Eurofer: EU Electrification Plan could boost steel competitiveness
The European Steel Association (Eurofer) announced that, following the completion of the public consultation on the EU Electrification Action Plan (EAP), they expect a comprehensive strategy aimed at restoring access to affordable electricity for industrial sectors to be adopted in early 2026.
According to Eurofer, rapidly and effectively reducing electricity costs is critically important both for accelerating the decarbonization of the steel sector and for strengthening Europe’s international competitiveness.
Eurofer emphasized that increasing the share of fossil-free electricity consumption would not only support progress toward climate neutrality but also contribute to the EU’s strategic industrial autonomy targets. To achieve this, electricity-related costs must be substantially and swiftly reduced. The association stated that this objective will require a broad set of policy measures — ranging from lowering wholesale market prices to effectively decoupling fossil fuel prices from electricity prices in long-term contracts.
The statement also highlighted the importance of enhancing transparency around the removal of fossil fuel-based power plants from the merit order in short-term markets. Eurofer noted that such transparency is essential for both consumers and investors, as it allows them to track whether new generation capacity is effectively exerting downward pressure on prices.
Eurofer further underlined the need for timely assessment of alternative market design models that reflect the EU’s rapidly changing energy landscape. In this context, the forthcoming Action Plan should include “consumer-focused and bold” measures to support the transformation of the European steel sector.
The association concluded that improving energy cost conditions will unlock investment in low-carbon steel production and reinforce the sector’s global competitiveness, making the EAP a strategic opportunity for EU industry.
Worldsteel: China’s steel overcapacity won’t be easy to resolve
Edwin Basson, Director General of the World Steel Association (Worldsteel), stated that China’s long standing steel overcapacity can’t be reduced quickly, as it is deeply linked to the structure of the country’s economy.
Speaking to Bloomberg, Basson emphasized, “Shutting down a steel plant creates a chain reaction across other domestic sectors. Therefore, there is no viable short term solution.”
The steel sector was among the first targets of the import tariffs introduced earlier this year by US President Donald Trump, and many countries, including Vietnam, have begun imposing antidumping duties on Chinese steel. Basson said that this trend has reversed roughly 20 years of relative openness in global steel trade: “The open market that existed from 2000 to 2020 is now disappearing. Free movement of goods between continents is a critical issue for the sector.”
China’s demand decreases, exports reach record levels
According to Worldsteel, steel demand in China is expected to decrease by 2% in 2025 and by 1% in 2026. This decline is driving producers to export record volumes despite rising protectionism. China’s steel exports are moving toward an all-time high in 2025, with shipments exceeding 100 million tonnes in the first 11 months of the year. This momentum has also pushed the country’s total trade surplus above 1 trillion USD for the first time in history.
Meanwhile, iron ore futures in Singapore decreased by 0.9% on the first trading day of the week, falling to 102.45 USD per tonne.
A fragmented global market complicates carbon reduction
Rizwan Janjua, Head of Technology at Worldsteel, said that fragmentation in the global steel market is jeopardizing the sector’s climate goals. He noted that steel accounts for around 8% of global carbon emissions and emphasized, “Cleaning up the sector requires unprecedented levels of international cooperation. However, as markets become more divided, ensuring this coordination becomes more difficult.”
Janjua added that the technologies required for emission reduction already exist, but issues related to energy supply and policy misalignment continue to slow progress: “If everyone doesn’t act together, each country will try to optimize only its own system.”
Worthington’s play for Germany’s Kloeckner rings out a year of intense M&A in steel processing sector
The news of US-based steel processor Worthington Steel being in talks with Kloeckner for a “voluntary public takeover” broke in two successive press releases on Saturday December 6, a development termed “crazy” by a market watcher.
Both companies released statements on Saturday to confirm they were in negotiations, with the German metals firm noting that Worthington Steel is conducting a due diligence review with the aim of potentially launching a voluntary public takeover offer for its shares.
“It is currently uncertain whether, or under which conditions, a potential voluntary public takeover offer will be pursued,” Kloeckner said in its statement.
Worthington Steel said in its statement that no investment decision had been made, and that the talks might not result in a deal.
Fastmarkets reached out to Worthington Steel on Monday December 8 for additional details, and a company spokesperson responded that, “at this time, we are still in negotiations and we will not be making any additional comments beyond what we shared on Saturday.”
If successful, the takeover will not be Worthington Steel’s first foray into international investments, especially against the backdrop of the 50% tariff on steel imports that US President Donald Trump implemented in 2025.
Earlier this year, Worthington Steel completed the acquisition of a 52% stake in Italy-based Sitem Group, which makes electric motor laminations and related products for automotive and industrial applications across six facilities in Europe.
Worthington Steel has publicly stated its aim of investing in value-added and specialty steel products in niche markets due to the higher margins the segments provide.
