EU HRC prices face downward pressure as market sentiment remains cautious
European domestic hot-rolled coil prices remained largely stable May 8, with sources citing a modest erosion of EUR10-20 across various regions.
“Prices have been pretty stable overall, but we expect a small dip in the short term, with HRC ex-Ruhr at EUR630-640 and ex-Italy at EUR620,” a mill source said. “We’re not seeing a lot of action in the market right now, and the outlook remains fairly weak.”
Despite this, there is optimism for the second half of the year, with expectations for a potential improvement as market conditions stabilize. However, concerns about the gap between domestic and import prices, combined with regulatory uncertainty, remain.
“Import activity is quieter, and there’s little insight on where it will go,” the source added, noting that a lack of clarity on the Carbon Border Adjustment Mechanism (CBAM) was exacerbating market hesitancy. “People are starting to calculate what it really means, but there are still many gaps to be filled by the commission.”
Platts assessed HRC ex-works Italy at EUR620/mt and HRC CIF Southern Europe at EUR530/mt, both stable day over day. Platts assessed HRC in Northwest Europe at EUR640/mt EXW Ruhr, down Eur5 day over day, and HRC CIF Antwerp at Eur540/mt, stable day over day.
CBAM extras must be discussed in supply chain to prevent major disruption of steel trade in 2026
The CBAM for imported products was proposed by the EU to prevent carbon leakage within the EU Emissions Trading System (ETS), and was expected to be implemented from January 1, 2026.
Despite the short time-frame, European steel market participants were still digesting important details on how the mechanism will be administered.
Effectively, CBAM will come into force on January 1, but the fiscal implications will only become effective in May 2027.
“The EU delayed the operational handing of CBAM until May 2027 because the [electronic] platform for handing the certificates is not ready for trading,” Alexander Julius, president of European steel distributors’ association EUROMETAL, said during his presentation in Milan.
The price of CBAM certificates will be linked to ETS prices. For example, EU carbon emissions allowance prices hovered around €71.52 ($80.49) per tCO2e in January this year, peaked at more than €81 per tCO2e in mid-February, and then dropped below €60 per tCO2e in early April.
Under CBAM, those involved will need to buy certificates on the EU platform and can also resell those which are not used, Fastmarkets understands.
There are actual values of CO2 in imported goods, and the European Commission has also introduced default values that can be accepted in the future and will be set in the system. But the default values will be higher than the actual values, Fastmarkets understands.
To import steel when CBAM is in effect, customs-authorized companies need to be registered with the platform to be able to pay for CBAM certificates.
Initially, CBAM declarations will need to be done for Scope 1-2 emissions, but eventually also for Scope 3.
Declarants will be held liable for declaring incorrect emissions values.
Therefore, to provide more transparency, non-EU suppliers can register their installations on the EU platform to declare their Scope 1-2 emissions. But this will have to be checked by EU verifiers and certification companies.
“This is a good plan because not every declarant can risk registering [CO2 emissions] independently,” Julius said.
There will be around 100,000 companies that will be authorised on the EU platform to buy CBAM certificates, he estimated.
Dangerous misunderstanding
But while some buyers felt that the delay of CBAM certificates purchases may relieve some immediate financial pressure, that impression was faulty because the exposure to financial risk remained the same.
“The problem with this [delay of certificates sales] is that we don’t know what will be the exact CO2 values under ETS,” Julius said.
“It’s a cashflow issue,” he added, “because in 2027 the declarant will have to buy all the certificates for the goods that have been fiscally cleared in 2026. And the declarant has to build [financial] reserves. And CBAM certificate prices must be displayed in the final pricing.”
In the first year of CBAM – 2026 – Importers will have to pay for only 2.5% of embedded emissions, but this rate will gradually increase to 100% of grey emissions by 2034.
Therefore, the costs of handling imports will dramatically change next year, and buyers should start to prepare now.
“Everything that has been ordered from non-EU countries for the second half of 2025 will be fiscally treated on January 1, 2026, will be subject to CBAM and CBAM extras,” Julius said.
