intensities or high domestic carbon price, such as in the US and UK, could be less impacted by CBAM, while Asian producers will need to consider diverting supply.

“In the early stages of CBAM implementation, higher prices in the EU will enable some low-cost foreign producers to maintain exports to Europe. Over time, however, the growing carbon cost will erode the competitive advantage of many non-EU producers, making the EU a less economically attractive export destination for higher-emitting steelmakers,” the firm observes in a report sent to Kallanish.

“Collateral damage should be expected, not only in the higher costs that will be inevitably passed on to European end-users, but also in the additional strains on industrial supply chains. The widespread use of steel products across a broad range of technologies in the energy sector, including wind turbines and electric vehicles, puts them at the centre of the transitioning world,” it continues.

“The CBAM is intended to ensure a fair transition in the EU and globally, but an unintended consequence could be to make the transition in Europe more expensive than elsewhere. In a high-price environment, an additional cost could result in political backlash,” it adds.

EU policymakers will need to monitor the effects of CBAM on energy, food, steel and other commodity prices, and intervene with subsidies to mitigate the impacts on businesses and consumers, Wood Mackenzie concludes.

Adam Smith Poland

Domestic CRC, HDG prices in Europe pressured by slow consumption

Domestic prices for steel cold-rolled coil and hot-dipped galvanized coil in Europe inched lower in the seven days to Wednesday September 20 amid slowing demand from end users and pressure from imports, industry sources told Fastmarkets.

European CRC and HDG producers avoided giving firm offers due to the weakness in the market, sticking to a “case-by-case” approach, Fastmarkets heard.

“The outlook is uncertain for October as demand from end users keeps slowing down. Steel service centers have thin order books and [are booking] less [CRC and HDG],” a mill source said.

Some mills in the region were still offering coil for October delivery, an indication of thin order books.

Slowing demand from end-user sectors was pressuring prices down, while producers were reluctant to reduce offers, citing high costs.

Buyers’ estimates of tradable values were between €730-740 ($780-791) per tonne ex-works for CRC and no higher €750-760 per tonne ex-works for HDG in Northern Europe.

One mill estimated the price for CRC at €750 per tonne EXW and around €770-780 per tonne for HDG.

Fastmarkets’ weekly price assessment for steel cold-rolled coil domestic, exw Northern Europe was €730-740 per tonne on Wednesday, down by €10 per tonne from €740-750 per tonne on September 13.

And the corresponding weekly price assessment for steel hot-dipped galvanized coil domestic, exw Northern Europe was €750-770 per tonne on Wednesday, down by €10-20 from €770-780 per tonne seven days ago.

Import suppliers of CRC to Europe were trying to push offers a bit higher after a series of booking in the first half of September.

Notably, transactions for Asia-origin CRC for October-November shipment were done at €660-670 per tonne CFR Southern Europe earlier this month.

Unlike for hot-rolled coil, quota availability was not a problem for CRC, so buyers showed interest in bookings.

Current offers from South Korea, Japan and Taiwan were around €680-690 per tonne CFR. And a Vietnamese supplier was offering $830-840 per tonne CFR for 0.5mm HDG with Z100-120 coating for November shipment.

Published by: Julia Bolotova

No rebound in sight for European HRC amid end-user consumption concerns

Quiet conditions and slowing end-user consumption persisted in the European hot-rolled coil market, clouding the outlook for the fourth quarter of 2023, sources told Fastmarkets on Wednesday September 20.

In Northern Europe, trading was close to nil, with most buyers postponing restocking.

“We expect restocking to begin in October or even November, as demand by end users is slowing down. So why buy when clients need less material and at the same time prices are under pressure?” a distributor in the region said.

Most buyers indicated that tradeable prices for HRC in the region were €620-640 ($663-684) per tonne ex-works, while producer sources were sticking to €640-650 per tonne ex-works.

Sources pointed out that firm offers were rare, with mills offering on a “case-by-case” approach. Lead times were quite short, around five to six weeks, indicating thin order books.

The major concern for market participants remained slowing end-user demand, with no signs of recovery this year.

“[Steel service centers] also have short orderbooks and therefore thin purchasing activity,” another source said.

Fastmarkets calculated its daily steel hot-rolled coil index domestic, exw Northern Europe at €634.88 per tonne on Wednesday, down by €0.12 per tonne from €635.00 per tonne the previous day.

The index was down by €7.20 per tonne week on week and by €1.37 per tonne month on month.

Fastmarkets’ calculation of its corresponding daily steel hot-rolled coil index domestic, exw Italy, meanwhile, was €622.08 per tonne on Wednesday, down by €1.25 per tonne from €623.33 per tonne on the previous day.

The Italian index was down by €5.25 per tonne week on week and by €7.92 per tonne month on month.

Domestic mills in Italy continued to avoid giving firm offers in a slow market, also preferring to conduct business on a “case-by-case” basis.

Buyers’ idea of the tradeable price level for HRC in the country was no higher than €620-630 per tonne ex-works.

Actual trading, however, was very meager in the Italian market, similarly to Northern Europe.

“It is a very quiet September, very few transactions. Our sales to end users are lower year-on-year, and we are not sure prices have touched the bottom yet, so nobody’s buying [HRC],” a steel service center source in Italy said.

Imports offers of HRC to Europe were broadly flat on Wednesday compared with a day earlier, but interest in imported coil remained low due to long lead times, the small gap with domestic prices and high safeguard-related risks.

An offer from a Vietnamese mill to Italy was heard at $630 per tonne CFR for January arrival.

Offers from Taiwan for January-delivery HRC were heard at around €590-595 per tonne CFR to Italy.

And Japan-origin HRC was offered by a trader at €600-610 per tonne CFR to Italy for January-arrival.

Published by: Julia Bolotova