Another example is Worthington Steel expanding its Tempel Steel facility in Apodaca, Mexico, to capture a larger chunk of the growing North American laminated electrical steel market.
Worthington Steel reported net sales of $872.9 million in the third quarter of 2025, an increase of 5% compared with $834 million in the previous year’s corresponding quarter, while quarterly earnings rose by 11.29% to $48.3 million.
Kloeckner is pursuing its own multiyear growth strategy, dubbed “Leveraging Strengths – Step up 2030,” and is focusing on higher value-added segments and its service center business.
As part of the plan, Kloeckner agreed to sell eight distribution sites of its US subsidiary, Kloeckner Metals Corporation (KMC).
Georgia-based KMC sold seven US-based seven service centers to Canadian processor and distributor Russel Metals for approximately $119 million, in a deal announced in late September this year.
KMC sold an eighth US distribution site to Service Steel Warehouse, according to Kloeckner’s financial report for the first nine months of 2025.
The Kloeckner Metals Americas segment generated earnings before interest, taxes, depreciation, and amortization (EBITDA) of €158 million ($183.87 million) in the first nine months of 2025, compared with €112 million in the prior-year period.
The positive trend in Kloeckner’s Americas division comes despite the negative impact of “increased economic uncertainty over the course of the year,” the German company said in its report.
Kloeckner & Co is also focused on expanding its capabilities in the defense and infrastructure sector in Germany to take advantage of increased defense spending across Europe, according to the report.
Triple-S Steel Holdings makes major investment in European steel distributor
The investment comes in the form of a major injection of equity capital into Zimmer Staal, the statement said.
Zimmer Staal is strategically located in the Port of Antwerp, where it operates a purpose-built warehouse with a permanent stock of approximately 60,000 tonnes of hot-rolled heavy plate. The distributor offers various dimensions and grades of heavy plate, including commercial grades and shipbuilding steels.
Triple-S is one of the largest steel service centers in the US, with over 50 locations across North America and a turnover of over 1,000,000 tonnes annually, offering structural steel, tubing, specialty metals and value-added processing in construction, manufacturing and infrastructure.
The substantial increase in equity will provide the necessary liquidity for Zimmer Staal to achieve its goals for further growth in revenue and product range, while the company’s management and workforce will remain unchanged, according to Luc Cools, Zimmer Staal’s managing director.
“The entire Zimmer Staal team are extremely pleased about the investment from our new partners. This influx of capital will allow us to accelerate our development plans,” Cools said in the statement. “Equally important, however, is that we have found partners who understand our business, offer genuine added value and can support us in our strategic direction. We are thrilled to be working with these two leading international steel groups from Europe and America.”
European steel HRC trading slow, limited flexibility on offers, buyers well-stocked
Fastmarkets’ daily steel hot-rolled coil index, domestic, exw Northern Europe, was calculated at €622.81 ($725.23) per tonne on December 9, up by €0.56 per tonne from €622.25 per tonne on December 8.
The index was up by €4.48 per tonne week on week and by €16.14 per tonne month on month.
Offers from integrated mills in the region continued to be significantly higher, at €620-650 per tonne ex-works.
Market sources noted that some suppliers showed some flexibility in sales, with deal prices for January-delivery HRC around €610-630 per tonne ex-works in Germany and the Benelux area.
But suppliers were mostly sold out for January tonnages and not very active in the spot market recently.
“[A leading European supplier] was selling HRC below target offers in November to fill order books but, now that they are comfortably booked, there is practically no flexibility from their current offer of €650 per tonne delivered,” a buyer in Germany said.
Market sources said that trading volumes of HRC remained limited and that business was mainly “hand to mouth” in the region.
“Stocks are high at buyers, but order bools are also quite good at mills, so there is no rush from either side,” a second buyer said. “Mills are negotiating long-term contracts with the automotive industry now – that’s the priority.”
In Italy, meanwhile only limited volumes were transacted recently, with local suppliers aiming for €620-630 per tonne ex-works for January and February delivery HRC, with “only limited flexibility in pricing,” market sources said.
“[A local supplier] was accepting €590-600 per tonne ex-works in November, but since the beginning of December it pushed offers to €620 [per tonne ex-works] with very limited opportunity for discounts,” a buyer in Italy said.
Buyers were estimating achievable prices at €600-620 per tonne ex-works.
Fastmarkets’ daily steel hot-rolled coil index, domestic, exw Italy, was calculated at €613.75 per tonne on Tuesday, up by €2.50 per tonne from €611.25 per tonne on Monday.
The index was up by €10.62 per tonne week on week and by €17.75 per tonne month on month.
Appetite for new imports was limited by the EU’s upcoming Carbon Border Adjustment Mechanism (CBAM) and new trade regime, as well as caution over quotas available under existing safeguard measures, market sources said.
