CBAM may help revive EU’s stainless steel scrap prices  

New carbon emissions taxes arising from the full implementation of CBAM could contribute to a recovery in EU stainless steel scrap prices before the end of 2025. 

MEPS’s Europe Average price for grade 304 stainless steel scrap has declined by 7.4% in the first six months of the year, registering a fall of 22.6% year-on-year in June. MEPS respondents indicate that offer prices are now at a multi-year low.  

The downward trend is due, in part, to international trade tensions resulting from the United States’ doubling of steel import tariffs to 50%. An expectation that Europe’s downturn in steel demand will further deepen in the quiet summer period is also a factor. 

However, the long-term weakness of stainless steel scrap prices is also a consequence of European stainless steelmakers’ increased procurement of low-cost alternative inputs. Imports of stainless steel slab have accelerated as narrow profit margins prompt producers to seek alternative, low-cost production methods.   

High energy costs, in particular, are reducing European mills’ ability to compete with low-cost Asian-origin stainless steel imports. According to market data published by the European Energy Exchange, Europe’s wholesale energy price has risen by over 15%, to EUR92.29 per megawatt hour, from the 13-month low of EUR80.10 figure recorded in mid-April. Many MEPS respondents expect prices to increase further during July.  

Growing influence of Indonesian slab  

ISSB data shows that stainless steel slab imports into the EU rose by 43.6% year-on-year, to 42,539 tonnes, in the first two months of this year as rerolling became a viable alternative to EAF-based stainless steel production. The increase follows a 20.7% year-on-year rise in stainless slab imports in 2024.   

Furthermore, the ISSB data highlights the growing role of low-cost Indonesian-origin slab. The United Kingdom remained the EU’s main source of imported stainless slab in 2024, accounting for 201,229 tonnes of the 263,967 total. However, 60,446 tonnes of Indonesian slab entered the EU last year via imports into Italy recorded in July, September and November. Import data shows that volumes further increased in the first two months of this year due to the arrival of 19,934 tonnes of Indonesian-origin slab – again into Italy – during February. UK-origin imports amounted to 22,554 tonnes in the same period.  

The CBAM effect  

Access to this low-cost feedstock might be curtailed by the January 1 rollout of CBAM, however. Emissions-based taxes will be applied to imports of stainless steel slab and billet from next year, albeit payments will not need to be made until 2027 under revised European Commission proposals. Stainless steel scrap, however, lies outside the scope of CBAM. This will ensure that recycling presents steelmakers with a significant cost advantage. Consequently, the demand for stainless steel scrap among EU steelmakers, and those exporting it to the region, will increase, applying upwards pressure to prices.  

The Commission’s country-specific benchmark carbon emissions will determine the level of CBAM taxes incurred by stainless steel imports, including semi-finished products. They are expected to be announced in quarter three.  

As detailed in previous editions of MEPS's Stainless Steel Review, new strategies to increase steelmakers’ access to affordable energy and, potentially, introduce a trade measure to control scrap exports, could also be implemented in the coming months. Both were detailed in the Commission’s Steel and Metals Action Plan, which was published in March alongside a proposal for a new “melted and poured” regulation.   

The value of domestic stainless steel scrap will only rise if demand from European steelmakers improves. To ensure that, CBAM’s taxes will have to mitigate competition from finished steel imports as effectively as the low-cost slab imports that are currently helping to maintain the profit margin of certain producers.