The European Commission’s three linked consultations, launched on August 28, addressed key issues including default values, benchmarks, recognition of third-country carbon pricing, and the adjustment mechanism for free EU Emissions Trading System (ETS) allocations.
Consultations closed at midnight Brussels time on September 25.
The Commission is expected to present a final draft of the CBAM regulations to be implemented in the fourth quarter of 2025.
Industry sources highlighted widespread concern about the balance between administrative burden and financial exposure. “Early preparation on data systems, verification processes, and supply-chain coordination will be crucial to manage compliance risk and competitiveness,” one distributor said.
The first consultation covered the methodology for calculating embedded emissions. Businesses will need to decide whether to provide actual plant-level data or rely on default values. While actual data can potentially lower the costs if carbon emissions are well managed, it also requires robust monitoring and verification systems. Treatment of indirect emissions, especially electricity, and the potential use of Power Purchase Agreements and Energy Attribute Certificates were key issues.
The second consultation dealt with adjusting CBAM certificate obligations in line with the free allocation of EU ETS allowances. The central debate was focused on how generous such adjustments should be, how quickly they should be phased out, and whether they might undermine the carbon price signal. Industry stakeholders tend to favor smoother, more protective transitions, while non-governmental organizations highlighted the risk of weakening climate ambition.
The third consultation concerned recognition of carbon prices already paid in third countries. Potentially, importers may claim reductions in CBAM obligations if they can prove equivalent payments abroad, Fastmarkets understands. However, verification requirements, exchange rate rules, and the treatment of rebates remain uncertain. The business challenge is ensuring documentation is accepted, to avoid paying for carbon emissions twice.
Overall, companies face tensions between the administrative complexity of CBAM and huge financial exposure.
Legal uncertainty persists
According to a notice from European steel distributors’ association EUROMETAL, emissions benchmarks, default values, and methodologies are unlikely to be published before early 2026. This leaves buyers negotiating 2025/26 contracts without a legal framework, creating risks of speculation, contractual disputes, and distortions in the single market.
In its letter to the Commission, EUROMETAL urged Brussels to:
• publish provisional benchmarks and values immediately;
• clarify the scope of downstream product coverage;
• accelerate communication on the export adjustment mechanism;
• consider a pre-payment or provisional charge at the border to stabilize markets;
• issue an EU-wide statement to reassure stakeholders before final texts are adopted.
“CBAM is not only a tax or customs issue but also a question of trade, competition and Single Market integrity,” EUROMETAL said, stressing the need for coordinated handling across Commission services.
Market impact
Looming uncertainty around CBAM rules and implementation have affected business activity in the EU flats market over the past several weeks.
Notably, demand for imported hot-rolled coil (HRC) remained quiet, with buyers taking a wait-and-see stance and assessing risks.
“Third-country imports are ruled out at the moment, no matter the offer price, because long lead times create a high risk of these goods being customs-cleared only after January 1, 2026 [when CBAM is phased in officially],” a mill source in Northern Europe told Fastmarkets.
A trading source in Italy confirmed that there was no interest in bookings of imported material at the moment owing to CBAM risks.
Some Asian suppliers were heard offering to cover CBAM risks for buyers to stimulate buying appetite.
Notably, several industry sources pointed out that Asian suppliers were normally ready to pay CBAM risks up to a certain threshold – for example, a maximum of €35 per tonne ($41).
“So, at the end of the day, you have no clue what the final import price [for HRC] will be,” a buyer in Italy said.
Some industry sources expressed hope that a lack of viable import options will result in stronger reliance on domestic coil and support a domestic price rebound.
Fastmarkets’ calculation of the daily steel hot-rolled coil index, domestic, exw Northern Europe, was €575.00 per tonne on September 25, stable day on day.
The Northern European index was down by €5.50 per tonne week on week, and down by €1.25 per tonne month on month.