A deal for Indonesian HRC was reported at €490 per tonne CFR earlier in December.
A transaction for India-origin coil was heard at $570 per tonne CFR in late November.
Asian suppliers could offer March-April delivery, market sources said, adding that there were two large import coil buyers in Italy and “they will keep booking [HRC] from imports despite regulations.”
At the same time, smaller market participants were cautious with new bookings or preferred to book imports on a DDP basis “to at least partially account for CBAM costs,” Fastmarkets heard.
Indonesian coil for April arrival was on offer at €595-600 per tonne DDP into Antwerp.
Turkish coil with March arrival was offered at €600-620 per tonne DDP in Italy.
ArcelorMittal Spain shuts Avilés pickling line as part of €18 million upgrade
ArcelorMittal Spain has shut down the pickling line at its Avilés plant as part of an €18 million modernization program, according to media reports.
The stoppage comes amid broader operational challenges across the company’s Asturias facilities, including ongoing issues restarting blast furnace “B” in Gijón and planned maintenance work on sinter plant “A”.
The Avilés pickling line, which removes oxide scale from hot rolled steel using diluted hydrochloric acid, will remain offline for three weeks. The €18 million upgrade includes replacing the hydrochloric acid storage tanks that feed the process, which treats coils coming out of the hot strip mill.
Ongoing failure of blast furnace “B” causing serious disruption
This modernization forms part of a broader €168 million investment package announced earlier this year for ArcelorMittal’s facilities in Avilés, Gijón, Sagunto, Etxabarri and Lesaka. A significant share of the total investment is earmarked for the hybrid electric arc furnace project in Gijón, while the Avilés pickling line revamp represents a key component of ongoing downstream improvements.
The shutdown will have immediate downstream effects, as the pickling line supplies strip to the tandem mill, temper mill and tinplate lines in Avilés.
ArcelorMittal has been unable to restart blast furnace “B” in Gijón for two months, following a maintenance shutdown during which the unit suffered several fires. Three attempts to restart the furnace using the oxy-lance method, injecting oxygen and propane, have failed due to a large mass of solidified iron inside the vessel.
As a result, the plant is facing an acute shortage of hot metal. With only blast furnace “A” operational, production levels are insufficient to supply all rolling and steelmaking units.
Hot metal shortages force prioritization and interruptions
Due to limited hot metal availability, ArcelorMittal is prioritizing hot strip production for the automotive sector, to avoid penalties, and rail manufacturing, which currently has strong order volumes.
Other downstream facilities are experiencing intermittent stoppages. The company informed employees that the shutdown of the Gijón heavy plate mill would be extended due to a lack of slabs available for rolling.
The Gijón plate mill sources its slabs from the Avilés melt shop, which is currently running at 60 percent of capacity because of the shortage of hot metal. Most of its limited output is being directed to the Avilés hot strip mill.
Ilva commissioners to seek €5 billion in damages from ArcelorMittal
The special commissioners of the former Ilva plants, now Acciaierie d’Italia (ADI), located in Taranto in southern Italy, plan to launch legal action against ArcelorMittal to obtain €5 billion in damages. The move was announced by Minister of Enterprises and Made in Italy Adolfo Urso, who referred to the damage suffered by the steel group during the years of management by the Franco-Indian giant.
According to the minister, the requested amount reflects the losses generated by the deterioration of the facilities, the lack of ordinary and extraordinary maintenance, and the loss of ETS quotas accumulated in previous years. The lawsuit is expected to be filed between December 15 and December 18, with the Morselli management period at the centre of the complaint. Minister Urso reiterated that there is no plan to close the Taranto steelmaking hub. On the contrary, almost one year ago the commissioners launched an emergency maintenance program with the aim of delivering safe and operational plants to a future buyer by March, ensuring a minimum production capacity of 4 million mt of steel per year.
In parallel, the search for a new private investor continues. The competitive procedure, launched after ADI was brought under state control at the beginning of 2024, has attracted interest from several players, but so far only the consortium led by Baku Steel with Azerbaijan Investment Company and India’s Jindal Steel has expressed willingness to acquire the entire assets. Since 2022, the state has already provided more than €2 billion in loans, subsidies and emergency support measures to keep production running.
As previously reported by SteelOrbis, the Italian government has recently announced new funds to secure the former Ilva’s operations, while confirming the continuation of the current rules on access to short-time work schemes and the ongoing negotiations with potential buyers. In another key step, talks on the decarbonization plan have led to the establishment of an inter-institutional technical committee tasked with assessing gas supply options and the feasibility of the four DRI plants planned for the future pre-reduced iron hub in Taranto, with the still-open issue of a possible floating storage and regasification unit (FSRU).
