CBAM Certificate Price Starts Reshaping EU Import Costs Across Fertiliser and Steel

CBAM Reshapes EU Fertiliser Import Economics

CBAM certificate price implementation is beginning to reshape EU import economics across carbon-intensive sectors, with fertilisers and steel showing the clearest early signs of disruption. The European Commission set the first-quarter 2026 CBAM certificate price at €75.36/t of CO2 equivalent, turning the EU carbon border adjustment mechanism into a measurable cost for importers.

The impact is uneven because each product carries a different embedded-emissions burden and a different ability to absorb added carbon costs. Urea imports remained workable in the first quarter, while calcium ammonium nitrate and urea ammonium nitrate became much harder to justify. Steel imports also faced pressure as default emissions values strengthened the relative competitiveness of EU-produced material.

CBAM certificate price exposure was partly delayed by heavy pre-buying in 2025. Many importers entered 2026 with inventories, which blunted the immediate effect of the mechanism. However, as stocks run down and EU free allocations begin to decline, CBAM is moving from a compliance issue into a commercial constraint.

The first quarter therefore marked an important transition. CBAM did not stop all imports. Instead, it began sorting the market between products, origins and suppliers that can manage carbon costs and those that cannot.

Fertiliser Imports Show How CBAM Separates Viable and Unviable Products

Fertiliser markets provided the clearest example of CBAM’s uneven effect. Urea imports continued because the additional carbon cost remained relatively small compared with delivered market prices.

Egyptian urea carried a default CBAM charge of €39.52/t in January-March. That represented roughly 5% of French urea prices by the end of March. Default costs for other major origins, including Algeria, Russia, Turkmenistan, Uzbekistan and Nigeria, ranged around €41-53/t.

These charges were manageable for traders because urea prices rose sharply during the quarter. The Middle East conflict lifted French urea prices by 45% between late February and the end of March, reducing the relative weight of CBAM in total delivered costs.

As a result, urea continued moving into the EU, especially in March. European buyers returned to the market ahead of the spring application season, and higher global prices made the CBAM burden easier to absorb.

Nitrate products faced a very different outcome. Calcium ammonium nitrate imports were largely priced out because default CBAM costs reached €105-119/t across major exporting origins. That equalled roughly a quarter of prevailing German CAN prices.

This cost level made non-EU CAN structurally uncompetitive. Importers could not easily pass through the additional carbon cost without losing competitiveness against EU-produced material.

Urea ammonium nitrate faced similar pressure. Default CBAM charges started at €62.16/t for Trinidad and Tobago material and reached €86.52/t for US-origin product. By the end of March, these costs represented up to 20% of French UAN prices.

The economics became even harder when existing EU anti-dumping duties were added. Traders viewed imports from these origins as effectively unworkable under the combined burden of duties and CBAM.

Phosphate-based fertilisers were less exposed. Moroccan diammonium phosphate, a key EU import product, carried an additional charge of only €16.19/t in the first quarter. That equalled about 2% of delivered prices in northwest Europe.

Moroccan NPK 15-15-15 faced a larger default cost of €53.36/t, or around 10% of Belgian prices. But traders still described that burden as manageable. This means CBAM narrowed product choice rather than cutting fertiliser imports across the board.

The fertiliser market therefore shows CBAM’s real mechanism. It does not apply uniform pressure. It changes competitiveness product by product, depending on emissions intensity, delivered price, existing duties and the ability to provide certified actual emissions data.

CBAM Turns Steel Imports Into a Trade Filter

Steel, EUA Volatility and Default Values Turn CBAM Into a Trade Filter

Steel markets showed a different but equally important effect. CBAM reinforced the cost advantage of EU-produced steel by making imported material more expensive under default emissions values.

Hot-rolled coil import offers into the EU rose through January-March. The increase reflected higher production costs at mills and rising freight rates. However, fewer delivered-duty-paid offers were seen because traders were also preparing for changes to EU safeguard measures.

Much of the steel sold on a delivered basis came from existing stock. This delayed the full pass-through of higher import costs into market transactions. But market participants broadly agreed that importing steel under default emissions values was economically difficult for most origins.

Brazil was cited as one limited exception, but most imported steel faced a structural disadvantage. This is important because steel has high embedded emissions and large delivered price sensitivity. Even a moderate carbon cost can change the landed-cost calculation.

Certified actual emissions data will become critical. Suppliers that can prove lower embedded emissions may preserve access to EU buyers. Suppliers relying on default values may find their products increasingly uncompetitive.

CBAM is therefore beginning to act as a trade filter. It rewards verified lower-carbon production and penalises imports that lack transparent emissions data. This could gradually shift EU import flows toward suppliers with stronger measurement, reporting and verification systems.

The EU emissions trading system added another layer of complexity. The Commission calculates the CBAM certificate price from the weighted average of primary EU ETS auction clearing prices. These auction prices are closely linked to secondary-market prices for EU allowances.

EUA prices were volatile in the first quarter. Structural tightening supported prices early in the period, including a 4.3% reduction in the ETS cap for 2026, the removal of 27mn allowances and a further 52mn cut linked to expanded maritime coverage.

Demand from maritime and aviation sectors also increased as those sectors moved into full ETS coverage. At the same time, some companies handling CBAM-covered goods began buying EUAs as a proxy hedge for future CBAM exposure.

However, political risk weakened the bullish case in February. Senior figures in key EU member states questioned the future of the ETS and called for reforms or even temporary suspension to reduce pressure on industry. Investment funds responded by cutting long positions, pushing prices lower.

The US-Iran war then added another source of volatility. The conflict created renewed energy price stress and revived political calls for ETS intervention. Although the Commission rejected suspension of the scheme, it acknowledged the need for reform, keeping regulatory uncertainty high.

This matters for importers because CBAM certificates cannot be traded or resold. Companies can use EUAs as a proxy hedge, but the hedge is imperfect because CBAM costs are tied to primary auction prices, not directly to tradable CBAM certificates.

The first quarter therefore exposed a new risk-management problem. Importers must now manage commodity prices, freight, duties, safeguard rules, emissions verification, EUA volatility and CBAM certificate exposure at the same time.

The outlook points to stronger pressure through 2026. Maritime and aviation demand will keep adding to ETS coverage. The linear reduction factor will keep shrinking the cap. Free allocations will continue to decline. Inventories built before CBAM will continue to unwind.

At the same time, the Market Stability Reserve and the upcoming ETS review could limit extreme price spikes or change market expectations. This means CBAM costs are likely to become more visible, but the exact price path remains exposed to policy risk.

For fertiliser and steel importers, the direction is already clear. Products with manageable carbon costs and strong emissions documentation will keep moving. Products with high default emissions, existing duties or weak verification will face higher barriers into the EU market.

The Metalnomist Commentary

CBAM is becoming an industrial trade policy tool, not only a climate mechanism. The first-quarter data show that carbon costs are starting to decide which products can enter the EU competitively, and which supply chains must either decarbonise, verify emissions or lose market access.