CBAM clarification raises importers’ cost expectations

EU steel importers have expressed concern that CBAM will present significantly higher costs than previously thought.

Documentation, that has yet to be officially published by the European Commission, shows that its CBAM Committee has accepted a series of revisions to previously leaked draft implementation proposals. These include lower definitive benchmark emissions values, above which CBAM taxes will be charged at 100% of the carbon cost determined by the bloc’s Emissions Trading Scheme (ETS). 

The revisions have also raised some of CBAM’s country-specific default emissions values. These fixed values, which are applied to both finished and semi-finished steel, vary by country and production route and must be used to determine CBAM taxes in the absence of verified mill data. 

Preliminary calculations, based on these factors, indicate that CBAM taxes will make imports from certain countries uncompetitive. The costs added to material produced via the blast furnace route in China, India and Indonesia, in particular, are likely to be significant. 

EU mills to realise CBAM benefit after tough 2025 

The clarification of CBAM’s potential costs, just weeks before the mechanism’s January 1 implementation, will be welcomed by most EU steelmakers. Some have already begun extended Christmas shutdowns amid hopes that CBAM taxes will deliver an uptick in both demand and prices in the new year. 

• This article first appeared in MEPS International's European Steel Review. The monthly Review features steel prices, indices, commentaries and forecasts covering Belgium, France, Germany, Italy, Spain and the United Kingdom. Contact MEPS for details of how to subscribe.

A 12-month period of subdued domestic demand and international trade volatility has seen mills operate at 60-67% capacity utilisation, according to European Commission data. Worldsteel data showed that crude steel production among the 27 EU countries it monitors had declined by 3.4% year-on-year by the end of October, falling to 107.7 million tonnes. The output of mills in Germany has declined by 9.9% during the first 10 months of the year, falling to 28.5m tonnes. 

Global crude steel production decreased by 2.1% in the same period, to 1.52bn tonnes. This overall decline was largely driven by a 3.9% decline (to 817.9m tonnes) in China. 

US President Donald Trump’s blanket reintroduction of Section 232 tariffs on steel in March, and its subsequent doubling to 50% in June, has exacerbated the effects of limited domestic steel demand in the EU. In 2024, 16% of EU steel exports were shipped to the US. 

Eurofer’s latest Economic and Steel Market Outlook said that apparent steel consumption reversed its short-lived recovery in quarter two, declining by 1.8% year-on-year following a 2.2% year-on-year uptick in the first quarter. The report said that the EU steel sector is expected to record a 0.2% decline in apparent consumption in 2025. 

Reduced EU steel production failed to support prices 

Against this backdrop of weak demand, the decline in EU steelmakers’ output has done little to tighten supply or support domestic steel prices. Over the first eight months of 2025, imports edged up by 0.3%, with a market share of 27%. 

Consequently, despite modest price increases during quarter four, the MEPS Europe Average price for hot rolled coil has declined by 6.4% year-on-year in 2025. The price of hot rolled coil averaged EUR599-625 per tonne during the past 12 months. In the longs sector, MEPS Europe Average price for rebar has declined by a lesser 2% year-on-year. 

Eurofer has forecast a 3% growth in apparent steel consumption in the EU for 2026. The influence of CBAM taxes and the replacement for the European Commission’s safeguard measures will restrict imports further, supporting prices and improving local mills’ profit margins. However, for some importers, stockists and rerollers, the added cost and complexity of imports, and the prospect of increased domestic prices, pose a threat to their business model.