CBAM-prompted imports may deepen oversupply in EU

Some European stainless steel buyers expect an influx of material into EU ports towards the end of 2025 as importers attempt to avoid the added administrative and cost burden of CBAM.

The European Commission’s emissions-based Carbon Border Adjustment Mechanism is currently scheduled for a full rollout from January 1, 2026. Under the current plans, registered declarants – those approved by the Commission to import material – will have to report all imports and their carbon content from that date.

They will also have to buy and submit CBAM certificates to reflect the greenhouse gas emissions generated during the production of the goods they bring into the EU. This means they will effectively pay a charge based on the quantity of carbon emitted during the manufacturing process in the country of origin.

Under changes proposed by the Commission in February, the purchase of CBAM certificates would be delayed until February 1, 2027, however. This is part of a package of measures which aim to simplify the process and further smooth a transition period which started in October 2023. Approval of the amendment was expected as the Stainless Steel Review was published.

The need to report stainless steel imports and their emissions will remain, regardless of the amendments’ approval. Consequently, some MEPS respondents anticipate that import volumes will grow in quarter four. However, others highlight that weak demand may mitigate any upturn in imports.

Any increase in third-country shipments would be an unwelcome development for European mills. MEPS respondents say that the use of Indonesian-origin slabs as a basis for coil production, and a reduction of scrap prices, may be helping to preserve certain producers’ profit margins. Nonetheless, low selling prices are challenging their profitability.

Inventories are rising, meanwhile, due to a combination of low demand and the loss of export business in the United States, following the implementation of 25% Section 232 import tariffs on March 12. Changes to the EU’s import safeguard measures have done little to reduce imports in recent weeks.

The UK plans to roll out its own CBAM scheme in 2027. The EU and UK have agreed to work towards linking their Emissions Trading Systems, effectively exempting shipments between the two from CBAM’s associated cost and administrative burdens.

Mills under price pressure

The quarter one financial results of Europe’s largest stainless producers indicate that oversupply will continue to apply downward pressure to stainless steel prices.

Acerinox reported a 29% quarter-on-quarter increase in melt shop production, to 512,000 tonnes, from its consolidated operations in Europe and the United States. This came despite an acknowledgement that inventories had increased amid pressure from imports, which have increased their share of the European market to 22%.

Acerinox expects US tariffs to improve the profitability of its US operations. However, chief executive Bernado Velázquez raised concerns that many of the exports that previously ended up in the US, and that have lost competitiveness as a result of the tariffs – including European exports – may now end up in the EU.

Outokumpu’s stainless steel deliveries, in Europe, rose by 10.8% quarter-on-quarter and 5% year-on-year, to 318,000 tonnes, in quarter one. The value of the steelmaker’s sales rose by a lesser 9.8% quarter-on-quarter and 3.4% year-on-year due to reduced selling prices.

Shipments from Aperam’s stainless and electrical steels division rose from 401,000 tonnes to 421,000 tonnes quarter-on-quarter. Nonetheless, its earnings before interest and tax declined by 30% quarter-on-quarter and 67% year-on-year, to EUR34m. The decrease was attributed to “intensive pricing pressure in Europe”.

All three producers forecast a more profitable quarter two. However, Aperam chief executive Timoteo Di Maulo said that reliable projections for the remainder of the year are “challenging in the current volatile environment”.

mepsinternational.com

European long steel market remains subdued amid summer slowdown, CBAM uncertainty

The European domestic long steel market remained subdued in the week to June 4, as demand failed to recover following recent holidays, with participants citing seasonal slowdown and regulatory uncertainties – particularly around the Carbon Border Adjustment Mechanism – as key overhangs.

Tradable values for rebar were largely unchanged week over week, reported at Eur650-660/mt delivered to Germany, and Eur625-630/mt delivered to Belgium. One trader noted ex-works levels around Eur615-620/mt in Benelux, reflecting limited transactional movement and persistent buyer caution.