High extras for carbon emissions-intense steel
The complexity of CBAM might become a significant burden for smaller business, with intermediary companies simply unable to digest the costs.
“In the future, we will need much more stronger cooperation in the supply chain between importing companies, processing companies [and] up to the end-user company,” Julius said.
“We made calculation based on our imports volumes in 2024,” a buyer in Northern Europe said, “and CBAM handing costs are estimated to be €6.5 million [$7.3 million]. This is totally unmanageable.”
A buying company will need to be familiar with the system to be able to take the cost factor into consideration. Extras will have to be paid for imported steel with higher emissions, bringing additional costs of round €56 per tonne, Julius said.
One way to address the issue could be the introduction of “emissions surcharges” – adapting contracts to include advance emissions-tracking coordination between mills, customers and logistics partners, and to consider the use of digital systems for emissions reporting and certificate management.
“Nobody is willing to pay [emissions] extras, but under CBAM steel prices will increase dramatically,” Julius said. “These extras need to be discussed in the supply chain.”
What’s next?
In the fourth quarter of 2025, the European Commission will introduce CBAM amendments, including a potential extension of its scope downstream and additional anti-circumvention measures.
The proposed amendments will be in three areas – to address the problem of carbon leakage for CBAM goods exported from the EU to third countries; to introduce a CBAM scope extension to certain steel downstream products, to address the risk of carbon leakage being pushed further down the value chain; and to propose anti-circumvention measures, including those against resource shuffling.
While steel imported into the EU to produce finished goods will be subject to CBAM regulations, some steel derivatives – products made from steel, such as auto parts, cookware, nails or furniture. – can be imported directly without falling under the scope of CBAM. But this carbon leakage might do further damage to the already-suffering manufacturing industry in the EU, trade sources said.
“Instead of bringing the steel coil, beam, section or whatever from Asia and processing it in the EU,” a mill source said, “we buy the ready-made steel structure without quota, without anti-dumping duty and CBAM. That’s killing our downstream industry.”
EU launches steel carbon label consultations
The European Commission has initiated a public consultation as part of its impact assessment on different policy options related to the Clean Industrial Deal, which include a voluntary label specifying the carbon intensity of steel products, Kallanish notes.
The Industrial Decarbonisation Accelerator Act, a key part of the Clean Industrial Deal, aims to increase sustainable and resilient industrial production in energy-intensive industrial sectors (EIIs) in the EU by supporting decarbonisation investments.
Its three objectives are to speed up permitting procedures for industrial decarbonisation; Identify and promote priority industrial decarbonisation projects and clusters; and create and protect European lead markets for European low-carbon products.
The last of these will consider introducing sustainability and
Also assessed will be promoting industrial products with a low carbon intensity, including options for an EU label. This will develop a voluntary label for steel based on EU Emissions Trading System data and building on the EU’s Carbon Border Adjustment Mechanism (CBAM) methodology, the Commission says.
The impact assessment will also consider incentives for uptake of clean carbon feedstock, including carbon capture and u
In a continuation of its recent language that has been strongly supportive of industry, the Commission says: “The absence of additional EU action would maintain the status quo, increasing the risk of losing European strategic industries and becoming excessively dependent on non-EU countries for the EU’s green, digital, defence and economic security objectives.”
It admits problems can only partially be addressed by member states due to the integrated nature of the market for energy-intensive industrial products and that of energy markets.
EIIs are “of strategic importance to the EU’s resilience, security and economic prosperity. They are the key starting point for many value chains, providing raw, processed and intermediate materials to downstream sectors,” the Commission adds.
They therefore need “urgent support to decarbonise, electrify as well as tackle high energy costs, unfair global competition and complex regulations that jeopardise their business case, harm their competitiveness and weaken European resilience,” it notes.
The consultation is open for feedback for 12 weeks from 2 May and is open to all citizens and stakeholders.
