Steel prices in Europe are set to rise on increased regulation, despite weaker demand conditions, according to Tata Steel.
The evolving tariff framework and CBAM in Europe are “pivotal for rebalancing EU market dynamics”, chief executive T V Narendran said in the firm’s earnings release last week.
During the earnings call monitored by Kallanish he noted that sentiment in the EU is improving, supported by the CBAM rollout and expected safeguard revision from June.
Koushik Chatterjee, executive director and chief financial officer, said: “The effectiveness and timing of the CBAM effect and the trade-related quotas will determine how quickly the imports retreat from the EU market and the utilisation of the local steel industry increases, which will have positive implications on the price regime.”
He added: “Irrespective of the demand condition, there will be an uptick in prices because, arithmetically, it has to work in that manner. And then comes the steel action plan. So there are two very fundamental regulatory triggers in the EU, which will push up the prices.”
There is a CBAM markup of 10% in 2026 and 20% in 2027. “Until the verification happens, the markup keeps increasing. So, technically, the prices should increase,” he noted.
There is an expectation that EU prices will move away from Asian prices and closer towards US prices, Narendran added. The executives expect a gradual increase of around €100/tonne ($119/t) over the full year rather than a jump.
“It will happen at least in two stages. One is CBAM now, and secondly is when the tariff comes in post-June 2026,” Chatterjee suggested.
For its Netherlands operations, Tata expects an Ebitda expansion, with an additional 400,000 tonnes on-quarter to be sold in the March quarter. The IJmuiden plant is well positioned to take advantage of the higher prices, Narendran added.
Tata is also calling for changes to safeguards in the UK, where its operations continue to make a loss.
“Given the actions being taken in the US, in Europe, in India, and elsewhere, we expect the UK government also to be taking these actions,” Narendran said. “Once it happens, hopefully, we are on track to make sure that the UK is on positive Ebitda territory.”
Chatterjee expects a UK price increase of around £100/t ($137/t) plus if the quotas are similar to the EU’s, which will “significantly” help profitability.
“It is also important for the UK to do that in the context of the fact that the EU has come out with the quotas and with their steel action plan and, therefore, there is a need to harmonise it,” he added.
