EU 2035 Car Emissions Target Faces Growing Political Divide

EU, ETS

EU 2035 car emissions target remains firmly backed by France, Spain and Sweden, while Poland is pushing for greater flexibility on vehicle rules and a slower rollout of the bloc’s emissions trading system for road transport and buildings.

EU 2035 car emissions target requires new passenger cars to reach 0g/km of CO2 from 2035. France says it has assembled enough support to block attempts to extend conventional internal combustion engine sales beyond that date.

EU 2035 car emissions target is becoming increasingly linked with industrial competitiveness. Policymakers are debating whether biofuels, e-fuels and low-carbon steel should help manufacturers meet emissions obligations without weakening overall climate targets.

The discussion also exposes widening divisions over ETS 2, electricity costs and how quickly Europe can electrify transport while preserving automotive manufacturing.

Car Rules Bring Steel, Fuels and Manufacturing Into the Debate

France, Sweden and Spain argue that weakening the 2035 target would undermine investment certainty for electric vehicles and associated supply chains.

Sweden has warned that slowing electrification could make European automakers more vulnerable against global EV competitors. Spain has also expressed concern that excessive flexibility would dilute the original target.

The European Commission has proposed allowing carbon-neutral biofuels and e-fuels to count toward up to 3% of vehicle CO2 targets.

More importantly for the metals sector, low-carbon steel credits could contribute up to 7% of manufacturers’ CO2 reduction requirements for cars and vans.

This creates a direct connection between automotive regulation and green steel demand. Carmakers using lower-emissions steel could gain additional compliance value beyond conventional material performance.

For European steel producers investing in electric arc furnaces, hydrogen-based ironmaking and lower-carbon power, such credits could create a stronger demand signal from automotive customers.

However, broader flexibility also creates policy risk. If compliance pathways become too generous, demand for battery electric vehicles could grow more slowly than expected.

That would affect not only automakers but also lithium, nickel, graphite, copper and battery manufacturing investment across Europe.

ETS 2 Reform Highlights Europe’s Cost and Competitiveness Problem

Poland is separately calling for another delay to ETS 2, which is already scheduled to begin in 2028 after being postponed from 2027.

The system will extend carbon pricing to road transport and heating fuels, potentially increasing costs for households and businesses using fossil fuels.

Warsaw is also seeking to transform the existing emissions trading system market stability reserve into a stronger price control mechanism.

The reserve currently absorbs excess allowances from the market, but Poland wants greater ability to prevent sharp carbon price increases.

Germany is taking a different approach, arguing that changes to the annual reduction rate for existing ETS allowances should only begin from 2036.

These positions show that Europe increasingly faces two competing priorities: maintaining credible decarbonisation targets while preventing carbon costs from damaging industrial competitiveness and consumer affordability.

The debate also extends beyond Europe. Turkey has proposed a global target for electricity to reach 35% of final energy consumption by 2035, reflecting the growing role of electrification in international climate policy.

For metals markets, faster electrification would support long-term demand for copper, aluminium, electrical steel and battery materials. But the pace will depend increasingly on whether Europe can manage power, carbon and manufacturing costs simultaneously.

The Metalnomist Commentary

Europe’s climate debate is shifting from whether to decarbonise toward how to distribute the industrial cost. The inclusion of low-carbon steel credits shows that automotive policy is increasingly becoming metals policy as well.

SDI Aluminum Plant Relocation Brings Recycled Slab Capacity to Mississippi

SDI Aluminum

SDI aluminum plant relocation will move Steel Dynamics’ planned recycled aluminum slab facility to Columbus, Mississippi, alongside its new Aluminum Dynamics rolling mill. The decision abandons Benson, Arizona, after disagreements with state officials created uncertainty around construction and future operations.

SDI aluminum plant relocation will cost the company around $16mn in second-quarter asset write-downs. However, Steel Dynamics still expects substantially stronger earnings as both its steel and aluminum businesses improve.

SDI aluminum plant relocation also changes the logic of the company’s recycling network. Locating slab production next to the rolling mill should simplify logistics, reduce internal transport requirements and improve control over recycled aluminum feedstock.

The move comes as Aluminum Dynamics ramps production in Columbus and begins shipping automotive flat-rolled material for customer qualification.

Co-Locating Slab and Rolling Capacity Improves Integration

The original slab project was intended to process recycled aluminum into feedstock for the Columbus rolling mill. Moving the plant directly next to the mill creates a more integrated production structure.

This can reduce transportation costs between casting and rolling operations while simplifying inventory management. It also gives SDI greater flexibility over slab chemistry, production schedules and downstream rolling requirements.

The change may sacrifice some of the original Arizona project’s proximity to west coast used beverage can supply. However, the Mississippi location could offer stronger operational benefits by placing melt-and-cast capacity directly beside the consuming rolling asset.

Aluminum Dynamics is continuing to ramp the Columbus mill. The company expects to begin qualifying its third cold-rolling mill in July and has already started sending automotive sheet to customers for approval.

Automotive qualification is an important milestone because body sheet requires strict surface quality, mechanical properties and consistency. Successful customer approvals will determine how quickly Columbus can move toward higher-value production.

Recycled slab capacity at the same site could eventually strengthen SDI’s ability to supply lower-carbon aluminum products to automotive and packaging customers.

Strong Steel and Aluminum Markets Support SDI Earnings

Steel Dynamics expects aluminum segment earnings to rise sequentially as shipments increase and realized prices improve during the Columbus commissioning process.

The company is also benefiting from stronger steel margins. Selling prices increased faster than scrap raw material costs during the quarter, widening the spread between finished steel and ferrous scrap.

Low inventories and firm demand across non-residential construction, energy, automotive and industrial markets have supported order activity.

Steel fabrication also remains supported by commercial construction, data centers, warehouses, manufacturing and healthcare projects. SDI’s fabrication backlog is around 40% higher than a year earlier and extends into 2027.

Metals recycling volumes also increased, although unrealized hedging losses in non-ferrous scrap limited earnings improvement.

The combination of stronger steel margins, rising aluminum shipments and continued US infrastructure investment gives SDI a more supportive earnings backdrop while it restructures the aluminum project.

The Metalnomist Commentary

Moving the recycled slab plant beside Columbus prioritizes operating integration over raw-material geography. If SDI secures efficient scrap flows into Mississippi, the relocation could strengthen Aluminum Dynamics’ cost position while accelerating its automotive aluminum strategy.

SDI Aluminum Slab Plant Relocation Raises US Recycling and Supply Chain Questions

Steel Dynamics

SDI aluminum slab plant plans are being reassessed as Steel Dynamics considers abandoning Benson, Arizona, for another location. The long-delayed 150,000 t/yr satellite cast house was designed to supply recycled aluminum slab to the company’s rolling mill in Columbus, Mississippi.

SDI aluminum slab plant relocation would extend uncertainty around Aluminum Dynamics’ effort to build an integrated recycled flat-rolled aluminum supply chain in North America. The company is evaluating several alternative sites, although it remains unclear whether the project will stay in Arizona.

SDI aluminum slab plant development originally targeted the US southwest to access used beverage can scrap generated on the west coast. That feedstock strategy remains industrially important even if the final location changes.

The project’s repeated delays also show how permitting, community opposition and site selection can become major constraints for new US metals capacity.