Adam Smith Poland
UK publishes draft CBAM primary legislation for technical consultation
The draft outlines the legislative framework for the CBAM tax on certain imported goods into the UK, which will become effective from January 1, 2027.
The tax will apply to direct and indirect emissions embodied in the imported CBAM good.
“This represents continued momentum for the adoption of CBAM mechanisms globally, as countries follow in the EU’s footsteps to use trade as a tool for climate policy. It also helps better align policies in the UK and the EU, smoothing the way to progress linking of the UK and EU emissions trading systems, which will be a topic for discussion at the UK-EU Summit in May,” Stuart Evans, Fastmarkets’ chief economist and head of environmental markets, said.
As it stands, goods imported to the UK are not subject to the UK’s Emissions Trading System (ETS).
The ETS operates through a “cap and trade principle,” whereby the cap is set by the ETS and participants can trade emission allowances as needed.
CBAM aims to prevent carbon leakage in the UK, since imported goods not subject to the UK ETS have also not been subject to a similar carbon price from the jurisdiction they were produced in.
A “CBAM” good is defined in Schedule 1 of the draft primary legislation as:
- Aluminium
- Cement
- Fertilizers
- Hydrogen
- Iron and steel goods
Specific CBAM goods will be subsequently identified by commodity codes.
The CBAM tax rate will be charged “at an amount equal to the sectoral domestic price” of the good and multiplied by the number of tonnes of CO2 embodied in the good.
The “sectoral domestic price” will be calculated by the Treasury for each CBAM sector every quarter.
This would involve using the previous quarter’s average UK ETS auction price.
The importer will be liable to the CBAM cost, but exemptions are available if the good has originated in the UK, it has been returned or the good has been imported outside the course of business.
Registration with His Majesty’s Revenue and Customs (HMRC) will be required if CBAM goods with an aggregate value of £50,000 ($67,033) or more have been imported into the UK over 12 months, or it is expected that this quantity will be met before the end of a 30-day period.
According to the draft legislation, registration must occur within 30 days of triggering the above threshold.
The first accounting period for the CBAM tax will run from January 1, 2027, to December 31, 2027; returns and payments will be due five months after the end of the first accounting period (May 31, 2028) to provide businesses and HMRC sufficient time to adjust to the new system.
From January 1, 2028, CBAM costs are required every quarter and are due two months after the accounting period ends.
Initially the consultation proposal outlined quarterly accounting periods from 2028 with a one-month return and payment window. But after concerns around data availability were raised, this has been amended to two months, to bring greater alignment between CBAM and other UK tax models and provide businesses more time to gather the data required to submit their return.
As part of the submission, the government will allow the use of the most recently verified emissions data, and the most recently verified information to determine the “deductible carbon price.” According to the draft legislation, independently verified data or default values can be used by the importer.
From 2027, the government will proceed with a single default value per good, and the methodology for its calculation and publication will be confirmed prior to the beginning of CBAM in 2027.
The government noted that it is considering moving to an alternative approach from 2028 onward.
Importers can reduce their CBAM liability through a carbon price relief if the embodied emissions of the goods they have imported have previously been subject to a “deductible carbon price.”
This could be either through another country’s ETS or taxation.
In a previous consultation, the government confirmed that only explicit carbon prices that place a price per tCO2e can be used as part of this relief. Other policies, such as fuel duties or carbon regulations, are not allowed to form part of any deductions.
The UK government also proposed an exemption for goods that originated in a jurisdiction with a linked carbon pricing scheme, since carbon leakage risk would be minimal because the ETS prices would converge.
The consultation will end on July 3, and feedback is encouraged from all affected stakeholders.
UK-EU carbon markets relationship
The EU’s equivalent CBAM policy will come into effect on January 1, 2026, which has prompted other countries to look at setting up similar measures and their own ETS.
But the European Commission is planning to review legislative proposals amending CBAM in the fourth quarter this year, Fastmarkets recently reported.
