EU CBAM export support moves to the top of Brussels agenda

EU CBAM

EU CBAM export support is moving closer as the European Commission considers a two-step aid mechanism. EU CBAM export support would offer “immediate” transitional relief for energy-intensive exporters facing rising carbon costs. As a result, EU CBAM export support is emerging as the key political trade-off between climate ambition and industrial competitiveness.

EU CBAM export support to start with transitional measures

The commission is preparing EU CBAM export support that begins with short-term, transitional tools. Officials indicated that a first phase of support would arrive “immediately,” ahead of a more permanent scheme. However, they have not clarified whether support will take the form of direct payments or carbon cost refunds.

Meanwhile, Brussels wants any EU CBAM export support to be WTO-compatible and legally robust. Industry groups argue that exporters cannot plan while details remain vague and timelines unclear. Fertilizers Europe is pushing to retain free ETS allocations for exports until 2030 as the “easiest solution.”

Debate deepens over free allocation and exporter ‘fairness’

The debate around EU CBAM export support centres on fairness for EU exporters under rising carbon prices. The commission is exploring using a share of CBAM revenues to finance long-term export support schemes. As a result, future CBAM cash flows could be recycled back into hard-pressed energy-intensive sectors.

However, fertilizer producers warn that simultaneous CBAM implementation and fast ETS phase-out could trigger widespread bankruptcies. They point to structurally higher EU energy prices that have already pushed margins to zero or below. Industry leaders now openly call for pausing the ETS reduction for CBAM-covered sectors until a final export mechanism is defined.

Politics, timing and the risk of policy fatigue

The political path for EU CBAM export support remains uncertain and highly contentious. Any legal act must pass the European Parliament and member states amid tight legislative calendars. Officials admit that securing agreement on all CBAM amendments before end-2025 would be “highly ambitious.”

At the same time, policymakers acknowledge that the fertilizer sector’s situation is “dire” and cannot absorb more shocks. Yet they are reluctant to dilute CBAM’s climate integrity or delay broader decarbonisation targets. This creates a narrow window where support must be generous enough to retain industry, yet disciplined enough to survive legal and political scrutiny.

The Metalnomist Commentary

Brussels is effectively trying to retrofit a CBAM export leg that was politically postponed during the original negotiations. The eventual shape of EU CBAM export support will signal how far Europe is willing to go to protect its mid- and downstream metals, fertilizer and hydrogen value chains. If delays continue, we should expect more calls for ETS pauses, higher import prices, and accelerated de-industrialisation risk in exposed sectors.

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.

Russia EU CBAM Dispute Challenges Carbon Border Mechanism at WTO

Russia, EU CBAM

Russia EU CBAM dispute escalated to formal World Trade Organisation proceedings as Moscow challenges the European Union's carbon border adjustment mechanism. The Russia EU CBAM dispute claims the carbon pricing system violates multiple WTO agreements including the General Agreement on Tariffs and Trade 1994, potentially disrupting global metals trade and climate policy implementation across aluminum, steel, and iron sectors.

WTO Challenge Targets Multiple Trade Agreement Violations

Russia EU CBAM dispute allegations encompass comprehensive trade agreement breaches affecting critical industrial sectors. Moscow claims the carbon border mechanism violates the Agreement on Import Licensing Procedures and the Agreement on Subsidies and Countervailing Measures. Additionally, Russia targets specific WTO accession protocols for Bulgaria, Croatia, Estonia, Latvia, and Lithuania, broadening the dispute's scope beyond core EU institutions.

Meanwhile, the CBAM implementation schedule spans 2026-34 with carbon pricing applied to goods imported from aluminum, cement, iron, steel, electricity, fertilizers, ammonia, and hydrogen sectors. This phased approach affects major Russian export commodities, particularly metals and fertilizers that constitute significant portions of bilateral trade with European markets.

Export Subsidy Claims Challenge Free Allocation Calculations

However, Russia's primary objection centers on alleged "prohibited subsidies contingent upon export performance" within CBAM's design framework. Although the mechanism lacks specific provisions for EU export sectors, Russia considers free allocation calculations that include export values as discriminatory trade practices. This interpretation challenges fundamental CBAM architecture and carbon pricing methodologies.

Therefore, the dispute highlights tensions between climate policy implementation and international trade law compliance. Russia argues that EU domestic industry receives preferential treatment through free allocation systems while foreign competitors face carbon pricing burdens. This asymmetry allegedly creates unfair competitive advantages violating WTO non-discrimination principles.

