European steel sector reels from carbon border tax hit: Eurometal

The European steel import sector is grappling with severe implementation challenges under the Carbon Border Adjustment Mechanism, with importers facing "excessive cost surprises" from regulations published at the last minute, Eurometal President Alexander Julius said in an interview.

Julius warned that the steel industry is confronting an unprecedented regulatory burden that threatens to accelerate European deindustrialization.

The European Commission published more than 1,600 pages of new calculation factors in December 2025, leaving most importers scrambling to understand compliance requirements that took effect Jan. 1, 2026.

"The complete steel-using industry is suffering from the final CBAM cost calculation components published by the European Commission last minute in December 2025," Julius told Platts, part of S&P Global Energy. "Most importers and their steel-using partners will be faced by excessive costs surprises never assumed nor included in the original calculation done in the course contract closing in 2025."

The timing has created a cascade of problems across the steel supply chain, with companies unable to properly assess compliance costs before contracts were finalized in 2025. Julius said most industry participants responsible for CBAM compliance had not begun reviewing the extensive new documentation before offices reopened Jan. 5.

Agricultural precedent

The steel sector's struggles come as the European Commission has already signaled its willingness to provide relief to the agricultural sector just two weeks after CBAM's entry into force. Under pressure from EU agriculture ministers, EU Commissioner Maroš Šefčovič indicated he may suspend CBAM requirements and reduce tariffs for fertilizers.

Julius expects similar political pressure to emerge from the steel sector, arguing that the justification for exemptions lies in the "unproportional costs and price increases resulting in steel based finished products being not competitive compared to products made outside of the EU and imported into the EU."

The competitive disadvantage extends beyond imports, with EU exports also expected to decline as domestic production costs rise. "The logical consequence is an exponentially increasing deindustrialization in Europe," Julius said. "This is not fiction, we know various manufacturing companies already announced those consequences."

The new regulations could fundamentally alter sourcing patterns, potentially making certain origins uncompetitive and driving prices even higher when combined with broader EU steel import restrictions.

The implementation challenges are compounded by what industry participants describe as fundamental flaws in the CBAM framework.

Steel trader Gerber Steel has formally alerted the European Commission to "serious errors and inconsistencies" in default values, particularly for Taiwan's stainless steel category, arguing the values appear copied from other origins rather than being based on country-specific data.

Julius characterized the default value system as "a mystery," suggesting it was developed to meet the Dec. 31, 2025, deadline rather than being based on factual analysis. The rushed implementation has created additional complications around certification requirements, with certifiers not expected to receive accreditation from national bodies until July 2026.

"The biggest challenge lies with certifiers not being accredited by the national accreditation bodies before July 2026," Julius said. "The next challenge then will be a timely certification by a small number of certifiers available for thousands of installations to be certified."

This certification bottleneck is likely to force many importers to rely on default values, which are typically higher than actual emissions and therefore more costly. The European Commission's "unrealistic time schedule" has effectively pushed importers toward the most expensive compliance option.

While it remains too early to observe definitive shifts in sourcing patterns, Julius suggested EU domestic steel producers may benefit from the import cost increases. "I guess the EU domestic steel producers can sit back, relax, and wait for the development of import prices and availability," he said.

Eurometal has repeatedly approached the European Commission requesting a reliable basis for cost calculations well in advance of implementation, but Julius said those approaches "have been ignored by the Commission." The organization argues the Commission is now penalizing importers and steel-using customers with "a framework of inflationary cost components and unrealistic verification timelines" that further weakens an already struggling industry.

Platts assessed domestic HRC at Eur630/mt ex-works Ruhr on Jan. 13 and Eur625/mt ex-works Italy, both unchanged day over day. Imported HRC was assessed at Eur500/mt CIF Antwerp and Eur495/mt CIF Southern Europe on Jan. 13, stable day over day.