Recycled Slab Supply Is Critical to Columbus Ramp-Up

The planned cast house is intended to produce 150,000 t/yr of aluminum slab for SDI’s new rolling operations in Columbus, Mississippi.

Its location in the southwest was designed partly around access to used beverage cans and other recycled aluminum feedstock from western US markets. Transporting scrap to a regional melt-and-cast facility can reduce the need to move bulky secondary material across longer distances.

The resulting slab can then feed downstream rolling capacity, allowing Aluminum Dynamics to integrate more recycled content into flat-rolled products.

This strategy is increasingly important for beverage can, automotive and packaging customers seeking lower-carbon aluminum. Recycling aluminum requires substantially less energy than producing primary metal, giving secondary feedstock a strong emissions advantage.

A prolonged delay in the satellite cast house could therefore complicate raw material logistics for the Columbus mill. SDI may need to rely more heavily on alternative slab sources while the new site is selected, permitted and built.

The company already operates another satellite slab facility in San Luis Potosi, Mexico, providing some geographic diversification. However, the US southwest plant remains important to the original recycling network design.

Permitting Risk Becomes a Major Constraint on New US Capacity

SDI’s experience in Arizona highlights the growing execution risk surrounding large industrial projects.

The company originally selected Gila Bend before community opposition forced it to reconsider the location. Benson then faced its own resistance from grassroots and environmental groups.

No building permits have yet been requested in Benson, despite the lengthy review process that would be required before construction. Moving elsewhere in Arizona would also require a new environmental permitting process because existing permits cannot simply transfer to another site.

This means a relocation could materially delay commissioning beyond the company’s original timeline.

For US industrial policy, the case illustrates an important tension. Demand for domestic metals processing and recycling capacity is rising, but projects still depend on local permitting, environmental approvals and community acceptance.

The challenge is particularly relevant for aluminum recycling infrastructure because future low-carbon metal supply will require more regional melt, cast and rolling capacity close to scrap generation.

SDI’s final site choice will therefore influence not only project timing but also the economics of scrap collection and recycled slab delivery across the western US.

The Metalnomist Commentary

SDI’s challenge shows that recycled aluminum growth depends on infrastructure location as much as scrap availability. The strongest site will be the one that balances west coast UBC access with permitting certainty and efficient slab logistics to Columbus.

Global Warming 1.5°C Threshold Could Be Crossed by 2030

UNFCCC

Global warming 1.5°C threshold could be exceeded within about four years if current emissions trends continue, according to an international team of climate scientists. Human-induced warming reached 1.37°C above the 1850-1900 average in 2025.

Global warming 1.5°C risk is rising because greenhouse gas concentrations remain at record levels. Human-induced warming is increasing at around 0.27°C per decade, keeping the world on a trajectory toward further temperature increases.

Global warming 1.5°C also carries direct industrial implications. More frequent heat, drought, flooding and extreme weather can disrupt mining, energy systems, transportation networks and metals production.

The remaining carbon budget consistent with limiting warming to 1.5°C is estimated at around 130bn t of CO2 from the start of 2026. At current emission rates, that budget could be exhausted in roughly three years.

Carbon Budget Shrinks as Emissions Remain Near Records

Global greenhouse gas emissions reached a record 56.8bn t of CO2 equivalent in 2024, with fossil fuel consumption remaining the largest contributor.

The rate of emissions growth has started to slow, suggesting that renewable energy, electrification and climate policies are beginning to affect the trajectory.

However, slower emissions growth is not the same as absolute emissions reductions. Global CO2 output must fall substantially if the remaining carbon budget is to last longer.

That creates additional pressure on governments to accelerate investment in renewable power, grids, storage, nuclear energy and energy efficiency.

For metals markets, this implies stronger structural demand for copper, aluminium, electrical steel, lithium and other materials required for electrification.

At the same time, heavy industries such as steel, aluminium, cement and chemicals will face greater pressure to lower emissions from existing production.

This increases the strategic value of low-carbon electricity, recycling and technologies that reduce the emissions intensity of industrial production.

Strong El Nino Could Add Near-Term Climate Pressure

The emergence of El Nino conditions could temporarily accelerate global temperatures even further.

Current forecasts suggest the event could become very strong, with some models indicating potentially record intensity. El Nino typically raises global temperatures by releasing additional heat from the tropical Pacific into the atmosphere.

That could push annual temperatures sharply higher and potentially make the coming year the hottest recorded since modern measurements began.

The hottest year so far remains 2024, while 2023-25 were the three warmest years on record. Their combined average was around 1.48°C above pre-industrial levels.

Temporary annual breaches do not necessarily mean the Paris Agreement's long-term 1.5°C target has formally been exceeded. However, repeated breaches would indicate that the underlying warming trend is moving increasingly close to that level.

For industry, the implications extend beyond emissions regulation. Extreme temperatures and weather events can reduce hydropower availability, disrupt mining operations, strain electricity grids and increase cooling demand.

Climate risk is therefore becoming an operational and supply-chain issue as much as an environmental one.

The Metalnomist Commentary

The shrinking carbon budget increases pressure for faster electrification, but that transition will require enormous quantities of metals. The challenge is that climate policy is simultaneously increasing demand for critical materials while climate disruption makes producing those materials more difficult.

Tianhao Magnesium Alloy Plant Targets NEV and Aerospace Lightweighting Demand

Huizhou Tianhao New Material Technology

Tianhao magnesium alloy plant development has started in Huizhou, Guangdong province, as Chinese manufacturers expand capacity for lightweight materials used in new energy vehicles, electronics and aerospace.

Tianhao magnesium alloy plant is designed to produce 20mn units/yr of magnesium alloy profiles. The company has not disclosed a start-up timeline, but construction began on 4 June.

Tianhao magnesium alloy plant development reflects rising demand for lightweight structural materials across NEVs, consumer electronics, low-altitude aviation and aerospace. Magnesium's low density gives it an advantage where reducing component weight can improve energy efficiency and vehicle performance.

China already dominates global magnesium production and processing, giving domestic manufacturers strong access to metal feedstock and downstream fabrication capabilities.

Lightweighting Drives Magnesium Alloy Demand

Magnesium alloys are increasingly used where manufacturers need lower weight without abandoning metallic structural materials. This is especially relevant to electric vehicles, where reducing vehicle mass can improve driving range and offset battery weight.

Consumer electronics provide another important demand segment. Magnesium alloys can be used in lightweight housings and structural components that require stiffness and dimensional stability.

The low-altitude economy could become a larger growth market. Drones, electric vertical take-off aircraft and other lightweight aviation platforms need materials that can reduce mass while maintaining adequate structural performance.

Aerospace applications add further demand potential, although qualification requirements remain much stricter than in consumer or automotive markets.

China produced 428,400t of magnesium alloy in 2025, up 8% from the previous year. Stronger lightweighting demand and pressure to reduce carbon emissions supported the increase.

The Tianhao project therefore enters a market where both production and downstream applications are expanding.

China Strengthens Its Magnesium Processing Advantage

Global magnesium metal consumption reached around 1.2mn t in 2025. Magnesium alloy production represented the largest end-use segment at roughly 650,000t.

Other major applications included steel desulphurisation, aluminium alloying and metal reduction. However, magnesium alloy demand is expected to grow fastest as transportation and electronics markets seek lighter materials.