Consultation Process Shapes Future Climate Trade Policy

Furthermore, mandatory 60-day consultations between Russia, the EU, and member states will determine dispute resolution pathways. If negotiations fail, Russia can request WTO panel adjudication, potentially creating precedent-setting rulings on carbon border mechanisms. The outcome influences global climate policy implementation and international trade law interpretation.

As a result, the Russia EU CBAM dispute represents broader conflicts between environmental regulations and trade liberalization principles. Major economies worldwide monitor these proceedings as they develop similar carbon border mechanisms. The WTO ruling could significantly impact future climate policy design and international carbon pricing coordination.

The Metalnomist Commentary

The Russia-EU CBAM dispute represents a critical test case for international trade law's intersection with climate policy, potentially establishing precedents that influence global carbon border mechanism development. While Russia's challenge primarily reflects economic interests in preserving metals and fertilizer export competitiveness, the dispute's resolution will significantly shape how nations balance environmental objectives with WTO compliance requirements.

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.

EU CBAM Downstream Goods Expansion Targets Cars, Fridges and Components

EU CBAM

EU CBAM downstream goods coverage is set to expand from 1 January 2028 under a draft European Council compromise text. The proposal would apply the Carbon Border Adjustment Mechanism to steel-intensive finished goods and components, including cars, washing machines, fridges and a wider range of downstream products.

The move marks a significant shift in Europe’s carbon trade policy. Until now, CBAM has focused mainly on basic materials and selected upstream products, but the new proposal would extend protection further along the industrial value chain.

EU CBAM downstream goods expansion directly addresses a long-standing concern in the steel market. Without downstream coverage, importers could bypass carbon costs by bringing in finished products or components instead of covered steel inputs.

Downstream Protection Becomes Central to Steel Competitiveness

Downstream protection has been strongly supported by parts of the European steel market, including distributors association Eurometal. The argument is straightforward: CBAM cannot protect European steel producers if foreign manufacturers can export carbon-intensive finished goods into the EU without equivalent carbon costs.

The proposed expansion would therefore widen the policy shield around European steel-intensive manufacturing. Cars, appliances, machinery parts and components all contain embedded steel, and their inclusion could reduce the risk of carbon leakage moving further down the value chain.

This matters for European industrial competitiveness. Steelmakers, processors, distributors and manufacturers are all exposed if carbon pricing raises domestic production costs while finished imports remain outside the mechanism.

Verification Capacity Remains a Key Implementation Risk

The draft text also points to possible agreements for mutual recognition of third-country accreditation bodies. This is designed to address a major implementation bottleneck: the limited number of recognised verification bodies able to carry out CBAM audits.

Only six verification bodies have so far been recognised, which may be insufficient for the number of steel mills and exporters seeking approval before the deadline. Without broader verification capacity, CBAM implementation could face delays, disputes and administrative pressure.

The European Parliament is also moving through its own process. Dutch centre-left member Mohammed Chahim has been appointed to draft the legal report, with an environment committee vote expected on 6 July and an indicative plenary vote scheduled for September. That process will shape parliament’s position before final negotiations with EU member states.

The Metalnomist Commentary

The EU CBAM downstream goods proposal shows that Brussels is moving from carbon accounting toward industrial border protection. If adopted, it could reshape trade flows for steel, appliances, automotive components and machinery by forcing carbon costs deeper into finished-product supply chains.

CBAM Gaps Threaten EU Steel Trade

EU steel

CBAM gaps threaten EU steel trade as Eurometal warns that the mechanism will go live without a full rulebook. CBAM gaps threaten EU steel trade because key benchmarks, default values and recognition of foreign carbon prices remain undecided. As a result, CBAM gaps threaten EU steel trade just as distributors negotiate 2025 contracts without legal certainty on future carbon costs.

Incomplete CBAM Framework Raises Contract and Pricing Risks

European steel distributors now face CBAM implementation in 2026 while several core design details remain unresolved at EU level. Benchmark and default values for embedded carbon are still under discussion, leaving buyers unsure how imported steel will be priced. At the same time, the methodology for recognising carbon prices paid in third countries remains unclear for many import routes. However, importers must already negotiate term contracts, while they cannot accurately model future CBAM-related charges. This lack of clarity creates room for speculative behaviour, mispricing and contractual disputes between mills, traders and end users. Small and medium-sized enterprises are especially exposed because they lack in-house compliance and pricing expertise to manage CBAM risk.

