Category: Latest Updates

The UK government is considering reforms to its upcoming Carbon Border Adjustment Mechanism (CBAM) to expand the instrument’s scope, and better align its rules to the EU’s own CBAM model, according to an official presentation seen by Dow Jones Energy.

Based on industry feedback, the government splits possible “future CBAM reform” into two groups: one focusing on scope expansion, and another on reforms to the existing UK CBAM methodology.

The UK’s CBAM framework takes effect from January 2027, charging carbon costs on the emissions embedded in UK steel imports, in-line with what domestic producers pay to the UK Emissions Trading System (ETS). The EU introduced its own CBAM at the start of 2026, with ‘payments’ – via CBAM certificate surrender – due in September 2027.

While the specific values for calculating UK CBAM liabilities are as yet unknown, the UK CBAM methodology – which adopts a single sector value for all CBAM default emissions value, and benchmark/rate metrics – suggests its costs will be significantly lower than the EU’s version.

One of CBAM’s primary mechanisms for increasing supply chain transparency to the EU’s desired level is its punitive default emissions values, which generate high carbon costs should importers fail to report and verify the emissions across their supply chains. For example, Indonesian-origin hot-rolled coil imported under the EU CBAM on default values results in carbon costs that can exceed the price of the base import itself.

Indeed, the EU’s default values for CBAM are generally high, even before “punitive” mark-ups between 10-30% are added. If the UK adopts a single global average value for its CBAM default rate, it risks giving advantageous treatment to the most polluting of origins, eliminating any incentive to report, verify, and improve their emissions portfolio where their ‘actual’ values are above the defined global average. This could see the UK become an attractive “dumping ground” for higher-carbon steel products as steel and wider climate protectionism expands globally, especially vis-a-vis the EU and its stricter CBAM protections.

Eligible CBAM deductions for carbon prices already paid are also deducted from the CBAM emissions volume under the EU system, but deduct directly from the price in the UK framework, generally facilitating lower UK CBAM costs due to the cheaper UK ETS price.

Negotiations between the UK and EU have been ongoing to link their respective ETS frameworks, with media reporting that a final agreement has been reached in advance of summit discussions announced for November. Policymakers have suggested that a UK-EU ETS merger could facilitate exemptions to each jurisdictions’ CBAMs – though it seems dubious that EU authorities would permit full CBAM exemptions for UK exports to the EU, if there were to be significant cost misalignments between the two systems.

Sources close to the matter state that cost-discrepancy issues have been raised multiple times with the UK’s CBAM policymakers, but that authorities have been slow to respond to highlighted issues.

While evidently at a very initial consideration stage, the government’s presentation shows that it is now considering aligning the UK CBAM to the EU version at a later date, citing a potential switch to the EU’s product-specific “benchmarking” approach to calculating CBAM rates (as opposed to the existing single sector rate based on sector free allocation coverage); a switch to country-specific default emissions values (replacing the global sector average); and the introduction of default values for carbon price relief deductions.

Importantly, these potential methodological changes were not expected any time soon, and certainly not for the initial year of the UK CBAM’s operation.

These changes would remedy many of the misalignments between the UK and EU systems, and could better facilitate merger-based exemptions between the UK and EU CBAM’s down the line. The government’s mention of scope expansions to CBAM – to new products, sectors, and indirect emissions values – would also align with EU efforts, as EU authorities actively legislate to extend CBAM protections to downstream manufacturing by 2028.

Some – like the International Institute for Sustainable Development (IISD) – have argued that the launch of Carbon Border Adjustment Mechanisms globally across like-minded jurisdictions could assist in the creation of low-carbon trading clubs to fight climate, and overcapacity-based pressures, via mutual exemptions between CBAM frameworks. If that is to be the case, then these systems will have to approximately align in both ambition and methodology, or risk becoming little more than an administrative afterthought.

Author: Benjamin Steven

opisnet.com

The EU’s Carbon Border Adjustment Mechanism (CBAM) could provide less protection to European energy-intensive industries than the existing system of free emissions allowances, particularly for export-oriented steel producers, according to a new report published by Swedish research organization SNS.

The report, prepared by economists Christoph Böhringer and Knut Einar Rosendahl, examines the economic and industrial effects of gradually replacing free allowances under the EU Emissions Trading System (ETS) with CBAM, which is scheduled to be fully phased in by 2034.

According to the researchers, free emissions allowances help offset carbon costs for European producers selling both domestically and internationally, while CBAM imposes carbon costs on imports without providing equivalent protection for EU exports. As a result, the transition could weaken the competitiveness of European heavy industry in markets outside the EU.