“Mills are struggling to keep the price — it’s not brilliant,” said a trading source. “Demand is weak for many reasons; the economy is what it is, and there’s still no clarity on CBAM implementation. We still don’t have benchmark values to work with.”

Medium sections were heard traded at Eur785/mt delivered Benelux for volumes around 2,000 mt, with broader tradable values seen at Eur785-790/mt delivered.

Across the long segment, participants noted the combination of May holidays and the early onset of the summer slowdown had stalled buying appetite. “It takes more time for spending approvals to come through, and activity is slower than expected,” one distributor noted.

Carbon-accounted offers continued to face resistance, with reported premiums between Eur30-65/mt deemed unworkable in the current market. “It’s a good idea, but it’s not working,” one source said. “People are paying for certificates, but the product is still the same.”

Platts assessed rebar at Eur620/mt ex-works Benelux, down Eur5/mt on the week. Platts assessed medium sections at Eur780/mt delivered Benelux, stable on the week.

Meanwhile, Platts assessed both carbon accounted rebar and carbon accounted medium sections at Eur30/mt, stable on the week.

EUROMETAL gathers Flat SSC leaders in Hamm to tackle industry challenges

Last thursday, EUROMETAL brought together 35 participants from leading German-speaking Flat Steel Services Centres companies in Hamm for a key meeting of the “SSC Arbeitskreis”. The event focused on the strategic challenges ahead for the sector.

The session was opened by Arbeitskreis Chairman Thomas Niederhofer (Knauf Interfer) and Head of Sales Automotive Bernd Tremmel (Becker Stahl-Service), who warmly welcomed the group.

The agenda covered essential topics including a compliance briefing by Alexander Bartsch (Henseler & Partner), an overview of the current challenges in the EU steel market by Alexander Julius (EUROMETAL), and legal insights on CBAM, embargoes, sanctions, and customs duties from Lars Hillmann (Cattwyk).

Stefan Grüll (S1Seven) introduced the role of digital mill certificates in supporting sustainability traceability across the steel supply chain.

Thomas Niederhofer (EUROMETAL) also shared the first ideas from the working group on cargo securing for vertically loaded slit coils.

EUROMETAL President, Alexander Julius emphasized the unknown variables in CBAM, urging companies to factor these into contracts and negotiations for 2026. He also highlighted EUROMETAL’s ongoing advocacy to ensure steel derivatives are properly included in CBAM taxation, and safeguard measures.

The day concluded with a guided visit to Becker Stahl-Service GmbH in Bönen.

These are decisive times for our industry. EUROMETAL will continue to be a strong voice to shape the path forward — with and for our members.

EU Parliament approves proposed CBAM simplifications

The European Parliament (EP) has approved proposed simplification changes to the Carbon Adjustment Border Mechanism (CBAM), Kallanish learns.

The changes, first proposed by the European Commission in February, as part of its Omnibus simplification package, include a new lower 50-tonne threshold. While the changes remove 90% of small companies from being liable for the carbon tax, the vast majority of steel companies remain within the scope.

Now approved, EP will move to finalise amendments with the European Council on the regulation.

Despite these changes being approved, Belgium-based climate think tank Sandbag and steelmakers’ association Eurofer have separately released statements calling for further changes.

Sandbag has released a position paper outlining reasons why CBAM should be extended horizontally to more products and vertically to include key precursors such as coke, lime and ferro-silicon, alongside international transport emissions. It says this is essential to close remaining emissions gaps.

This expansion is also needed to support the phase-out of free allocation under the EU Emissions Trading System (EU ETS), which currently fails to incentivise decarbonisation in the EU, it adds.

It has also called for scrap to be included within CBAM’s scope.

Eurofer meanwhile notes CBAM remains full of loopholes that need to be fixed. Failure to do this risks undermining decarbonisation investments, accelerating deindustrialisation, favouring production in third countries, and failing to cut global emissions.