The proposed amendments will be in three directions — to address the problem of carbon leakage for CBAM goods exported from the EU to third countries; to introduce CBAM scope extension to certain steel downstream products, to address the risk of carbon leakage being pushed further down the value chain; and to propose anti-circumvention measures, including those against resource shuffling.
Harmonizing CBAM policies between the UK and EU would provide domestic producers a way to offset associated CBAM costs when exporting to the UK through domestic pricing schemes.
The UK is at risk to lose £3.5 billion-8 billion in revenue from 2025 to 2030 if it remains outside the EU carbon market, since UK ETS allowance prices are lower than those in the EU, a UK Energy report from October 2024 shows.
“The UK Emissions Trading Scheme (ETS) is 10 times smaller, more volatile and, since mid-2022, has been priced lower than the EU ETS… A lower UK carbon price leads to reduced revenues for Treasury and lessens the incentive to decarbonize,” the report reads.
“Analysis by Frontier Economics projects shows that the introduction of the EU CBAM will lead to £800 million being paid to EU member states on export across all impacted sectors between 2026 and 2030,” it continued.
For example, in January 2025, UK ETS allowance prices were just around £32.57 per tCO2e. In contrast, EU carbon emissions allowance prices hovered around €71.52 ($74.06) per tCO2e in Janaury 2025, peaked at over €81 per tCO2e in mid-February, and then dropped below €60 per tCO2e in early April.
The projected average price for the year is around €75 per tCO2e, which is 15% higher than in 2024, according to the outlook for European Union Allowance, the financial instruments within the EU Emissions Trading System.
Jamie Mcleod at IREPAS: EU is taking steps to simplify CBAM but not weakening it
Speaking at the SteelOrbis Spring 2025 Conference & 92nd IREPAS Meeting taking place in Athens on April 27-29, Jamie Mcleod, director at consulting firm Crowe U.K. LLP, talked about the EU’s Carbon Border Adjustment Mechanism (CBAM) which is in its transition period right now, stating that in January 2026 the definitive period starts, imposing a levy on carbon-intensive goods imported into the EU, with steel being the most affected good.
Mr. Mcleod said that the transitional period is only the reporting phase and the 5th quarterly report is due to be submitted in April, marking the third report requiring actual emissions data, as default values are no longer permissible for the rest of the transition period.
He underlined that obtaining reliable and complete actual emissions data remains a significant challenge. If actual data is unavailable, CBAM declarants must demonstrate that they have made all possible efforts to obtain it.
Regarding the CBAM, Mr. Mcleod stated that, apart from the obvious results, another practical result of the mechanism is that it will generate billions of revenues for the EU.
The EU is taking steps to simplify the CBAM but is not weakening it. He went on to say that the EU is proposing a mass-based threshold of 50 mt per importer per calendar year, meaning that, if an importer imports 50 mt for the whole year, they will be exempt from CBAM obligations. However, he noted, most steel importers will be over that threshold.
He warned that, from 1 January 2026, only authorised CBAM declarants can import CBAM goods into the EU.
If you are supplying to EU, you need to be authorized and applicants must have a strong compliance history, no customs debts, sufficient financial standing to meet their CBAM obligations, and suitable internal processes to demonstrate adequate CBAM management.
While EU importers are directly responsible for CBAM reporting and charges, the CBAM impacts the whole supply chain, the Crowe U.K. official pointed out.
Touching upon the UK’s CBAM, Mcleod indicated that it will come into effect in 2027 and that there will not be a transition period, adding that alignment between the UK and the EU could mitigate trade impacts for trade of CBAM goods between the parties.
Italy, France, Slovakia seek to further simplify CBAM
Italy, France and Slovakia are urging the European Commission to simplify the Carbon Border Adjustment Measure (CBAM) and resolve the administrative challenges that come with its implementation.
The complex structure of this system could cause delays and increases in management and operational costs for European businesses.