Global magnesium alloy consumption could reach 1.39mn t by 2028 if current growth expectations materialise. NEVs, consumer electronics and low-altitude aviation are expected to provide much of that increase.

China is well positioned to capture this growth because it controls a large share of global magnesium metal production and already has extensive alloying and fabrication capacity.

That advantage could deepen as manufacturers move further downstream into profiles, castings and finished components rather than selling primary magnesium alone.

For international buyers, this creates a familiar critical materials challenge. Strong Chinese integration can deliver low costs and scale, but it also increases geographic concentration across the magnesium supply chain.

The Metalnomist Commentary

Tianhao's project shows that magnesium is moving further into high-growth lightweighting applications. China's advantage lies not only in producing magnesium metal, but increasingly in converting it into higher-value components for EVs, electronics and aerospace.

EU CBAM Extension Could Cover 200 More Steel and Aluminium Products

CBAM

EU CBAM extension plans could widen the carbon border adjustment mechanism to around 200 additional downstream products that use significant volumes of steel and aluminium. The proposal goes beyond the European Commission’s earlier plan covering 180 product codes.

EU CBAM extension reflects growing concern that carbon leakage could shift from raw materials into manufactured goods. If downstream products remain outside the mechanism, overseas producers using higher-carbon steel or aluminium could gain a cost advantage over European manufacturers.

EU CBAM extension would therefore move the system deeper into industrial supply chains. The impact could reach fabricated steel products, aluminium-intensive components and other manufactured goods that compete directly with EU-made products.

The Council presidency also wants the list of covered customs codes to remain flexible, allowing future additions or adjustments as trade patterns and circumvention risks evolve.

Downstream Expansion Targets Carbon Leakage Beyond Raw Materials

CBAM initially focused mainly on carbon-intensive upstream materials, including iron and steel, aluminium, cement, fertilizers, electricity and hydrogen.

The next phase targets a structural weakness in that model. European manufacturers can face higher carbon costs when using domestically produced steel or aluminium, while competing imported finished products may avoid equivalent charges.

Extending CBAM downstream aims to close that gap. It would place more imported products under carbon-cost rules based on the emissions embedded in their metal content and production.

For European steel and aluminium producers, the change could strengthen demand for regional low-carbon material. Downstream manufacturers may have less incentive to substitute EU metal-intensive products with cheaper imports produced under weaker carbon constraints.

But the administrative burden could rise. Importers and overseas manufacturers will need more detailed emissions data, product classifications and supply-chain documentation.

The Council presidency is therefore trying to balance wider emissions coverage with manageable reporting requirements. Three medical-use customs codes have been proposed for removal from the expanded list, reflecting concerns over unnecessary complexity in sensitive sectors.

Aluminium and Steel Supply Chains Face Wider Compliance Pressure

The expansion could have important consequences for global metals trade. Exporters of fabricated steel and aluminium products into Europe may increasingly need to demonstrate embedded emissions and product origin.

This could influence sourcing decisions far beyond primary metal. Extrusions, fabricated components, steel structures and other downstream goods may face stronger pressure to use lower-carbon feedstock.

For aluminium producers, access to renewable electricity and recycled metal could become more valuable. For steelmakers, electric arc furnace production, scrap use and lower-carbon iron inputs could improve competitiveness.

The proposal also strengthens the role of customs classification. A continuously adjustable list of CN codes would allow the EU to respond as companies change product routes or trade patterns to avoid carbon costs.

That flexibility could make CBAM more effective, but it also increases regulatory uncertainty for exporters. Companies selling into Europe will need to track not only carbon prices but also changing product coverage.

The Council has broadly supported extending CBAM to more downstream products, although some member states have argued for a narrower approach. The final scope will therefore depend on negotiations between EU institutions.

The Metalnomist Commentary

CBAM is evolving from a raw-material carbon mechanism into a wider industrial trade tool. For steel and aluminium suppliers, competitiveness will increasingly depend on proving low-carbon production across the entire downstream value chain.

UK Seventh Carbon Budget Sets 87% Emissions Cut Target for 2038-42

Climate Change Committee

The UK seventh carbon budget sets a legally binding ceiling of 535mn t of CO₂ equivalent for 2038-42, equivalent to roughly an 87% reduction in greenhouse gas emissions from 1990 levels. The target includes the UK’s share of international aviation and shipping emissions.

The UK seventh carbon budget gives energy-intensive industries a clearer long-term decarbonisation trajectory. Steel, aluminium, chemicals, transport and other industrial sectors will increasingly need to align capital spending with lower-carbon power, electrification and emissions reduction.

The UK seventh carbon budget follows the recommendation of the independent Climate Change Committee. The CCC identifies electrification and low-carbon electricity as the largest contributors to its pathway, accounting for around 60% of required emissions reductions by 2040.

The target strengthens the investment signal around renewable power, nuclear energy, grids and industrial electrification. It also reinforces the UK’s legally binding objective of reaching net-zero greenhouse gas emissions by 2050.

Industrial Decarbonisation Will Require More Clean Power and Metals

The new carbon budget has direct implications for UK manufacturing. Deep emissions reductions will require industry to replace fossil fuel consumption with electricity, low-carbon fuels and more efficient production processes.

For metals markets, that transition creates additional demand for copper, aluminium and electrical steel. Grid expansion, renewable power, electric transport and industrial electrification all require substantial quantities of conductive and structural materials.

The target can also increase pressure on high-emission materials producers. Steel and aluminium customers are increasingly tracking embedded carbon, while future investment decisions will depend more heavily on access to competitive low-carbon electricity.

Energy security is another part of the policy case. The UK government argues that greater reliance on domestic clean power can reduce exposure to volatile imported fossil fuel markets, while the CCC has similarly linked its recommended pathway with lower dependence on imported fuels.

This creates both risk and opportunity for industry. Companies with access to renewable power, recycling, efficient processing and lower-carbon technologies may gain an advantage as the emissions ceiling tightens.

Long-Term Target Gives Investors a Clearer Policy Signal

Carbon budgets cap total UK greenhouse gas emissions over five-year periods, giving companies a longer planning horizon than annual targets. The seventh budget extends that framework through 2042.

That certainty matters for infrastructure with long investment cycles. Power networks, nuclear projects, smelters, industrial plants and transport systems often require capital decisions many years before new capacity begins operating.

The government has said a specific delivery plan for the seventh carbon budget will follow, setting out how the target will be achieved. The existing Carbon Budget and Growth Delivery Plan covers earlier budgets through 2037.

The industrial challenge will therefore shift from setting the target to allocating the cost of delivery. Power availability, grid expansion, industrial support and technology investment will determine whether UK manufacturers can cut emissions without losing competitiveness.

The Metalnomist Commentary

The seventh carbon budget gives UK industry a clear direction, but the real test is whether clean electricity and grid capacity expand fast enough to support it. For metals producers, lower-carbon power could become as important to competitiveness as raw material cost.

Derichebourg Recycling Results Rise on Strong Non-Ferrous Demand

Derichebourg

Derichebourg recycling results strengthened in the first half of its 2025-26 financial year as higher non-ferrous metal volumes and prices lifted profitability. The French recycling group reported Ebitda of €177.8mn for October-March, up almost 10% from a year earlier.

