Tag: CBAM

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 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.

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.

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.”