Swedish steel production could decline by 1.7 percent under CBAM

Sweden was identified as a particularly notable example, given its relatively low-carbon steel industry, which rely heavily on low-carbon electricity and export a significant share of their production. Based on the researchers’ simulations, the production loss for Swedish heavy industry would increase from 0.6 percent under free allowances to 1.3 percent under CBAM, compared with a scenario without climate policy.

The impact would be particularly pronounced in the iron and steel sector, where a slight production increase under free allowances would turn into a 1.7 percent decline under CBAM. A similar pattern is projected for the rest of Europe, where heavy industrial production would decline by 2.6 percent under CBAM, compared with a 1.3 percent reduction under free allowances.

However, the researchers indicated that CBAM could deliver greater benefits for the wider economy through improved terms of trade. In Sweden, the economic cost of climate policy would decline from approximately 0.05 percent of real income under free allowances to almost zero under CBAM. For the rest of Europe, the corresponding cost would decrease from 0.25 percent to 0.17 percent.

CBAM offers limited improvement in preventing carbon leakage

Regarding carbon leakage, the researchers found that replacing free allowances with CBAM would produce only a limited improvement. The share of European emissions reductions offset by increased emissions elsewhere would decline from 16.9 percent under free allocation to 16.0 percent under CBAM. Without either mechanism, the carbon leakage rate would reach 28.5 percent. The researchers emphasized that CBAM alone cannot eliminate carbon leakage, particularly through global energy markets, and that the mechanism currently targets less than two percent of global emissions.

They also examined potential changes to CBAM’s design. Including indirect emissions from electricity consumption, known as Scope 2 emissions, could improve the mechanism’s effectiveness and provide additional benefits to producers using low-carbon electricity. For Swedish heavy industry, this would reduce the estimated production loss under CBAM from 1.3 percent to one percent.

Export rebates could strengthen protection for European steelmakers

The researchers further suggested that introducing export rebates to compensate European producers for their carbon costs could restore much of the protection currently provided by free allowances. According to their simulations, combining CBAM with export rebates could reduce the carbon leakage rate to 10.6 percent, although such measures could raise legal concerns regarding export subsidies.

They also highlighted the regulatory challenges associated with extending CBAM further downstream, particularly for industries purchasing emissions-intensive materials and for imported finished goods containing embedded carbon emissions. According to the report, policymakers will need to balance the competitiveness of European heavy industry with broader economic benefits when determining the future design of CBAM, including the treatment of indirect emissions and potential measures to protect EU exports.

 

Norwegian government agency Enova has announced that it will provide up to NOK 244 million ($25.54 million) in funding to Nordic Circles and Alsaker Stål for a project aimed at reusing steel from decommissioned ships in new buildings, potentially reducing greenhouse gas emissions associated with building construction by up to 25 percent.

The funding, conditional on the project proceeding, will support the establishment of a circular steel value chain in Norway, involving the recovery, cleaning, quality assurance and recertification of steel from decommissioned vessels for use in construction.

AI and automation to support commercially competitive steel reuse

The project builds on previous pilot initiatives supported by the Research Council of Norway, Siva and Innovation Norway, which demonstrated the feasibility of using recovered ship steel in construction. One example is an eight-story office building in Bergen.

According to Enova, the project will use artificial intelligence-based planning tools, automation and new steel cutting and cleaning technologies to improve efficiency and make reused ship steel commercially competitive with newly produced steel. The initiative also involves investment of up to NOK 520 million ($54.44 million) by Alsaker Stål, part of Tertnes Holding, in cooperation with Nordic Circles and Enova.

European ship steel reuse could cut carbon emissions by 17 million mt annually

Enova stated that steel production can account for up to 25 percent of greenhouse gas emissions associated with building construction. Reusing existing steel components could eliminate almost all emissions associated with producing the equivalent quantity of new steel. Approximately 10 million mt of steel from European ships is scrapped annually, with most vessels dismantled in Asia. Recovering and reusing this material in Europe could therefore create new industrial opportunities while reducing demand for newly produced steel.

Enova estimates that reusing all steel recovered from decommissioned European ships in new buildings could reduce emissions associated with European steel production by up to 17 million mt of carbon dioxide annually, equivalent to more than one-third of Norway’s annual greenhouse gas emissions. The project aims to establish a commercially viable model for ship steel reuse that could be expanded across Norway and other European markets.

 

The World Steel Association (worldsteel) announced the newly elected members of its Executive Board of Directors for the 2026/2027 period on October 13.

The association elected Hadeed CEO Abdulqader Almubarak as its new chairman, while Çolakoğlu Metalurji CEO Uğur Dalbeler, who chaired the association during the previous term, was elected vice-chair. Nippon Steel president and COO Tadashi Imai was elected as the other vice-chair, while EMSTEEL group CEO Saeed Al Remeithi was named Audit Committee chair.