Derichebourg recycling results also benefited from rising copper and aluminium volumes. The company expects similar performance in the April-September second half, supported by firm non-ferrous demand and improving conditions for ferrous scrap.

Derichebourg recycling results highlight a broader shift in Europe. Scrap is becoming more strategically valuable as steelmakers respond to CBAM, new trade measures and pressure to reduce carbon intensity.

Full-year Ebitda is expected at €350mn-370mn. The company’s share price also moved above €10 following the results announcement, from around €9.50 previously.

Copper and Aluminium Lift Non-Ferrous Performance

Derichebourg sold 357,100t of non-ferrous metals during the first half, up 4.4% from a year earlier. Segment revenue increased by almost 20% to €1bn as average non-ferrous prices rose by nearly 15%.

Copper delivered the strongest volume increase, with sales rising by 17%. Aluminium volumes excluding ingots increased by 10%.

These gains show continued demand for recycled metals tied to electrification, infrastructure and industrial manufacturing. Copper scrap is particularly important as buyers look for additional metal units outside constrained primary mine supply.

Aluminium recycling also benefits from tighter sustainability requirements. Secondary aluminium requires significantly less energy than primary production and can help manufacturers lower embedded carbon.

But automotive weakness affected some product categories. Aluminium ingot sales fell by 15%, while lead volumes declined by 4%.

This divergence shows that scrap demand depends heavily on end-use exposure. Copper and processed aluminium benefited from broader industrial demand, while automotive-linked products remained under pressure.

For recyclers, the value proposition is becoming stronger. Industrial customers increasingly need not only scrap availability, but consistent chemistry, traceability and reliable processing.

CBAM and Steel Trade Measures Strengthen Scrap Outlook

Derichebourg’s ferrous scrap revenue fell by 5% to €649.9mn because weaker average prices offset higher sales volumes. Ferrous scrap shipments still increased by 2.2% to 2.13mn t.

European mills increased scrap purchasing ahead of the Carbon Border Adjustment Mechanism entering force in January. Some steelmakers have shifted toward European feedstock to avoid complex CBAM calculations and uncertainty over import-related costs.

This creates a structural advantage for regional scrap suppliers. As carbon becomes part of steel procurement decisions, recycled feedstock can support lower-emission electric arc furnace production and reduce exposure to imported raw materials.

Derichebourg also expects new EU steel quotas and customs duties introduced in July to support ferrous scrap demand. These measures could encourage more regional production and strengthen demand for domestically sourced scrap.

Turkey’s higher steel output has provided additional support because the country remains a major buyer in the international scrap market.

Derichebourg is also expanding its geographic reach through the planned acquisition of Scholz Recycling. Scholz operates 180 sites, including joint ventures, across Germany, the Czech Republic, Poland, Slovenia, Austria and Romania.

The transaction is expected to close in the second half of 2026. It will significantly strengthen Derichebourg’s footprint in eastern Europe and expand access to scrap collection networks.

The Metalnomist Commentary

European scrap is becoming an industrial resource rather than simply a recycling product. CBAM, trade protection and stronger demand for low-carbon metals are increasing the strategic value of large collection and processing networks.

EU Car Emissions Policy Divides States as 2035 and ETS 2 Battles Intensify

EU, ETS

EU car emissions policy is becoming a major fault line between member states as governments debate how much flexibility automakers should receive after 2035 and how quickly carbon pricing should expand into road transport and buildings.

France, Spain and Sweden defended continued electrification, while Poland called for greater flexibility in vehicle CO2 rules and further changes to ETS 2. The European Commission’s current proposal would replace the existing 100% tailpipe-emissions reduction requirement for new cars and vans from 2035 with a 90% reduction, with the remaining emissions compensated through low-carbon steel, e-fuels or biofuels. 

EU car emissions policy increasingly matters for metals markets because the regulatory outcome will influence the pace of EV adoption, internal-combustion vehicle production and material demand across batteries, copper, aluminium and automotive steels.

At the same time, disagreements over ETS 2 show that Europe is still negotiating how quickly consumers and transport markets should absorb the cost of decarbonisation.

2035 Flexibility Could Reshape Automotive Metals Demand

The Commission’s proposed flexibility would allow plug-in hybrids, range extenders, mild hybrids and some internal-combustion vehicles to remain in the market beyond 2035, provided manufacturers meet the wider emissions framework. 

That matters because the automotive material mix changes significantly depending on powertrain.

Battery electric vehicles typically require larger battery packs and more copper-intensive electrical systems. They directly support demand for lithium, graphite and selected nickel and manganese products depending on battery chemistry.

Hybrids require much smaller batteries, reducing battery mineral intensity per vehicle. However, they still consume more copper and electrical components than conventional combustion vehicles.

Continued ICE production would also sustain demand for metals and components linked to traditional powertrains, including speciality steels, aluminium castings and exhaust-system materials.

Low-carbon steel is becoming another strategic element. Under the Commission proposal, EU-made low-carbon steel could contribute to compensating the remaining emissions permitted after 2035. 

This could create a new commercial advantage for European steelmakers investing in lower-carbon production. Automotive decarbonisation would then depend not only on the vehicle powertrain but also on the embedded emissions of its materials.

The industrial argument is therefore becoming more complex than EV versus ICE. Europe is increasingly debating whether decarbonisation should be measured through tailpipe emissions alone or through a broader combination of powertrain, fuels and lower-carbon materials.

ETS 2 Debate Highlights Cost of Europe’s Transition

The political divide extends beyond cars to carbon pricing.

ETS 2 is designed to expand emissions trading to fuels used in buildings, road transport and additional sectors. Its full launch is currently scheduled for 2028, while EU institutions have also been strengthening its market stability reserve to reduce excessive price volatility. 

Poland is pushing for stronger mechanisms to control carbon prices and has argued for further flexibility around implementation.

The issue is important because ETS 2 could eventually increase the carbon cost associated with road fuels and heating. Governments are therefore balancing emissions objectives against household costs, inflation and industrial competitiveness.

For metals and manufacturing, carbon market design has indirect but significant consequences. Faster electrification supports grids, charging infrastructure and electrical metals demand. Slower implementation could extend fossil fuel consumption and delay part of that investment cycle.

Germany has meanwhile focused on the longer-term availability of allowances under the existing ETS, highlighting concern over how rapidly the emissions cap declines as Europe approaches its 2040 climate targets.

These debates show that Europe has broadly agreed on the direction of travel but not on the speed or industrial structure of the transition.

The eventual policy mix will influence where manufacturers invest, which automotive technologies survive and how quickly European material supply chains need to adapt.

The Metalnomist Commentary

Europe’s automotive debate is shifting from a simple ICE-versus-EV argument toward a contest over technology, carbon pricing and material origin. For metals markets, the final policy balance will determine how quickly demand moves toward batteries, copper and low-carbon steel.

Cop 31 Electrification Target Could Reshape Global Power and Metals Demand

Cop 31

Cop 31 electrification target proposed by Turkey would lift electricity’s share of global final energy consumption to 35% by 2035, from around 20% today. The IEA is urging countries to support the goal at the November climate summit in Antalya.

Cop 31 electrification target would place power systems at the centre of the next phase of global decarbonisation. Reaching the target would require substantial investment in generation, grids, storage and end-use electrification across transport, buildings and industry.