The industrial side of the story is closely linked to the environmental side. Brussels has sent Italy another letter of formal notice for violations related to emissions from the Taranto site, keeping open an infringement procedure that has been under way for more than ten years and that requires a rapid shift towards lower-impact technologies. In this context, low-carbon transition projects are gaining weight, including initiatives related to DRI production and pilot schemes for the use of green hydrogen in steelmaking.
The outcome of the lawsuit against ArcelorMittal and the choice of a new investor will be decisive for the relaunch of ADI. While the government aims to close the international tender in the coming months, the outlook for the Taranto hub remains uncertain, amid pressure from EU institutions, trade union demands for stronger employment guarantees and the need to finance a decarbonization path that is expected to require total investments of more than €5 billion.
EU Commission looks to update methodology for CBAM default values after industry concerns
The first draft of the default values was published on November 7 and outlined provisional carbon emission numbers for CN Codes under CBAM. In response, some industry participants and member states said that for some CN codes and origins the default values were too low if compared with alternative sources.
The EU’s CBAM is set to enter its definitive phase on January 1, with costs depending on the EU’s Emission Trading System (ETS) auction price and the embedded emissions in the CBAM good.
To calculate embedded emissions, importers have the choice of using benchmark rates which are specific to the CBAM good, or default values which are average embedded-emission intensities for each product and production route.
While leaked provisional benchmarks were largely in line with market expectations for aluminium and steel industries, the default values released by the European Commission in early November were not.
The feedback from member states centered around the methodology for calculating default values, with stakeholders saying the proposed method was unreliable.
The Commission subsequently published an approach for revising the default values.
With just over three weeks to go before carbon liabilities at the border kick in, the EU Commission suggested the following approach in the interest of time.
Firstly, it would identify priority cases for values that require updating most urgently. This will be determined by an analysis of the reliability of default values developed by the Joint Research Centre (JCR), which will include consideration of feedback received from stakeholders and the data model used by the JRC for calculating the values.
Once priority cases have been identified, the Commission’s JRC will seek to “improve the reliability of some of their estimates, taking into account additional information provided by stakeholders,” according to the document. Where concerns could be addressed and rectified the new values will be used as default values.
If it is not possible to improve the reliability of default values, the Commission suggests basing the default values for certain products on emission data from the CBAM Transitional Registry.
In limited instances, where the reliability of default values cannot be improved via either of these methods, default values should be based on the average emission intensity of the ten exporting countries with the highest emission intensities.
In addition, the Commission proposed to “revise more structurally the approach to determining default values, with a view to updating the values by 2027 at the latest,” it said.
The analysis for this revision will start immediately after the adoption of the Implementing Act containing the default values for 2026.
Mark-ups to be phased in gradually to compensate for issues with default values
Elsewhere, the Commission noted that to compensate for issues with calculating default values, it will phase-in the use of mark ups from 2026 onward.
CBAM mark ups are essentially an additional penalty which is applied when a CBAM declarant uses default values instead of actual emission data.
As the Commission continues to amend its methodology, default values are still up in the air. To account for this, it proposed a “balanced approach” for most CBAM sectors for the use of mark ups.
The mark up will be 10% in 2026, 20% in 2027 and — pending final confirmation of the default values — 30% in 2028.
EU Commission identifies two shortcomings for calculating iron and steel default values
The European Commission identified two shortcomings in the calculation of default values. The first is that the calculation approach used relies on energy balance data from the International Energy Agency (IEA), which could contain errors.
Secondly, the approach to calculate the values used by the JRC uses a model that attempts to reflect if a high-carbon good is additionally processed in another country then it is included in the default values of the more processed good. This, however, does not cover the entire value chain of the CBAM good and could result in too low values for some stainless-steel goods.
The Commission also identified a series of calculation errors across steel alloy grade, American castings, US forgings and emissions from the foundry casting process, among other things.
To solve issues with the methodology and subsequent default values, the Commission has changed its approach to calculating these default values.
The default values have been checked against those on the CBAM Transitional Registry. For each group, the default value will be compared with the 90th percentile (Q90) of actual emission data on the registry.
If the Q90 actual emission data on the registry is higher than the default value and lower than the average emission intensity of the ten exporting countries with the highest emission intensity, the default value will be updated.
If the Q90 actual emission data on the registry is higher than the existing default value and higher than the average emission intensity of the ten exporting countries with the highest emission intensity, then further action is required.
To avoid “extreme increases that may be difficult to justify,” the Commission has placed a 400% cap on how much the default value can change to “mitigate data quality issues in the CBAM registry.”
Concerns over discrepancies in default values for primary and secondary aluminium
Following the publication of the draft default values in early November, the aluminium industry raised concerns around the data for primary and secondary aluminium.