Bangladesh’s Anwar Ispat and China’s Hunan Iron and Steel Group joined as regular members, while UAE-based Metaluck Global Resources and Steel Producers Committee, alongside the Uzbekistan Metallurgy Association, were admitted as affiliated members.

 

Trading remained muted in the European domestic HRC market on Tuesday October 13 with market participants reporting sufficient stocks and little urgency to restock, while prices were largely unchanged.

Fastmarkets’ daily steel hot-rolled coil index, domestic, exw Northern Europe, was calculated at €746.25 ($834.39) on October 13, up by €4.58 per tonne from €741.67 on October 12.

The index was up by €1.25 per tonne week on week and similarly month on month.

A seller source provided an indication of tradeable level within the range of €740-750 per tonne ex-works.

A buyer source reported an indication of tradeable level within the range of €740-760 per tonne ex-works.

A second buyer source provided an indication within the range of €740-750 per tonne ex-works.

Sources said that the market remains largely quiet with limited trading activity. They added that stocks remain high with some service centers in the region still using foreign material booked earlier at lower prices, which is preventing prices from rising as expected.

A seller source even mentioned that stocks are high enough to affect purchasing in 2027. However, market participants’ mood in general was that towards the end of 2026 prices should increase somewhat amid restocking activity and lower import volumes due to the effect of safeguard measures.

The Italian market was also said to be quiet despite limited availability of the material with few deals heard during the day made within the range of €740-750 per tonne ex-works, whereas offers were heard up to €760 per tonne ex-works.

“Stocks are still too high. We will see more demand around December I guess,” one buyer said.

Fastmarkets’ daily steel hot-rolled coil index domestic, exw Italy was calculated at €740 per tonne on October 12, down by €2.50 per tonne from €742.50 per tonne on October 9.

The index was down by €0.31 per tonne week on week but up by €9.69 per tonne month on month.

 

Norway has lined up NOK 244 million ($25m) to support the establishment of a circular value chain in which steel from decommissioned ships is recovered and recertified for use in new buildings, Kallanish hears.

The money will be granted by state-owned development organisation Enova to the partners in the project, metals recycler Nordic Circles and processor company Alsaker Stål, part of Tertnes Holding.

“We know that buildings can be made using steel from ships because this has been tested in a number of pilot projects,” says Astrid Lilliestråle, director of technology and market development at Enova. “We are now supporting efforts to explore how new technology can make this commercially viable.”

Every year, 10 million tonnes of steel from European ships are scrapped, mainly in Asia, Enova notes. If successful, the new project could represent a significant industrial opportunity for Norway and Europe, the organisation says.

Enova estimates that recovering steel from decommissioned European ships could reduce emissions from European steel production by up to 17mt of CO₂ annually, provided that all the steel is used in new buildings.

“I am pleased that we can now use steel from old ships in new buildings. This could create new jobs in Norway and provide Europe’s steel industry with a local and reliable supply of steel,” says Norway’s Minister of Climate and Environment, Sigrun Aasland.

 

Brazil’s Companhia Siderúrgica Nacional (CSN) has agreed to sell its German subsidiary, Stahlwerk Thüringen (SWT), to Spain’s Megasa Group.

The companies have signed a non-binding agreement setting key terms and conditions for the sale of a 100% share in SWT. The transaction will be carried out through CSN Steel, the Spanish company that controls CSN’s European assets in Europe, and Megasa subsidiary Bipadosa, Kallanish learns from the Brazilian steelmaker.

The agreement provides for an exclusivity period of up to ten weeks. The deal is valued at €550 million ($616.2m).

SWT is a long steel manufacturer. Its plant in Unterwellenborn has an installed production capacity of 1.1 million tonnes/year of steel. The company became part of CSN in 2012.

The Brazilian company is currently executing a divestment programme aimed at lowering indebtedness and optimising its assets in line with strategic financial objectives.

 

Northwestern European sections mills and distributors are both seeking to keep current price levels firm towards year-end.

The prices for sections category 1, as seen from mills and buyers, are in the range of €830-850/tonne ($928-950/t). Mills are striving for €850/t, but deals are often struck at around €830/t, both sides confirm. Prices are also expected to remain firm in the coming weeks. Sources note that low offers from Spain in summer have prevented domestic mills from being able to increase prices too sharply.

Currently, distributors, too, feel that they can largely maintain their sale prices, which is unusual in the fourth quarter when they try to deplete their inventories for the end of the year. “In our group, we are clearly advised to bring the inventories down to one third by the end of December,” one source tells Kallanish. This year, however, distributors are not selling out at bargain offers, as they have kept their inventories low for quite a while, in an environment of modest demand.

This is followed by a period of replenishment at the beginning of the year. Mills might still accept orders for delivery this year for another three to four weeks. Pretty soon, the run for delivery in the first quarter of 2027 will kick off, one manager remarks. This is why mills can keep their prices stable for little while, even if demand does not recover on a large scale, he says.