Cop 31 electrification target also carries major implications for metals demand. More electricity infrastructure would support long-term consumption of copper, aluminium, electrical steel, battery materials and other inputs used in transmission, storage and renewable generation.

The political challenge is financing. Developing countries warned that higher borrowing costs, limited technology access and weak capital availability could prevent them from participating in the transition at the same pace as wealthier economies.

Grid Investment and Finance Will Determine Delivery

Turkey proposed the 35% electrification goal during climate talks in Bonn. The IEA said the target is achievable and could become a major legacy of Cop 31 if governments reach agreement.

However, expanding electricity use requires far more than adding renewable generation. Countries need transmission lines, distribution networks, transformers, substations, storage systems and digital grid infrastructure.

That creates a significant industrial demand signal. Copper will be central to cables, transformers and electrical equipment, while aluminium will remain critical for transmission conductors and lightweight electrical applications.

Battery storage will also become more important as renewable penetration rises. This supports demand for lithium, graphite, copper and other battery materials, while alternative storage technologies could create additional demand for vanadium, zinc and other metals.

Developing economies face the biggest financing challenge. High borrowing costs can make power projects significantly more expensive even when renewable resources are strong.

Turkey and Australia therefore want finance to sit alongside electrification in the Cop 31 agenda. Ministers from Ethiopia, Colombia and other developing countries also stressed that implementation will depend on better access to capital and technology.

Without that support, electrification could widen industrial inequality. Countries with cheaper financing would build grids and clean power faster, while higher-risk markets could remain dependent on older infrastructure and more expensive energy.

Clean Power Source Will Decide Climate Impact

Electrification alone does not guarantee lower emissions. The climate benefit depends on how the additional electricity is generated.

Civil society groups and governments have warned that rising electricity consumption can still be supplied by coal, gas or other fossil fuels. That means the electrification target must be linked with clean generation expansion and fossil fuel transition policies.

The Powering Past Coal Alliance has called for governments to integrate electrification, clean power build-out and coal transition scenarios. It warned that rapid power demand growth could otherwise lock countries into new coal capacity.

Colombia also argued that faster renewable deployment is not enough without addressing the phase-out of fossil fuels. This debate will remain central to negotiations around the broader transition away from fossil energy.

For industrial supply chains, the distinction matters. A clean electrification pathway creates sustained demand for renewable generation, grids, batteries and low-carbon materials. A fossil-heavy pathway may still increase metals demand, but with a much weaker emissions benefit.

The 35% target therefore represents more than an energy consumption metric. It would influence capital allocation, power infrastructure planning and material demand across multiple sectors for the next decade.

The Metalnomist Commentary

A global electrification target would be a major structural driver for copper, aluminium, electrical steel and storage materials. But without affordable finance and clean generation, electrification could expand electricity demand faster than it reduces emissions.

Asian Investor Climate Policy Advocacy Rises as Transition Finance Needs Clearer Rules

AIGCC

Asian investor climate policy advocacy is accelerating as more asset owners and managers push governments for clearer frameworks to support climate investment. The Asia Investor Group on Climate Change said investors across the region are moving beyond broad net zero pledges toward more direct engagement on policy.

Asian investor climate policy advocacy is becoming more important because Asia’s energy transition depends heavily on regulation, project approvals and national transition roadmaps. Markets across the region differ widely in policy maturity, carbon rules, disclosure standards and grid planning.

Asian investor climate policy advocacy now extends beyond emissions targets. Investors are calling for stronger sector transition plans, technology support, physical climate risk frameworks, nature-related disclosures and just transition policies.

The shift matters for metals and industrial supply chains. More investible climate policy can unlock capital for energy storage, renewable power, transmission, low-carbon transport and green infrastructure, all of which require large volumes of copper, aluminium, battery materials, electrical steel and critical minerals.

Energy Storage and Grid Investment Draw More Capital

Energy storage has become one of the clearest winners from stronger climate policy interest. The share of surveyed investors interested in energy storage doubled to 82% in 2025 from 40% in 2023.

This is an important signal for battery metals. Storage growth can support demand for lithium, iron phosphate, graphite, copper, aluminium and power electronics materials, even when electric vehicle growth becomes uneven.

Renewable power generation and transmission are also attracting investor attention. These sectors require long-term policy certainty because projects depend on grid access, permitting, tariff structures and reliable revenue models.

Green infrastructure, low-carbon transport and nature-based solutions are also gaining interest. But capital will move fastest where governments provide clear investment rules, predictable transition pathways and credible national targets.

The report shows that investors are becoming more practical. They are no longer only setting portfolio-level climate targets. They are asking governments to create the conditions needed for real projects to be financed.

Transition Plans Remain the Missing Link

Investor climate commitments are rising, but implementation remains uneven. The share of investors with net zero portfolio pledges increased to 45% in 2025 from 40% in 2024, while 33% have set interim targets.

However, only 22% of investors published a climate transition plan in 2025, unchanged from the previous year. This gap matters because transition plans connect targets with capital allocation, engagement priorities and risk management.

Just transition strategies are even less developed. Only 11% of investors have adopted one, showing that social and regional impacts remain under-integrated in climate finance.

Asia’s transition will require place-based planning. Coal-heavy markets, export-driven manufacturing hubs, emerging economies and advanced financial centres all need different pathways.

For metals producers and industrial companies, this creates both opportunity and scrutiny. Investors will increasingly prefer companies with credible decarbonisation strategies, resilient supply chains and exposure to climate-enabling materials.

The broader message is clear. Climate finance in Asia is moving from ambition toward execution, but policy certainty and transition planning must improve before capital can scale at the speed required.

The Metalnomist Commentary

Asian investors are telling governments that climate capital needs bankable rules, not slogans. For metals markets, the strongest signal is energy storage: policy clarity could turn climate finance into real demand for copper, aluminium, lithium and grid materials.

France Fossil Fuel Roadmap Sets Clear Timetable for Energy Transition

Fossil fuel roadmap

France fossil fuel roadmap marks an important step in turning climate targets into a structured energy transition plan. The roadmap does not introduce new targets, but it brings France’s energy policies, electrification strategy and climate goals into one document.

France fossil fuel roadmap is significant because it gives a clear schedule for reducing fossil fuel dependence. France aims to cut fossil fuels from around 60% of final energy consumption in 2023 to 40% in 2030 and 30% in 2035.

France fossil fuel roadmap also sets long-term phase-out dates for coal, oil and natural gas. The government plans to phase out coal by 2030, oil by 2045 and natural gas by 2050, while targeting net zero emissions by mid-century.

The roadmap matters beyond France. It gives other governments a practical example of how fossil fuel transition planning can connect emissions targets, energy security, electrification and industrial strategy.

Electrification Becomes the Core of Fossil Fuel Reduction

France’s roadmap links fossil fuel reduction directly to electrification. The country’s new electrification plan, released in April, now sits alongside its national low-carbon strategy and wider climate targets.

This connection is important because fossil fuel phase-out cannot happen only through policy declarations. It requires more electricity, cleaner generation, stronger grids, electric heating, electric transport, industrial efficiency and lower-carbon manufacturing.

France also has an energy security reason to move faster. More than 95% of fossil fuels burned in the country are imported, exposing households and industry to external price shocks, shipping risks and geopolitical disruption.