According to feedback from the market, some of the values for primary aluminium were “very low in comparison to data from commercial providers” for countries like Cameroon, Brazil, Egypt, Ghana, Iran, Tajikistan, Turkey, US and Venezuela.
The market also noted that for secondary aluminium, the default values were “too low, and do not sufficiently consider the trade in precursors made of primary aluminium.”
While the Commission did not offer a solution for these concerns, it said that an assessment is continuing which will suggest scope for correction, however it is likely to be to a “lesser extent than for the steel sector.”
Going forward, the Commission said that a more “granular” analysis is needed to “define an appropriate way forward.” The Commission did not disclose when this would be published, but it provided an overview of what country default values could be subject to change. These included Egypt, India, Mozambique, Turkey and the US, among others.
CBAM is entering its definitive phase on January 1, 2026, while CBAM certificates will only be able to be purchased from 2027 onward.
List of National Competent Authorities for CBAM published
The European Commission has published the List of National Competent Authorities (NCAs) responsible for administering the Carbon Border Adjustment Mechanism (CBAM).
Importers should note that access to the CBAM Registry must be requested through the NCA of the EU Member State in which the importing company is established. This step is essential for ensuring compliance with reporting requirements and for the proper functioning of the mechanism.
The full list of NCAs is available on the European Commission’s official CBAM page.
Provisional CBAM calculation values pass committee vote
The European Commission’s Carbon Border Adjustment Mechanism (CBAM) Committee has accepted the final revisions to technical implementing acts core to calculating CBAM costs – part of the EU comitology process – laying vital foundations for the instrument’s definitive, fiscally-liable stage, from January.
After multiple revisions, the implementing acts outlining the technical application of CBAM benchmarks and default values have passed comitology with sufficient member state votes, and are now expected to be official presented for adoption before end of year.
Despite formal recognition, these calculation values still exist on a provisional basis, and will see further review post-adoption, as CBAM proceeds through its definitive stage.
McCloskey exclusively broke details on CBAM’s core calculation values back in November, which detailed higher-than-expected costs potentially faced by EU importers,when calculating CBAM liabilities on default values.
Since then, the “worst-case scenario” faced by steel importers has – if anything – gotten even worse, with default values increased for a number of origins (such as China); and benchmark values revised downward following overall decreases to account for projections for underlying EmissionsTrading System (ETS) benchmarks 2026-2030, and reductions to direct-reduced iron (DRI) related benchmark values.
For example, McCloskey learned of a fresh deal for a full vessel (40-50kt) of Indian-origin carbon hot-rolled coil (HRC) to a single Italian buyer at the dollar equivalent of around EUR430/t CFR Italy, 10 December, that if declared on default emissions values, would incur a per ton CBAM cost of around EUR270/t – almost EUR13.5m across the full shipment.
McCloskey has calculated potential CBAM costs for a range of product categories, as initially demonstrated for imports of carbon HRC across core origins:
CBAM declarations and calculations
CBAM is best thought of as a mirror of the EU ETS, imposing carbon costs at the border in line with what a third country installation would pay if operating domestically in the EU.
Simplified formulae for calculating CBAM’s additional import costs are below:
Carbon Price Already Paid
Little is yet known about how any Carbon Price Already Paid will be recognised and accounted for in the CBAM framework, though the European Commission has committed to publishing ‘default’ carbon price deductions for respective origins later in the definitive stage.
Cross-Sectoral Correction Factor (CSCF)
The CSCF reduces free allocations uniformly across the ETS where demand exceeds supply, but is not yet known for the 2026-2030 period. The CSCF was previously set at 100% for 2021-2025.
Free Allocation Adjustment
The ‘Free Allocation Adjustment’ is a deduction to balance CBAM liabilities against ‘free allowances’ received by domestic producers via the ETS,and is calculated in reference to specifically designed CBAM benchmarks. CBAM benchmarks are themselves derived from ETS benchmarks, and are multiplied by a ‘CBAM factor’ that increases CBAM liabilities as ETS free allocations are phased-out at an increasing rate between 2026-2034. The CBAM factor starts at 97.5% in 2026.
‘Actual’ vs ‘Default’ Benchmarks
CBAM’s benchmarks are split between ‘actual’ and ‘default’ listings. Default benchmarks in particular are then further split by production route, in recognition of the independent emissions profiles of blast furnace-basic oxygen furnace (BF-BOF); direct-reduced iron to electric arc furnace (DRI-EAF); and scrap to electric-arc-furnace steelmaking (scrap-EAF). Some ‘actual’ benchmarks, namely those relating to semi-finished steel products,are also split by production route.
Despite this split, the vast majority of origins have been assigned benchmark classifications of BF-BOF for their steel products, meaning they must use BF-BOF route benchmarks when calculating CBAM costs on default values, regardless of the actual production route of the import. To calculate CBAM liabilities with data corresponding to the actual production route, ‘actual’ emission data and benchmarks must be used.