“A simplification of the regulatory framework is needed to provide operators with clearly defined and simplified technical rules. Basing the CBAM on pre-defined emission values for upstream and downstream sectors could significantly simplify reporting requirements,” says the AoB document requested by France, Italy and Slovakia and obtained by Kallanish.
The paper suggests an exemption for small importers and a thorough review of downstream carbon leakage as well as carbon leakage in exports. The CBAM regulation now applies to the six pilot sectors and 20 neighbouring downstream products. However more sectors and downstream products may be at risk of carbon leakage due to the phase-out of free EU ETS allowances.
CBAM should cover downstream sectors and goods at risk of carbon leakage by the end of the transition period. At present, it does not include any measures to avoid carbon leakage from exports.
The EC is to consider the extension of CBAM to indirect emissions under the condition that it does not compromise decarbonisation efforts and to consider the impact of the mechanism on the competitiveness of the EU industry.
“The Commission is required to submit a report by 2028 on the impact of the CBAM, notably on carbon leakage to exports, resource shuffling, and an evaluation of the overall application of the regulation. Such a report should be anticipated to the end of the transition period. It should propose, if necessary, appropriate and proportionate measures to prevent carbon leakages in support of exporting industries, by maintaining, among other measures, targeted free ETS allowances for exportations to ensure a level playing field,” the paper concludes.
Earlier this month the Commission published its Steel and Metals Action Plan confirming it would issue a legislative proposal for CBAM adjustments by year-end.
Natalia Capra France
Redirection of Asian steel trade worries EU
Spain’s Celsa Group has joined the European steel sector in warning that the main impact of US tariffs will not be on European exports but rather on the influx of material from countries such as China, Indonesia and North Africa. These imports are expected to be redirected to Europe following the closure of the US market, Kallanish understands.
Celsa’s president, Rafael Villaseca, calls for stronger EU protection against potential trade diversions during the visit of European Commission vice president Stépahne Séjourné to the group’s plant in Castellbisbal. Like other European executives, Villaseca expresses concerns that Chinese steel is already being imported with state subsidies and does not meet Europe’s environmental standards.
“At a time of declining domestic consumption in China, rather than reducing production, they are shifting supply to other markets that lack protectionist measures, such as Europe,” he warns.
“Deindustrialisation is already a reality, with a loss of 29 million tonnes of annual production over the past decade. Strong political action is essential to defend European interests. We must curb unfair imports, ensure competitive energy costs, strengthen protection against carbon leakage, and guarantee that scrap generated within the EU is recycled within the continent,” he emphasises.
During the meeting with Séjourné, key measures were proposed for inclusion in the Steel and Metals Action Plan (see separate story). These included reviewing and strengthening EU safeguard measures to reflect current market conditions and prevent unfair competition. Another priority discussed was the need to secure access to affordable energy to maintain industry competitiveness and ensure the effective implementation of the Carbon Border Adjustment Mechanism (CBAM), reinforcing circular economy objectives.
Celsa accounts for 0.65 percentage points of the 3.3% of Spanish steel exports to the US.
Todor Kirkov Bulgaria
EU action plan confirms melted/poured, CBAM, scrap focus
The European Commission published its Steel and Metals Action Plan on Wednesday, confirming it is evaluating the “melted and poured” rule, adjustments to the Carbon Border Adjustment Mechanism (CBAM) and a scrap export duty.
However, its wording on various points softened compared with the Plan draft leaked earlier in the week, Kallanish notes.
European steelmakers association Eurofer praised the Commission’s proposals but warns that “energy remains the elephant in the room” and that “further work to reduce energy costs is crucial”.
The final Plan states the Commission “will assess whether it should adapt its practice by introducing a ‘melted and poured rule’.” This compares to the draft, which stated the Commission has already decided to implement the rule in its trade defence measures. No schedule has been provided for the assessment process.
The Commission says it will “consider proposing”, by the third quarter at the latest, export fees or export duties, “if necessary”, to ensure sufficient availability of scrap in the EU. It will also assess introducing a reciprocity rule to countries that ban scrap exports to the EU or apply unfair subsidies to support their metal recycling industries.