 

Local steel hot-rolled coil (HRC) prices in Northern Europe were largely stable on Monday October 12, with sources reporting limited demand and sufficient stock in the market, while Italian prices declined slightly, with buyers reluctant to order larger volumes, market participants told Fastmarkets.
In Northern Europe, sources said demand was still missing, while stockholders and fabricators were well filled.

Trading in the region has been slow, with latest deals reported at €740-750 ($829-840) per tonne ex-works for 2,000-3,000-tonne orders on Friday October 9.

On Monday, sources reported indications of workable market levels in a wider range of €730-760 per tonne ex-works, quoting €740 per tonne ex-works as current prices in Northwest Europe.

A trade source said that some northern mills have reported “closing or nearly exhausting their fourth quarter bookings,” but this was not independently confirmed by suppliers in the region.

A producer said that mills were waiting to see how much buyers were willing to pay, with demand remaining the key factor.

Thus, Fastmarkets’ daily steel hot-rolled coil index domestic, exw Northern Europe was calculated at €741.67 per tonne on October 12, unchanged from Friday October 9.

The index was down by €0.21 per tonne week on week and by €3.33 per tonne month on month.

Meanwhile, ArcelorMittal has restarted its blast furnace No. 5A at Eisenhüttenstadt on October 6 after halting operations on September 25, the producer told Fastmarkets on Monday.

“There was a process-related disruption at the blast furnace, which has now been resolved, and normal operations have been resumed,” the steelmaker said, without providing further details about the reason for the stoppage and the impacted production volume.

The mill produces slabs, hot-rolled, cold-rolled and hot-dipped galvanized products, according to company information.

In Italy, the tight HRC supply was limiting room for negotiations, sources said, adding that demand remained limited.

Latest indications of workable levels came within €730-750 per tonne ex-works on Monday, reported by two buyer sources.

A third buyer said that mills were not receiving enough orders to secure sufficient coverage for longer-term business. “Demand remains rather weak, and buyers still seem reluctant to commit to larger volumes or longer delivery periods,” the same source told Fastmarkets.

Meanwhile, market participants said that they were not hearing any recent price negotiations with the former Ilva steelworks in the spot market anymore, after the producer was ordered to suspend hot-end operations by October 28.

At the same time, Metinvest’s Ferriera Valsider mill in Italy had been offering minor December allocation in the HRC domestic market after declaring a force majeure in late August due to engine issues, according to a company source.

This has left buyers dependent on Arvedi as the country’s sole active domestic producer, sources said.

Fastmarkets’ daily steel hot-rolled coil index domestic, exw Italy was calculated at €740 per tonne on October 12, down by €2.50 per tonne from €742.50 per tonne on October 9.

The index was down by €5 per tonne week on week but up by €5 per tonne month on month.

On the wider picture, the World Steel Association (worldsteel) expects EU steel demand to decline by 0.3% in 2026 to 146.3 million tonnes from 146.7 million tonnes in 2025 before recovering by 3.1% in 2027 to 150.8 million tonnes, revising down its 2026 forecast by 1.5% in its Short Range Outlook, published on October 12.

According to worldsteel, stronger-than-expected demand in 2025 was partly driven by stock-building ahead of the introduction of the Carbon Border Adjustment Mechanism (CBAM) in 2026, while underlying market conditions have remained weak due to a slower-than-expected recovery in construction and continued weakness in the automotive sector.

However, the association expects steel demand to improve from 2027, supported by infrastructure and defense spending, rising household incomes, and investment in energy and rail projects.

 

Polish long steel prices moved higher in the week to Friday October 9, amid increasing production costs. Producers were targeting higher levels due to rising oil and energy costs; however, their efforts were constrained by slow demand.
“Demand is indeed weak and is not driving prices up; if anything, it is exerting downward pressure,” a distributor source told Fastmarkets.

Deals for drawing-quality wire rod were reported at 2,950 zloty ($754) per tonne for larger tonnages and 3,000-3,150 zloty per tonne for smaller volumes. Workable levels were heard at 3,000-3,150 zloty per tonne.

As a result, Fastmarkets’ weekly price assessment for steel wire rod (drawing quality), domestic, delivered Poland narrowed upward to 2,950-3,150 zloty per tonne, from 2,900-3,150 zloty per tonne the previous week.

The domestic rebar market also showed signs of strengthening. Deals and offers for domestic rebar were heard at 2,750-2,780 zloty per tonne CPT.

Fastmarkets’ weekly price assessment for steel reinforcing bar (rebar), domestic, CPT Poland rose to 2,750-2,780 zloty per tonne, from 2,700-2,750 zloty per tonne the previous week.