There are essentially three ways to declare CBAM liabilities once certificates are surrendered in September 2027:
Actual Values
Importers can calculate their imported embedded emissions using ‘actual’ values and benchmarks – provided by and specific to each exporting installation’s production process. This requires calculating the emissions liability for each process and precursor recursively up the production chain, and can quickly become sophisticated, especially given the complexity of steel goods.
‘Actual’ CBAM benchmarks are thus generally lower than ‘default’ benchmarks for the same CN code, as they do not account for embedded upstream emissions, which must be separately calculated and combined to derive the total emissions liability.
Default Values
Where emissions data is not available, or cannot be verified, importers must resort to ‘default’ values and benchmarks. These values make assumptions as to the carbon embedded in an origin’s steel products, and include a punitive element to incentivise the disclosure and use of actual values. The Commission has introduced a gradual phase-in for the punitive mark-up of steel products, starting at 10% in 2026; then 20% in 2027;and at 30% from 2028.
The Commission has committed to revise the default values and mark-ups “by December 2027 at the latest,” though “all necessary efforts” will be made such that a revision “can already be carried out in 2026.”
Mixed Values
If some precursors cannot be verified, then a mixed methodology can be used, assigning actual values downstream in the production process and using default values for some precursors. Where a default value is used, actual values cannot be used for upstream precursors connected to that default value, as their emissions have already been assumed.
In the finalised implementing acts, a new annex of provisional default values has been introduced for precursors for which the origin cannot be identified – most relevant to mixed values declarations. These defaults adopt the highest available value for each product listing across other origins, before applying the same 10-30% phased mark-up.
‘Actual’ and ‘default’ CBAM benchmarks for core steel products are illustrated in the table below.
Actual Values – Verification
Verification rules – compliance with which is necessary for CBAM declarations on ‘actual’ values – were released earlier in November, essentially imposing strict ETS-level criteria for third country installations to account, process, and subsequently verify their emissions data.
Verifications will commence from 2027, requiring emissions data averaged across calendar year 2026, meaning accredited verifiers cannot conduct necessary site visits or substantive verification activities until 2026 concludes.
The latest CBAM rules set 2026 as the minimum reporting period for CBAM declarations, so even material produced in 2025, and imported in 2026 will have to reference calendar year 2026 emissions data.
In light of this requirement, McCloskey has discussed the steel trade’s verification-readiness with a number of verifiers or related entities across Europe, Asia, and South America – all of which evidence a common theme: uncertainty.
Verification readiness
While importers are generally satisfied that larger or more modernised suppliers should be able to meet emissions data requirements when verification activities commence from 2027, both the capacities of accreditation bodies, and verifiers, as well as the willingness of third country installations to subject themselves to foreign scrutiny, are potential concerns that could see importers pushed onto default values.
“[National Accreditation Bodies] are already at high-capacity, so I really doubt they are going to start accrediting third-country verifiers on-mass, ”said an EU accredited ETS verifier. “Not only that, but what does this look like in practice? The reality of accessing and inspecting a plant from the ground can be difficult, opaque, and subject to resistance from personnel – I’m not sure this will all go as smoothly as the Commission hopes.”
A Chinese emissions and CBAM consultant agreed, stating that foreign verifiers may be unable to identify circumvention tactics once on-site, undermining physical visitation requirements. Chinese companies could also fall foul of China’s strict security frameworks if offering unrestricted physical or digital access to foreign verifiers.
More generally, the consultant considered that “data preparedness is not defined by a country’s size or level of development. It boils down to the willingness of the specific factory to collect and calculate said data.”
According to Mexican sustainability consultancy Sustainluum – “for many global companies, especially leaders in the […] steel sectors, this type of process is not unfamiliar. They have long been accustomed to receiving on-site audits, submitting their data to independent review, and working under formal emission measurement and reporting schemes. They have also developed exercises like EPDs (Environmental Product Declarations), which require a level of traceability and methodological coherence very close to what CBAM requires.
“This does not mean that the adjustment is automatic. CBAM requires verifiable information per facility, specific calculation methods according to Annex IV, and sufficiently robust traceability to allow external verification. To reach this level, facilities will have to strengthen the quality of their records, standardize factors, improve integration between their operational and environmental areas, and, in general, consolidate a more rigorous monitoring structure that allows the reconstruction of the information used in the calculation of embedded emissions.”
‘Looking behind’ EPDs
Sustainluum rightfully value possession of an EPD, but importantly clarify that EPD status and CBAM verification are not one and the same – an idea McCloskey commonly encounters across the global steel markets.
For example, China’s Iron and Steel Association (CISA) recently celebrated a milestone number of EPDs issued to its domestic steelmakers, with Chinese market participants said to beconnecting EPD possession with CBAM-compatibility.