Reducing imported fossil fuel use therefore serves two goals. It lowers emissions and reduces exposure to volatile global energy markets.

The roadmap reiterates France’s target to cut gross greenhouse gas emissions by 50% by 2030 compared with 1990 levels. It also supports the longer-term objective of net zero emissions in 2050.

France’s remaining two coal-fired power plants are scheduled to close or be converted by next year. This makes coal the easiest part of the transition, while oil and natural gas will require deeper changes across transport, buildings and industry.

For metals and materials markets, the roadmap points to rising demand for the physical infrastructure behind electrification. Copper, aluminium, electrical steel, transformers, batteries, rare earth magnets, grid equipment and power electronics will all become more important as France cuts fossil fuel use.

The policy also strengthens the case for clean energy investment. A clearer timetable can help utilities, manufacturers, grid operators and industrial users plan capital spending around future energy demand.

Fossil Fuel Transition Planning Gains Global Momentum

Think tanks welcomed the French roadmap because few countries address coal, oil and gas together under one transition framework. They noted that France did not raise ambition, but still provided a useful model by setting timelines and aligning policies.

This matters because global climate diplomacy is moving from broad pledges toward implementation. The first global stocktake agreed at Cop 28 called for a transition away from fossil fuels in energy systems, but many countries still lack detailed national plans.

France’s roadmap gives that commitment a national structure. It shows how governments can translate climate summit language into domestic policy sequencing.

The document also creates pressure on fossil fuel-producing countries. If demand for fossil fuels declines over the coming decades, producer economies will need diversification plans, new industries and alternative sources of public revenue.

Colombia’s draft fossil fuel transition roadmap shows that this discussion is widening. The country aims to cut primary fossil fuel demand by 90% over 2026-50 while expanding energy access and managing dependence on oil and coal exports.

The EU is also moving in the same direction, even if its language focuses more on emissions reduction than explicit fossil fuel phase-out. The bloc targets net zero emissions by 2050, a 55% emissions reduction by 2030 and a 90% reduction by 2040 compared with 1990 levels.

The practical effect is similar. Deep emissions cuts cannot happen without a major reduction in fossil fuel use.

For industry, this creates a long-term signal. Companies should expect more electrification, stronger carbon rules, higher clean-energy investment and greater pressure to reduce fossil fuel exposure in operations and supply chains.

The strategic issue is execution. Roadmaps help, but governments still need permitting reform, grid investment, clean power capacity, financing, industrial incentives and raw material supply security.

The Metalnomist Commentary

France’s roadmap shows that fossil fuel transition is becoming an infrastructure plan, not just a climate slogan. The industrial winners will be countries that connect phase-out timelines with grids, clean power, critical minerals and manufacturing capacity.

Indian Stainless Seamless Tube Exports Set to Stay Resilient in EU Market

Stainless Tube

Indian stainless seamless tube exports to Europe are expected to remain resilient despite tighter EU safeguard quotas and rising carbon compliance costs. European buyers continue to depend on imported material in product categories where regional stainless seamless tube capacity remains insufficient.

Indian stainless seamless tube exports are being tested by two forces at once. Europe is tightening trade protection and carbon policy, while India is expanding production capacity to serve both export and domestic industrial demand.

The result is not a simple import slowdown. Instead, the European market is likely to become more selective, with buyers continuing to source from India where local supply cannot meet technical, volume or cost requirements.

Speakers at SMR’s Stainless Steel Tube and Pipe Market Insights Day in Dusseldorf said EU safeguard quotas and the carbon border adjustment mechanism will raise costs. However, they said these measures will not remove Europe’s structural need for non-EU seamless tube supply.

EU Supply Gaps Keep Indian Tube Imports Viable

European stainless seamless tube buyers are not abandoning overseas suppliers because domestic mills cannot fully cover demand across all product segments. This is especially true in applications requiring specific sizes, grades, delivery windows or fabrication-linked supply.

Venus Europe managing director Stefan Muller-Bernhardt said price increases in Europe are being driven more by policy measures and cost inflation than by genuine shortages caused by lower imports. This distinction matters because trade measures may raise landed costs without creating enough domestic capacity to replace imports.

Ratnamani Metals and Tubes stainless steel division head MS Randhawa said imports will remain viable where demand exceeds regional supply. Even when buyers face higher tariffs and compliance costs, the need for material can outweigh the added expense.

This is particularly relevant for seamless tubes used in export-oriented fabrication. Products tied to heat exchangers, pressure vessels and engineered systems may still require imported tube input if European supply is limited or too expensive.

CBAM adds another layer of uncertainty. Importers will need to manage emissions reporting, verification and future carbon costs. But the mechanism is unlikely to eliminate Indian stainless seamless tube exports where Europe lacks sufficient domestic alternatives.

Safeguard quotas will have a more direct commercial effect. Tighter quotas can restrict volume flexibility and raise the risk of duty exposure. However, buyers with technical dependence on imports may continue purchasing Indian material even at higher cost.

This creates a more disciplined import market. Indian suppliers that can offer consistent quality, compliance documentation and reliable delivery will be better positioned than low-cost exporters with weaker transparency.

For European buyers, the key issue is not whether imports become more expensive. It is whether domestic producers can replace the material. In many seamless tube categories, the answer remains uncertain.

Indian Capacity Growth and Process Routes Reshape Competition

India’s stainless seamless tube industry is expanding rapidly, but speakers said this should not be viewed only as export pressure on Europe. Indian producers are also adding capacity to serve fast-growing domestic demand.

India’s refining, power, fertiliser, semiconductor, defence and industrial sectors are all increasing stainless seamless tube consumption. These applications require corrosion resistance, pressure integrity and reliable mechanical performance.

India also has low per-capita stainless steel consumption, leaving substantial room for long-term domestic growth. As industrialisation continues, local tube demand should absorb part of the new capacity being added by Indian producers.

Still, exports will remain attractive. Overseas markets often offer larger order volumes, better price realisation and more diversified customer bases. Europe will therefore remain important, even as Indian domestic demand strengthens.

The market is also seeing a technical divide between production routes. Rotary piercing is gaining share because of lower costs and improving process technology. This route is becoming more competitive in mainstream seamless tube applications.

Hot extrusion remains important for more demanding segments. Aerospace, defence, nuclear and nickel alloy applications still require higher-end processing, tighter quality control and stronger technical assurance.

The two production routes are unlikely to converge into one dominant model. Rotary piercing will likely serve broader volume demand, while hot extrusion will remain positioned in premium and technically demanding markets.

This divide matters for Europe. Buyers may use Indian piercing-based supply for standard industrial applications, while relying on hot-extruded material for more critical service conditions.

Indian stainless seamless tube exports will therefore become more segmented. The market will differentiate between commodity-grade volume, engineered stainless products and high-specification alloy tubes.

For Indian producers, the opportunity is clear. Companies that can serve both cost-sensitive mainstream demand and higher-specification industrial applications will be better placed to withstand EU policy pressure.

For Europe, the challenge is also clear. Trade controls and CBAM may protect local producers, but they cannot immediately create missing capacity in specialized seamless tube categories.