Eurometal Calls for Provisional CBAM Values and Clear Signals

Eurometal argues that CBAM can support decarbonisation only if steel market participants receive timely and predictable guidance from Brussels. The association has urged the commission to publish provisional CBAM benchmarks and default values without further delay. It also wants clarity on which downstream steel products will fall under CBAM coverage, including processed and fabricated items. Meanwhile, the sector is still waiting for details on the export adjustment mechanism that will affect EU steel shipped abroad. Eurometal proposes a provisional border charge to anchor expectations until the final legal text is adopted. It also calls for an EU-wide communication to calm markets and reduce uncertainty before the full CBAM phase-in. Without such steps, CBAM gaps risk undermining investment, hedging strategies and long-term decarbonisation planning in the EU steel value chain.

The Metalnomist Commentary

CBAM is meant to level the carbon playing field, but today CBAM gaps threaten EU steel trade and investment planning. Unless Brussels moves quickly with provisional numbers and clear communication, the risk is that confusion, not carbon, becomes the main cost driver in Europe’s steel imports.

EU CBAM benchmarks and embedded emissions: Commission seeks industry input

EU, CBAM

The European Commission opened a call for evidence on EU CBAM benchmarks and embedded emissions. The consultation will shape how importers account for foreign carbon prices and calculate embedded emissions. The move clarifies discounts, benchmarks, and default values before CBAM’s definitive phase.

How discounts and benchmarks will work

The first act will define how importers deduct foreign carbon prices. It will convert paid carbon taxes into EU CBAM benchmarks and embedded emissions certificates. It will also specify documentary evidence and conversion rules.

The second act will quantify free EU ETS allowances embedded in products. It will apply the value as a CBAM discount for covered goods. It will align benchmarks for installations with product-level categories. It will keep the system simple and accurate, the Commission said.

Timeline, scope, and data methodologies

The third act will govern calculations from 1 January 2026. It will set methods for actual direct emissions and electricity. It will also cover indirect emissions and default values where data are missing.

The feedback window runs until 25 September. The Commission plans adoption in the fourth quarter. Businesses should review product data flows now. They should stress-test compliance under EU CBAM benchmarks and embedded emissions.

The Metalnomist Commentary

The Commission is tightening CBAM mechanics before 2026. Early clarity on discounts and benchmarks reduces pricing risk. Firms that harmonize plant data with product codes will minimize certificate costs.

EU CBAM pre-consumer scrap proposal targets circumvention in aluminium and steel

Fe Scrap

EU CBAM pre-consumer scrap rules are moving closer to tighter enforcement. The European Commission proposed counting pre-consumer aluminium and steel scrap as an input in CBAM calculations. Therefore, the EU CBAM pre-consumer scrap proposal aims to reduce gaming risks and align carbon pricing.

Pre-consumer scrap comes from manufacturing before products reach end users. The commission said operators can misuse this channel to understate process emissions. Meanwhile, the proposal frames scrap use as a practical lever to cut embedded emissions.

Traceability rules tighten on “new scrap” declarations

The proposal targets misreporting that shifts material into lower-emission categories. The commission warned about cases that label pre-consumer scrap as post-consumer scrap. As a result, EU CBAM pre-consumer scrap reporting will likely require stronger proof of origin.

The commission also signaled more granular reporting on material composition. It wants better traceability to prevent misdeclaration of emission intensity. However, the proposal did not fully detail every new reporting field.

The commission also flagged “non-reliable economic operators” as a compliance focus. It cited shell companies and complex cross-border trade patterns inside the EU. Therefore, importers may face deeper due diligence on counterparties and documentation flows.

Downstream expansion from 2028 raises the compliance bar

The commission proposed extending CBAM coverage to more downstream steel products from 2028. That step can pull more of the value chain into carbon accounting obligations. Meanwhile, manufacturers will need cleaner data across semi-finished and finished goods.

The commission also floated a temporary decarbonisation fund for sectors exposed to carbon leakage. The fund could ease transition pressure while CBAM expands. However, companies should not assume support will offset weak reporting systems.

The Metalnomist Commentary

This proposal shifts CBAM from emissions estimates toward auditable material identity. However, scrap markets can fragment fast when traceability rules tighten. The winners will build verifiable scrap chains and defensible emissions data early.

EU-India FTA and CBAM Remain on Separate Tracks

EU-India, FTA

The EU-India FTA and CBAM remain on separate tracks. The European Commission confirmed that the trade deal gives India no exemption from the carbon border measure. India will not receive more favourable treatment than other countries. As a result, the EU-India FTA and CBAM will continue to shape trade under different rules.

The trade agreement still marks a major commercial breakthrough. The two sides concluded talks on tariff cuts or eliminations covering most EU goods exports to India. However, Brussels kept its climate border policy fully intact. Therefore, the EU-India FTA and CBAM now define both opportunity and constraint for industrial trade.