It has created a toolbox on how to fix these loopholes. This includes keeping free allocation for exports to avoid carbon leakage in global markets. It notes that 70% of EU steel exports go to countries with no carbon pricing, therefore making European steel uncompetitive.

Other calls include extending CBAM to steel-intensive downstream goods with a simplified emissions calculation system for complex products.

Additionally, it says the origin of CBAM goods must be set where the steel was melted and poured.

It also notes a loophole where steel-intensive goods such as car components, machinery and household items can be imported without paying any carbon price, which puts EU producers of these products at a disadvantage.

Carrie Bone UK

kallanish.com

 

European lawmakers approve carbon border tax reform on overwhelming majority

The European Parliament voted with a decisive majority to endorse a proposal to streamline the EU’s carbon border adjustment mechanism, or CBAM, by moving to a mass-based threshold and tweaking the timeline for the sale of carbon pricing certificates.

The simplification measures, part of the European Commission’s Omnibus package presented in February 2025, passed with 564 votes in favor, 20 against and 12 abstentions, clearing the way for negotiations with the European Council on the final shape of the legislation.

“The CBAM is a crucial instrument to help the EU prevent carbon leakage and incentivize climate action outside the EU. I am therefore glad that Parliament decided not to reopen other provisions of the CBAM legislation,” Antonio Decaro, a member of the European Parliament, who is the chair of the Committee on the Environment, Climate Change and Food Safety, said.

“This approach enables us to simplify matters for companies without dismantling or weakening the CBAM,” he said. “We will continue to work quickly to bring legal clarity and certainty to all CBAM stakeholders.”

 

CBAM tweaks

Under the changes, importers will be able to purchase CBAM certificates starting in February 2027 rather than from Jan. 1, 2026, to cover the emissions embedded in their imports for 2026, giving businesses more time to adapt to the new carbon pricing mechanism.

The proposal also includes a 50 mt de minimis threshold that would exempt 90% of importers while still covering 99% of CO2 emissions from key industrial imports.

Efforts to simplify the EU’s CBAM reflect a broader struggle within the bloc to balance environmental goals with economic realities, particularly as European industries face competitive pressures from regions with less stringent climate policies.

The European Commission had said the changes to CBAM were being made to enhance the competitiveness of the bloc’s industry by exempting small importers and reducing the administrative burden for many companies.

In early 2026, the Commission will assess whether to extend the scope of the CBAM to other ETS sectors at risk of carbon leakage.

“The bigger CBAM issues like export rebates and expansion to downstream products are still unresolved,” Ingvild Sorhus, manager of EU carbon analysis at Veyt, said. “The upcoming report on CBAM scheduled for the [Q3 2025] will be forward-looking and policy-design oriented. The report is expected to lead to a legislative proposal in Q4 2025, with exports, circumvention protection, and downstream products likely on the docket.”

CBAM essentially imposes a carbon tariff on emissions-intensive commodities imported by the EU, including aluminum, cement, electricity, fertilizers, hydrogen, and iron and steel. The aim is to level the playing field for EU companies, as most exporting countries do not have a carbon price as high as the EU Emissions Trading System or lack a price on emissions altogether.

Carbon prices vary significantly globally. Platts, part of S&P Global Commodity Insights, assessed EU Allowances for December 2025 at Eur72.69/mtCO2e ($82.24/mtCO2e) May 21.

This compares with China’s compliance emission allowance, which was valued at Yuan 70.42/mtCO2e ($9.79/mtCO2e) May 16, according to the Shanghai Environment and Energy Exchange.

EUROMETAL participates in EC Expert Group Meeting on CBAM

EUROMETAL took part in the 3rd Meeting of the Informal Expert Group on the Carbon Border Adjustment Mechanism (CBAM), held on 15 May 2025, and was represented by its President, Alexander Julius.