The Metalnomist Commentary

The EU’s policy direction will raise the cost of Indian stainless seamless tube exports, but it will not remove Europe’s import dependence. The stronger long-term shift is segmentation: lower-cost piercing will serve volume demand, while hot extrusion will defend premium industrial applications.

CBAM Article 27a Deletion Would Tighten EU Carbon Border Rules

CBAM

CBAM article 27a deletion would make the EU carbon border adjustment mechanism more rigid, predictable and difficult to suspend. The European Parliament’s environment committee is preparing to propose removing the clause that would allow temporary exemptions from CBAM under serious and unforeseen circumstances.

The proposal comes from a draft legal report prepared by Dutch centre-left MEP Mohammed Chahim. It signals that parliament may push for a tougher CBAM framework than some member states or industrial importers would prefer.

CBAM article 27a deletion matters because exemptions could weaken the market signal behind the carbon border system. If importers believe CBAM can be paused during disruption, the mechanism may lose some of its pricing certainty and investment value.

The draft instead proposes a narrower system for exceptional cases linked to prolonged military conflict. In those situations, the European Commission would assess whether affected operators can still comply with CBAM requirements.

This approach keeps the mechanism intact while recognising that war can disrupt reporting, verification, logistics and administrative compliance. It also avoids creating a broad exemption channel that could be used during ordinary market stress.

The proposal shows how CBAM is shifting from launch-stage implementation toward legal hardening. The EU is now debating how much flexibility the system should allow without undermining its role as a carbon-cost equalisation tool.

Parliament Seeks Fewer Exemptions and Rejects Article 6 Credits

The most important legal change is the proposed removal of article 27a. That article would allow goods to be temporarily exempted from CBAM during serious and unforeseen circumstances.

The environment committee draft argues that this flexibility could weaken CBAM’s strength and predictability. Predictability is central to the mechanism because importers, exporters and industrial buyers need to know how carbon costs will apply over time.

A broad exemption article could also create lobbying pressure during periods of high energy prices, trade disruption or geopolitical tension. Once a suspension route exists, affected industries may push to use it whenever CBAM costs become commercially painful.

CBAM article 27a deletion would therefore protect the mechanism from becoming too politically adjustable. That is important as the EU begins phasing down free allowances under the emissions trading system and shifting more carbon-cost exposure toward imports.

The draft does not ignore exceptional disruption entirely. It proposes a replacement article focused on prolonged military conflict and its impact on affected regions.

This is a narrower and more defensible framework. A military conflict can prevent companies from collecting emissions data, meeting verification requirements or maintaining normal trade documentation. But that is different from giving broad exemptions whenever market conditions become difficult.

The draft also proposes removing language that would allow the EU to consider carbon credits issued under Article 6 of the Paris Agreement as part of the carbon price already paid on CBAM-covered goods.

This is strategically significant. Article 6 credits could, in theory, reduce CBAM liabilities if foreign producers claim they have already paid a carbon price through internationally recognised credits. But the draft calls this premature and counterproductive.

The concern is credibility. International carbon credits can vary widely in price, quality and environmental integrity. Allowing them into CBAM too early could weaken the mechanism and create disputes over whether credits represent real emissions reductions.

This is especially important for heavy industry. Steel, aluminium, cement, fertilisers and other CBAM-covered sectors need clear rules on what counts as a paid carbon cost. If low-cost or low-integrity credits reduce CBAM exposure, EU producers may argue that the system fails to protect them from carbon leakage.

By rejecting Article 6 credits, the draft keeps CBAM tied more closely to direct carbon pricing and verifiable emissions. That would make the system stricter, but also simpler for enforcement.

The legal direction is clear. Parliament’s environment committee appears to favour a CBAM model with limited exemptions, cautious treatment of offsets and stronger predictability for industry.

For exporters into the EU, this raises the compliance threshold. They will need credible emissions data, verified reporting and direct carbon-cost evidence rather than relying on broad exemptions or international credit claims.

Sector Expansion and Indirect Emissions Could Widen CBAM’s Industrial Reach

The draft also points toward a broader CBAM after the next review, scheduled by the end of 2027. It says the EU should consider expanding the mechanism’s sectoral scope to additional industries.

The sectors identified include organic chemicals, polymers and scrap materials from pulp, paper and glass. These areas have already been assessed as technically feasible for inclusion by the Commission.

This matters because CBAM currently focuses on a narrower set of carbon-intensive sectors. Expanding into chemicals and polymers would move the mechanism deeper into industrial supply chains and downstream manufacturing.

Organic chemicals and polymers are especially important because they sit inside a wide range of finished goods. If CBAM expands into these materials, the mechanism could affect packaging, automotive parts, consumer goods, industrial components and many other value chains.

Including scrap materials from pulp, paper and glass would also widen the mechanism’s reach into recycling and secondary raw materials. This could create new reporting challenges because scrap flows often involve mixed origins, complex supply chains and variable embedded emissions.

The draft also calls for CBAM to gradually cover indirect emissions in more sectors. Indirect emissions are already included for fertilisers and cement, but not across all covered products.

This could become one of the most important future changes. Indirect emissions reflect the carbon intensity of electricity used in production. For sectors such as aluminium, steel and chemicals, power sourcing can materially change total embedded emissions.

If indirect emissions are added more broadly, exporters using coal-heavy power systems could face higher CBAM costs. Producers using renewable, nuclear or lower-carbon power could gain a competitive advantage.

This would sharpen CBAM’s industrial effect. The mechanism would no longer focus mainly on direct process emissions. It would also reward cleaner electricity systems and penalise high-carbon power inputs.

The draft asks the Commission to present a proposal by the end of 2027 after assessing technical and policy options. This creates a clear timeline for companies to prepare.

For metals producers, the direction is important. Aluminium and ferro-alloy production are highly electricity-intensive. If indirect emissions become more widely included, power procurement, renewable energy contracts and verified electricity data will become central to EU market access.

For chemical and polymer exporters, CBAM expansion could introduce carbon reporting into supply chains that have not yet faced the same level of scrutiny. This may force producers to improve emissions measurement well before formal inclusion.

The parliamentary timeline is also taking shape. The environment committee is expected to consider the proposed changes on 4-5 May and vote on whether to advance them on 6 July.

If approved, an indicative plenary vote is scheduled for 14 September. That vote would formalise the European Parliament’s position before negotiations with EU member states on the final legal text.

The draft follows a compromise proposed by the EU Council presidency, which had already suggested changes to article 27a. This means both parliament and member states are now actively shaping the flexibility, scope and legal strength of CBAM.

The key issue is balance. Industry wants clarity and workable compliance. Policymakers want to preserve the environmental and competitiveness purpose of the system. Exporters want flexibility during disruption. EU producers want strong protection against carbon leakage.

CBAM article 27a deletion sits at the centre of that debate. It would reduce the risk of temporary exemptions weakening the mechanism, but it would also make compliance more demanding during periods of market stress.

For global suppliers, the message is straightforward. CBAM is unlikely to become a soft or easily suspended regime. The EU is moving toward tighter verification, fewer loopholes and possible expansion into more industrial sectors.

The Metalnomist Commentary

CBAM article 27a deletion would make the EU carbon border system more credible, but also less forgiving. The bigger strategic signal is that Brussels is preparing to expand CBAM from a narrow carbon-pricing tool into a wider industrial competitiveness framework.