Unfortunately, while an installation’s EPD is good evidence that the required primary emissions data at least exists, the nuance of mapping site-level process emissions to specific product outputs is a particularly complex task, as described by a Turkish consultancy performing carbon accounting services.
“Turkish producers generally have no problem with primary data availability, and as with other exporting origins we incentivised to meet EU requirements due to the high default values for Turkey versus what can be achieved on actual values,” said the consultant.
“It will take some time to adjust to the level of CBAM, however, as many producers can make mistakes when tying direct or indirect emissions to specific products, or properly allocating process emissions. What poses greater difficulty [than data availability] is the expertise required to map emissions to specific processes and products, even before verification activities commence.”
Separately, European traders have estimated that as many as 80% of imported emissions could be forced onto default values due to verification frictions. This is somewhat evidenced by the lack of actual emissions data collected during the transitional stage, which McCloskey understands motivated the Commission’s original use of public datasets to inform CBAM’s default values.
As such, there is a risk that despite their best efforts, European importers could become subject to worst-case CBAM cost scenarios on default values through verification failures – potentially devastating to an importer’s bottom-line.
Default Values – Calculations
McCloskey has calculated CBAM cost exposure from the finalised provisional default benchmarks and values, referencing dominant origins within each product category on the basis of import data (Global Trade Tracker) for the last year.
Calculated values are presented per ton of steel in the tables below, and assume a CBAM certificate price of EUR80.
Where relevant benchmark or default values overlap within a product category, a proxy CN Code has been selected, as derived values are very often consistent across these CN Codes groupings (e.g. all CN Codes under Heading 7208 list the same default benchmark and value for respective origins).
Iron Ore
| Steel Product | CN Code | Origin | Year | Default Prod. Route | Default BM (t CO2e/t) | Default Value (t Co2e/t) | CBAM cost (Eur/t) |
| Iron Ore | 26011200 | Australia | 2026 | No Split/Hybrid | 0.086 | 0.099 | € 1.21 |
| 26011200 | Brazil | 2026 | No Split/Hybrid | 0.086 | 0.22 | € 10.89 | |
| 26011200 | Canada | 2026 | No Split/Hybrid | 0.086 | 0.099 | € 1.21 | |
| 26011200 | Mexico | 2026 | No Split/Hybrid | 0.086 | 0.143 | € 4.73 | |
| 26011200 | Ukraine | 2026 | No Split/Hybrid | 0.086 | 0.132 | € 3.85 | |
| 26011200 | United_States | 2026 | No Split/Hybrid | 0.086 | 0.748 | € 53.13 | |
| 26011200 | United_Kingdom | 2026 | No Split/Hybrid | 0.086 | 0.308 | € 17.93 |
Source: McCloskey by OPIS © 2025 Dow Jones Energy Limited
Pig Iron
| Steel Product | CN Code | Origin | Year | Default Prod. Route | Default BM (t CO2e/t) | Default Value (t Co2e/t) | CBAM cost (Eur/t) |
| Pig Iron | 72011090 | Brazil | 2026 | No Split/Hybrid | 1.21 | 1.62547 | € 35.66 |
| 72011090 | Canada | 2026 | No Split/Hybrid | 1.21 | 1.221 | € 3.30 | |
| 72011090 | Russia | 2026 | No Split/Hybrid | 1.21 | 3.344 | € 173.14 | |
| 72011090 | South_Africa | 2026 | No Split/Hybrid | 1.21 | 3.817 | € 210.98 | |
| 72011090 | Ukraine | 2026 | No Split/Hybrid | 1.21 | 2.3903 | € 96.84 |
Source: McCloskey by OPIS © 2025 Dow Jones Energy Limited
Direct Reduced Iron (DRI)
| Steel Product | CN Code | Origin | Year | Default Prod. Route | Default BM (t CO2e/t) | Default Value (t Co2e/t) | CBAM cost (Eur/t) |