The Expert Group, convened by the European Commission’s DG TAXUD, plays an important advisory role in shaping the development and implementation of CBAM. Its core mission is to support the Commission in preparing both legislative and non-legislative measures and to facilitate an effective exchange of knowledge, best practices, and technical insights among stakeholders and Member States.

The group contributes by assisting in the implementation of existing EU legislation, programmes, and policies; supporting the preparation of delegated and implementing acts; providing input on legislative proposals and policy initiatives; coordinating with national authorities and fostering dialogue across the EU and supplying expertise to the Commission ahead of comitology procedures.

During the session, EUROMETAL President Alexander Julius raised a strong concern regarding the lack of clarity around the average ETS (Emissions Trading System) price for 2026 and how this uncertainty — combined with the yet undefined benchmark factor — could pose a significant and unpredictable cost burden for the European manufacturing and processing industry.

EUROMETAL called for the prompt establishment of a modest and realistic benchmark factor, which would offer greater predictability and reduce the risk of overburdening the steel value chain during the critical early phases of CBAM implementation.

As a representative voice of Europe’s steel distribution, service, and trading sectors, EUROMETAL continues to actively engage in CBAM policy discussions to ensure that the framework is fair, effective, and supportive of both industrial competitiveness and environmental objectives.

Assofermet: steel demand-boosting measures needed in EU amid declining demand

Italian distributor and service center association Assofermet called May 13 for action to stimulate steel consumption across the European Union, as demand declines due to intense global competition and the urgent need for the industry to transition towards decarbonization.

“The EU steel Industry … is certainly experiencing one of the most significant historical moments due to the continuous growth of new generation sites in third countries capable of producing steel at lower cost … and is facing epochal challenges of transformation towards decarbonization that, not only should be recognized, but should be supported and backed by the European Commission with effective, rapid and concrete measures,” Assofermet said in a statement.

European manufacturers are finding it increasingly difficult to maintain their market position and produce steel at competitive prices, in particular with new generation steel production sites emerging in third countries. The decline not only threatens the steel industry itself but also jeopardizes the entire supply chain, including key sectors such as automotive, construction and infrastructure.

While the organization welcomed the EC’s Steel and Metals Action Plan as a necessary and important document signaling that Europe is ready to act to protect strategically important industries, it proposed several targeted measures aimed at boosting demand, including tax credits, non-repayable loans, and reduced VAT rates for steel products.

Echoing steel producers Assofermet advocated for the extension of the Carbon Border Adjustment Mechanism to cover certain steel-intensive finished products, which would help level the playing field for EU manufacturers against cheaper imports as well as introducing an obligation to favor the use of machinery, vehicles and products with high steel content produced in the EU in the bloc’s public procurement tenders.

Assofermet underlined the crucial role of end-users, as stimulating demand in sectors that rely heavily on steel would not only support Europe’s manufacturing base but also foster its economic growth.

In its proposal, the trade body outlined the need for a robust domestic supply chain, especially highlighted during crises like the COVID-19 pandemic, when the EU relied on imports to meet demand.

Platts assessed the southern European domestic hot-rolled coil price at Eur620/mt ($690/mt) EXW Italy on May 12, stable over the day.

EU steel consumption was expected to decline by 2.3% year on year in 2024 to 127 million mt due to the recession in the two major steel-consuming sectors, namely construction and automotive, European steel association Eurofer said in its latest report published in February.

Author Annalisa Villa 

 

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 European Union’s Carbon Border Adjustment Mechanism will be implemented in seven months’ time but the region’s steel industry was still not fully prepared for the gradual changes the system will involve, Fastmarkets heard on Thursday May 8 at the Made in Steel trade fair in Milan, Italy.

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 resilience criteria and minimum EU content requirements in public – and in some circumstances, private – procurement in strategic sectors. This aims to create lead markets for low-carbon industrial products.

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 utilisation, sustainable biomass and recycled waste.

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