The UK steel industry anticipates higher prices in 2027 despite largely tepid demand expectations, with key regulatory developments, such as the start of the UK’s Carbon Border Adjustment Mechanism and the recent safeguard quota changes, remaining under the spotlight at the annual joint International Steel Trade Association (ISTA) and National Steel Association (NSA) 2026 meeting.
With many market participants converging in Leeds for the annual joint meeting Oct. 22, the impact of the revised UK tariff rate quotas was a key topic, with concerns still existing over whether domestic UK production could fill the supply gaps left from a tighter import environment.
One speaker stated that the market remained supply-driven, as demand across most products remained largely weaker, albeit not in contraction. Like the dynamics affecting the European market, sources at the event noted that a recurring point of contention during negotiations was the allocation of risk, with buyers preferring to purchase outright on duty-inclusive terms, inclusive of potential CBAM charges.
However, due to uncertainty over these final CBAM charges — either due to verification concerns or limited transparency about inputs when purchasing from re-rollers — traders remained hesitant to close deals at an outright price or offer on inclusive terms, given the potential for margin-busting, higher-than-expected costs. Buyers and sellers at the event alluded to additional contract clauses being considered, either to share any higher-than-expected CBAM costs or to postpone any CBAM charges until the final cost can be ascertained, but these have been met with mixed reactions.
This uncertainty has also extended to the safeguards, with an increase in offers reported on a DAP basis, compared to the more traditional DDP terms used in the UK market, as sellers attempt to limit their risk exposure to any additional costs from material imported in excess of allocated quota volumes.
For hot-rolled coil imports into the UK, as of Oct. 26, the residual country quota was fully exhausted, with India at 94% of its 8,364 metric ton quota also allocated. South Korea’s quota sits at 20.3% allocated, of a total of 2,196 mt, while the largest quota, EU-origin HRC has allocated 65,700 mt of 93,750 mt total, data from the UK Department for Business and Trade showed.
Imports of fabricated goods may undermine regulation
According to numerous panel and audience members, the inflow of fabricated steel goods remained a key concern, with many arguing that it would undermine the current safeguard measures affecting upstream materials and that it could be used to circumvent CBAM from 2027. As in the EU, there are no quotas on downstream production, with limited protection provided by the EU’s safeguards for material exported from the UK for processing before being reimported (or vice versa).
One source with close ties to ports in the UK noted a large increase in these fabricated goods entering the country in 2026 and said they expected this trend to continue until the government provides sufficient protection.
Logistical issues
Logistical issues, ranging from sustained higher fuel costs impacting inland and waterborne freight charges to a shift in import patterns causing significant port backlogs, were also a key topic of discussion during the event, with expectations shifting toward significant steel inflows surrounding the quarterly refresh date for the safeguard quotas.
As a result, sources expect cyclical delays, with some already being recognized by port authorities following the recent quota refresh. Some material has struggled to clear customs in time for the 1st of the quota period, leaving importers potentially liable for out-of-duty costs. Likewise, it was also highlighted during presentations at the event that significant backlogs were forming across all imported products due to the influx of material timed around quotas refreshes due to insufficient berths and the resulting ship queues, increasing the risk of demurrage charges. In addition to the extra manpower required to move the material through the warehousing system or make it ready for inland freight, some market participants at the event shared broader concerns that these trends were likely to continue for the long term.
Author: Charles Thompson, Riley Waters