The draft language was firmer, indicating the Commission would propose a reciprocation measure by Q3.
The Commission’s CBAM adjustments proposed in the draft have all made the cut. The difference is the timing for one of them. The Commission will issue in Q2 a communication providing analysis and options on how to address the problem of carbon leakage for CBAM goods exported from the EU to third countries.
The Commission also confirms it will strengthen the monitoring of trade flows and will proactively open investigations based on a “threat of injury”, without waiting for material injury to occur.
On energy, in the short term, the Commission is encouraging member states to use existing regulation that allows for reduction of environmental taxes and parafiscal levies, and reduction of electricity levies. The Energy Taxation Directive allows to decrease electricity taxation to zero for energy intensive industries.
The Commission is consulting member states on a clean flexibility state aid instrument based on PPAs and industry committing to consume clean electricity. It will also provide guidance to member states on the design of public support schemes for clean energy through two-way contracts for difference. This will provide temporary price relief to enable decarbonisation investments, the Commission points out.
On lead markets for steel, as announced in the Clean Industrial Deal, the Commission will propose as part of the Industrial Decarbonisation Accelerator Act to introduce resilience and sustainability criteria to foster clean European supply for energy-intensive sectors. These criteria – for example, clean, resilient, circular, cybersecure – will strengthen demand for EU-made clean products.
Finally, the Commission made the link between steel and defence, saying the former is “crucial” to guaranteeing the EU’s security and delivering on the ReArm Europe Plan/Readiness 2030 programme, also launched on Wednesday.
Adam Smith Poland
Norway to introduce its own CBAM in 2027
The Norwegian government has announced that it is planning to introduce the country’s own Carbon Border Adjustment Mechanism (CBAM) from 2027. The ministry of climate and environment and The Norwegian Environment Agency will work together on the scheme.
With its CBAM, Norway aims to prevent the European industry from losing its competitiveness and from relocating to other countries where environmental regulations are not stringent.
Andreas Bjelland Eriksen, minister of climate and environment, stated that the CBAM will set an equal price for emissions caused by the production of goods, whether they are produced in Norway or the EU, or are imported from other countries. Meanwhile, Jens Stoltenberg, minister of finance, pointed out that the CBAM will maintain the competitiveness of domestic industry, while providing incentives for other countries to cut their emissions.
European Commission to postpone sales of CBAM certificates to 2027
One result is that steel importers will no longer be obliged to purchase CBAM certificates quarterly in 2026, as was planned originally.
The amendments were presented as part of the Clean Industrial Deal proposed by the European Commission on Wednesday. This was intended to serve as a framework to tailor action in Europe’s energy-intensive industries, including steel and metals, and the clean tech sector, to support decarbonization initiatives.
The official version of CBAM amendments complied with the changes, which were leaked into the public space earlier this week.
But the delay to the beginning of CBAM certificate sales will not remove the financial burden related to CO2 emissions, it will only shift it to the next year, Fastmarkets understands.
“The changes may relieve some immediate pressure, but the financial risk exposure stays the same,” Louis Redshaw, chief executive officer of Redshaw Advisors, said. “Companies will still be [liable] for 2026 emissions but won’t need to fully account for them until 2027. This delay doesn’t remove the financial burden, it just shifts when it [will become effective].”
Another change was the introduction of a new annual de minimis threshold to exempt small importers from the CBAM requirements. This meant that only companies importing more than 50 tonnes (or 100 tonnes of embedded CO2) of net mass of goods, covered by the legislation, will have to comply.
But representatives of the steel and metals industries commented that this change would make little difference because their shipment volumes were usually well above the threshold.
European steel association Eurofer also said that, although the proposed Clean Industrial Deal and the amendments in the CBAM have managed to identify the right problems, they offered only partial solutions.
The association expected that more measures would be included in the Steel and Metals Action Plan, which was expected to be announced on March 4 during the Strategic Dialogue on Steel, organized by the European Commission.