European Stainless Tube Trade Shifts as Policy, Imports and Data Centres Reshape Demand

European Stainless Steel

European stainless tube trade is entering a more selective phase as producers defend margins through higher-value applications, tighter specifications and regional supply advantages. The market remains stable, but it is no longer driven mainly by volume growth.

European stainless tube trade is being reshaped by three forces at once. Imports continue to pressure commodity and process pipe segments. Policy measures such as CBAM and revised safeguards are changing cost structures. At the same time, automotive exhaust demand is declining as electrification advances.

Speakers at SMR’s Stainless Steel Tube and Pipe Market Insights Day in Dusseldorf said Europe is behaving like a mature and cyclical market. Asia remains the main centre of stainless steel consumption and commodity production, while Europe depends more on technical applications, certification and regulatory positioning.

European stainless tube trade is therefore moving away from simple price competition. Producers are increasingly competing on quality, traceability, sustainability, lead times and the ability to serve complex end uses.

Italy-based Marcegaglia Specialties said traditional sectors such as construction, energy, oil and gas, automotive, water and food processing remain the backbone of demand. However, the next stage of competition will depend more on sustainability and product complexity than on basic market expansion.

CBAM and Import Pressure Are Regionalising Stainless Tube Supply

European stainless tube trade is becoming more regional because policy and geopolitics are increasing the value of local supply. CBAM, revised safeguard measures and wider instability are pushing buyers to look more carefully at origin, emissions, delivery risk and compliance.

European producers already operate inside the EU regulatory framework. This gives them an advantage in some higher-value applications where customers require reliable documentation, stable quality and shorter supply chains.

But the policy environment is not simple. Some industry speakers warned that CBAM could become more protectionist than environmental if it raises costs for European downstream processors without fully addressing import competition.

This concern is especially relevant for stainless tube makers. They buy input material under EU cost structures, but still compete with imported finished or semi-finished products in certain market segments.

OSTP chief executive Andrea Gatti argued that CBAM and revised tariff-rate quotas are creating a difficult environment for downstream processors. He said the measures can raise raw material costs for European producers while leaving import pressure unresolved in some product categories.

One concern is the way carbon steel and stainless steel products remain grouped in some quota categories. This can obscure the real level of import pressure in specific stainless segments.

The issue is most visible in process pipe. Overall import penetration in European welded stainless pipe may look moderate, but import pressure is much stronger in process pipe than in automotive or structural applications.

Some imported process pipe is arriving at prices close to European producers’ raw material costs. This creates a serious margin problem for EU producers, especially when they must meet higher regulatory, labour and energy costs.

Asian imports are particularly competitive in pipe and fittings made to ASTM specifications. Around 15-20% of the European market still requires ASTM-based products, often because older engineering standards and end-user specifications remain in place.

This creates an opening for Asian suppliers. Many have long experience producing ASTM-based products and can compete aggressively in segments where buyers focus mainly on price and basic compliance.

Asian producers are also becoming more capable of supplying European-standard material. However, some barriers remain. Hot-rolled feedstock availability, customer qualification and more complex technical requirements still protect parts of the European market.

CBAM adds another layer of uncertainty. Importers and buyers still lack full visibility on the actual carbon values that overseas suppliers will declare. Some emissions disclosures remain incomplete or unreliable.

This creates pricing uncertainty. If importers use default emissions values, CBAM costs may rise sharply. If suppliers provide certified actual data, costs may be lower. But the market does not yet know which overseas suppliers can verify emissions credibly.

For European producers, this uncertainty is both an opportunity and a risk. It may make some imports less attractive, but it also complicates raw material sourcing and customer negotiations.

The broader result is regionalisation. Buyers are increasingly weighing whether cheaper imported material is worth the compliance, delivery and emissions risk. European producers can benefit if they turn regulation into a trusted supply advantage.

However, they cannot rely on regulation alone. Imports will continue to pressure standard grades and process pipe where price remains decisive. Europe’s defence must therefore come from technical capability, service and qualification depth.

Automotive Decline and Data Centres Redefine Growth Applications

European stainless tube producers also face structural demand change in automotive applications. Exhaust-related stainless tube demand is declining as electric vehicle adoption reduces the long-term need for combustion engine systems.

German tubemaker Schoeller Werk said about 40% of its business is still linked to automotive. Around 95% of that automotive exposure is tied to combustion engine applications.

This creates a clear transition risk. Combustion engine exhaust systems have historically used stainless tube because of heat resistance, corrosion performance and durability. Electric vehicles remove much of that demand.

Industry speakers described this shift as irreversible, even if the speed varies by region. Combustion vehicles may remain relevant for some years, but the structural direction is clear.

Marcegaglia also described the shift away from combustion-engine vehicles as a trend that stainless tube producers must manage. The market cannot assume that traditional automotive exhaust demand will return.

This forces producers to find new growth areas. Data centres emerged as one of the clearest near-term opportunities during the Dusseldorf discussions.

Data centre stainless demand is growing because cooling systems are becoming more important. AI workloads, higher server density and larger hyperscale facilities require more advanced thermal management.

Stainless tubes can be used in cooling circuits, heat exchangers and wider water infrastructure. These applications often require corrosion resistance, reliability and long service life.

Gatti said the strongest opportunity may not only sit in outer water infrastructure. Inner cooling circuits also present growth potential as specifications increasingly exclude carbon steel and favour copper or stainless steel.

Copper’s high price is helping stainless steel compete. In some data centre applications, stainless can win substitution from copper on cost grounds while still meeting performance requirements.

This creates a valuable opening for European producers. Data centres are not only a volume market. They require quality, traceability, reliability and tight specifications, which fit Europe’s competitive strengths.

However, Asian competition remains a threat. If data centre projects are specified to ASTM standards, Asian suppliers may still compete strongly. This means European producers need early involvement in specifications and project qualification.

Other higher-value markets may also support growth. Specialist energy systems, premium process pipe, food processing, water treatment and industrial heat exchangers all require more complex tube products.

The key difference is that these markets reward performance rather than only price. European producers are better positioned when customers value certification, documentation, short lead times, sustainability and technical support.

This is why Europe’s competitive advantage increasingly lies in complexity. Producers cannot win every commodity segment against lower-cost imports. But they can defend and grow in applications where failure risk, qualification standards and technical requirements matter.

The next decade will likely reward producers that invest in advanced materials and difficult applications. This includes higher corrosion resistance, special dimensions, better surface quality, stronger traceability and lower-carbon documentation.

Policy could help if it is implemented carefully. CBAM and safeguards may support regional supply, but they must avoid damaging downstream processors through higher input costs or poorly designed quota structures.

The real test for Europe is execution. Producers must turn sustainability and regulation into commercial value, not only compliance costs. That means proving lower carbon intensity, shorter logistics chains and stronger product reliability.

European stainless tube trade will therefore become more segmented. Commodity and ASTM process pipe will remain import-sensitive. Automotive exhaust demand will decline. Data centres and complex industrial applications will become more important.

For producers, the strategy is clear. Europe must compete where technical standards, certification, sustainability and customer proximity matter most.

The Metalnomist Commentary

European stainless tube producers are being pushed out of low-margin commodity competition and into higher-specification markets. The winners will be companies that convert regulation, traceability and technical complexity into pricing power, especially in data centres, energy systems and premium process pipe.