| Direct Reduced Iron | 72031000 | Algeria | 2026 | No Split/Hybrid | 0.397 | 0.891 | € 40.31 |
| 72031000 | Canada | 2026 | No Split/Hybrid | 0.397 | 0.836 | € 35.91 | |
| 72031000 | Libya | 2026 | No Split/Hybrid | 0.397 | 1.4575 | € 85.63 | |
| 72031000 | Russia | 2026 | No Split/Hybrid | 0.397 | 2.211 | € 145.91 | |
| 72031000 | United_States | 2026 | No Split/Hybrid | 0.397 | 0.495 | € 8.63 | |
| 72031000 | Venezuela | 2026 | No Split/Hybrid | 0.397 | 1.4575 | € 85.63 |
Source: McCloskey by OPIS © 2025 Dow Jones Energy Limited
Ferroalloys
| Steel Product | CN Code | Origin | Year | Default Prod. Route | Default BM (t CO2e/t) | Default Value (t Co2e/t) | CBAM cost (Eur/t) |
| Ferro-manganese | 72021120 | India | 2026 | No Split/Hybrid | 1.361 | 1.859 | € 42.56 |
| 72021900 | India | 2026 | No Split/Hybrid | 1.361 | 6.149 | € 385.76 | |
| 72021120 | Malaysia | 2026 | No Split/Hybrid | 1.361 | 1.859 | € 42.56 | |
| 72021900 | Malaysia | 2026 | No Split/Hybrid | 1.361 | 6.149 | € 385.76 | |
| 72021120 | South_Africa | 2026 | No Split/Hybrid | 1.361 | 1.859 | € 42.56 | |
| 72021900 | South_Africa | 2026 | No Split/Hybrid | 1.361 | 6.149 | € 385.76 | |
| Ferro-chromium | 72024110 | South_Africa | 2026 | No Split/Hybrid | 1.142 | 2.585 | € 117.72 |
| 72024910 | South_Africa | 2026 | No Split/Hybrid | 1.142 | 3.157 | € 163.48 | |
| 72024110 | Zimbabwe | 2026 | No Split/Hybrid | 1.142 | 2.585 | € 117.72 | |
| 72024910 | Zimbabwe | 2026 | No Split/Hybrid | 1.142 | 3.157 | € 163.48 | |
| 72024110 | Turkey | 2026 | No Split/Hybrid | 1.142 | 2.585 | € 117.72 | |
| 72024910 | Turkey | 2026 | No Split/Hybrid | 1.142 | 3.157 | € 163.48 | |
| Ferro-nickel | 72026000 | Brazil | 2026 | No Split/Hybrid | 2.39 | 3.828 | € 119.82 |
| 72026000 | Indonesia | 2026 | No Split/Hybrid | 2.39 | 6.765 | € 354.78 | |
| 72026000 | Colombia | 2026 | No Split/Hybrid | 2.39 | 3.828 | € 119.82 | |
| 72026000 | New Caledonia | 2026 | No Split/Hybrid | 2.39 | 4.4154 | € 166.81 |
Source: McCloskey by OPIS © 2025 Dow Jones Energy Limited
Semi finished slab/billet
| Steel Product | CN Code | Origin | Year | Default Prod. Route | Default BM (t CO2e/t) | Default Value (t Co2e/t) | CBAM cost (Eur/t) |
| Semifinished | 72071210 | Algeria | 2026 | Carbon Steel – BF/BOF | 1.364 | 3.3 | € 157.61 |
| (slab/billet) | 72071210 | Brazil | 2026 | Carbon Steel – BF/BOF | 1.364 | 1.771 | € 35.29 |
| 72071210 | China | 2026 | Carbon Steel – BF/BOF | 1.364 | 3.485663842 | € 172.46 | |
| 72071210 | India | 2026 | Carbon Steel – BF/BOF | 1.364 | 4.697 | € 269.37 | |
| 72071210 | Russia | 2026 | Carbon Steel – BF/BOF | 1.364 | 3.531 | € 176.09 | |
| 72071210 | Turkey | 2026 | Carbon Steel – BF/BOF | 1.364 | 2.540638498 | € 96.86 | |
| 72071210 | Ukraine | 2026 | Carbon Steel – BF/BOF | 1.364 | 2.63723394 | € 104.59 | |
| 72071210 | Vietnam | 2026 | Carbon Steel – BF/BOF | 1.364 | 2.585 | € 100.41 |
Source: McCloskey by OPIS © 2025 Dow Jones Energy Limited
Hot-rolled Coil (HRC)/Heavy Plate
| Steel Product | CN Code | Origin | Year | Default Prod. Route | Default BM (t CO2e/t) | Default Value (t Co2e/t) | CBAM cost (Eur/t) |
| HR | 72083900 | Algeria | 2026 | Carbon Steel – BF/BOF | 1.37 | 3.3 | € 157.14 |
| (Coil/Plate) | 72083900 | India | 2026 | Carbon Steel – BF/BOF | 1.37 | 4.708 | € 269.78 |
| 72083900 | Indonesia | 2026 | Carbon Steel – BF/BOF | 1.37 | 9.053 | € 617.38 | |
| 72083900 | Japan | 2026 | Carbon Steel – BF/BOF | 1.37 | 2.31 | € 77.94 | |
| 72083900 | Serbia | 2026 | Carbon Steel – BF/BOF | 1.37 | 2.651 | € 105.22 | |
| 72083900 | South_Korea | 2026 | Carbon Steel – BF/BOF | 1.37 | 2.330323809 | € 79.57 |
Source: McCloskey by OPIS © 2025 Dow Jones Energy Limited
