CBAM creates costs, import issues; scrap critical: conference

The recently-introduced Carbon Border Adjustment Mechanism (CBAM) will create additional costs for European producers and issues for importers, said panellists during Kallanish Flat Steel 2023 in Istanbul on 19 October.

CBAM is part of a long investment journey taken by EU steelmakers to transition their production to low emissions. Nevertheless, steelmakers are set to struggle to compete in the global arena with CBAM in place.

GMK Center chief executive Stanislav Zinchenko said the EU is supporting the European steel industry with subsidies and identified CBAM as another EU protectionist measure. Tata Steel Nederland markets and pricing director Ronald de Haan, on the other hand, explained that CBAM is not a trade measure but a system to level the playing field and a necessity to safeguard future generations.

Turkish Flat Steel Import, Export and Industry Association (Yisad) chairman Tayfun İseri claimed that Turkey is already producing green steel due to the large share of EAFs in total production. The EU should import from Turkey if it wants to turn green sooner as its transition will take time, he added.

Given the transition to EAF-based production in order to achieve CBAM targets, Stemcor managing director distribution Dick Sands said scrap will become a critical feedstock. “Scrap is the new gold”, he commented, warning that countries that are dependent on imported scrap, like Turkey, are likely to suffer procurement difficulties in future.

McKinsey senior expert Steven Vercammen said that the cost of producing from scrap is expected to increase remarkably in the future alongside the CBAM rollout and increasing restrictions on scrap exports.

On 1 October, CBAM was implemented in its transitional phase. The permanent system is set to enter into force in 2026.

Burcak Alpman Turkey