Speaking of Steel CBAM podcast: counting the cost of carbon

CBAM was described as “the opportunity EU steel mills have been crying out for” as MEPS panellists discussed the added cost of newly introduced emissions-based import taxes in the latest Speaking of Steel podcast.

The European Commission’s December publication of the EU emissions benchmarks and country-specific default emissions values that are central to the calculation of CBAM taxes should have provided clarity to steel market participants. Instead, its 1,600 pages of documents left many importers in a continued state of uncertainty. 

In the latest instalment of the Speaking of Steel podcast, MEPS’s head of price analysis and forecasts, Kaye Ayub, joins steel market analyst Jon Carruthers-Green and managing editor Tom Sharpe to discuss the repercussions of CBAM import taxes implemented from January 1. 

The “counting the cost of carbon” episode of Speaking of Steel is available to watch now, via YouTube, Spotify or Apple Podcasts, and reveals: 

• The cost of CBAM taxes on the EU’s most imported steel products. 
• How high country-specific default emissions values have prompted mills’ race to verify their actual carbon output. 
• The EU’s evolving carbon market: how CBAM costs will be influenced by the Emissions Trading Scheme (ETS). 
• Details of the CBAM methodology and how it might evolve. 
• The European Commission’s role as a pioneer of emissions-based import taxes, and whether others might be encouraged to follow its lead. 

Carruthers-Green told the podcast that CBAM taxes on some the EU’s most imported steel products would render procurement from certain well-established overseas sources unviable. This will reshape the EU’s steel supply chain. It will also present an opportunity for domestic steelmakers.  

The opportunity EU mills have been ‘crying out for’ 

“It really gives European mills the opportunity they've really been crying out for these past few years. I think they're going to be very happy with this,” said Carruthers-Green. 

“It's going to give them a chance to start increasing their capacity, increase their output, increase their market share.” 

Ayub said that EU steel buyers would now be assessing all their overseas supply options as they seek to maintain a cost advantage following the implementation of CBAM taxes.  

“They'll need to calculate what all the CBAM charges are,” she said. “If they're buying, for instance, hot rolled coil, they'll need to know what all the CBAM charges are from every single country that they can buy from and also the potential impact of the [European Commission’s replacement for its current import safeguard measures] from July.” 

Ayub said that EU steel prices were forecast to rise as a result of reduced competition from imports. However, she added that there was a limit to increases that could be realised by domestic steelmakers in the medium-to-long term. 

She said: “There'll always be a ceiling price on the European steel market where, it tips over that, then the import price will become competitive again.”