CBAM Stays Firm Even as the Trade Deal Expands

CBAM remained one of the toughest issues in the negotiations. EU officials said India first took a very hard line on the carbon border measure. However, the final outcome did not alter the EU’s legal obligations. That means exporters to Europe must still prepare for carbon-related compliance costs.

The agreement instead opens room for technical dialogue. EU officials said both sides can now discuss CBAM through a more structured channel. They also agreed to deepen cooperation on climate change and decarbonisation. Meanwhile, the EU is considering support for India’s greenhouse gas mitigation efforts.

This approach shows the EU’s broader trade logic. Brussels wants market access and climate discipline at the same time. It will cooperate on decarbonisation, but it will not dilute core climate tools. Consequently, EU trade policy now links commercial openness with tougher carbon accountability.

Industrial Trade Gains, but Carbon Compliance Still Matters

The industrial impact will extend beyond tariffs alone. Steel, cars, and carbon-intensive products remain highly sensitive in the EU-India relationship. Even with lower tariffs, exporters still face the strategic challenge of embedded emissions. Therefore, carbon performance will matter almost as much as price competitiveness.

The agreement also leaves some areas outside the deal. EU officials said there is no dedicated chapter on raw materials or energy. That omission matters for supply chain planning in metals and industrial manufacturing. It suggests the current deal focuses more on trade access than resource integration.

The entry into force process will also take time. Legal revision, translation, publication, and political consent still lie ahead. That means businesses should not expect immediate full implementation. Instead, companies should prepare for a phased trade opening alongside unchanged carbon obligations.

The Metalnomist Commentary

This deal confirms that the EU will not trade away CBAM for easier market access. That is an important signal for metals, chemicals, and other carbon-intensive sectors. The real lesson is clear: future trade competitiveness will depend on both tariff access and decarbonisation readiness.

EU ETS and CBAM Reform Moves to the Center of Europe’s Industrial Debate

EU ETS

EU ETS and CBAM reform has moved to the center of Europe’s industrial debate. European leaders and major industrial executives now want climate policy to protect competitiveness more effectively. They argue that energy costs and carbon costs are putting heavy pressure on manufacturers. As a result, EU ETS and CBAM reform is becoming a core test of Europe’s industrial strategy.

Ursula von der Leyen made the message clear in Antwerp. She said more ETS revenues should flow back into industry instead of remaining underused. EU ETS revenues have exceeded €260bn since 2005, but only a small share has supported industrial decarbonisation. Therefore, EU ETS and CBAM reform is no longer only about emissions policy. It is also about how Europe funds industrial survival and transition.

Industrial leaders are also asking for a harder review of the current ETS design. Cefic’s leadership argued that two decades of ETS policy may have created unintended pressure on European producers. That criticism reflects a wider concern across chemicals, steel, and fertilizers. Consequently, EU industrial competitiveness is now being discussed alongside carbon ambition, not after it.

ETS Revenues for Industry Are Becoming a Main Political Demand

ETS revenues for industry are now one of the clearest demands from business leaders. Companies want a larger share of carbon-market income returned to industrial decarbonisation projects. They argue that this money should help fund cleaner production, not simply disappear into general state budgets. As a result, the summer ETS reform debate could become highly consequential for manufacturers.

This issue matters because European industry is already under cost pressure. Energy prices remain volatile, and carbon costs add another burden to production. If ETS revenues are reinvested more directly, companies may gain more confidence to modernize assets and keep production in Europe. Therefore, ETS revenues for industry could become one of the most practical tools in the reform package.

French president Emmanuel Macron added a similar message from a competitiveness angle. He argued that ETS must support decarbonisation without damaging industry. That framing is important because it shifts the debate from climate policy alone to climate policy design. Meanwhile, it strengthens the case for reforms that are more responsive to industrial reality.

CBAM Certainty Will Matter as Much as CBAM Ambition

CBAM certainty is now just as important as CBAM ambition. Macron said CBAM is necessary if Europe wants to preserve sectors such as steel. However, industry leaders warned that mixed signals from Brussels are creating confusion. That confusion risks weakening trust in the policy before it is fully established.

Yara’s chief executive highlighted that risk directly. He said fertilizer producers faced serious uncertainty after the Commission discussed a possible temporary suspension for some CBAM goods. Even the idea of retroactive change unsettled the market. Therefore, EU ETS and CBAM reform must now address policy stability as well as policy strength.

The wider business message from Antwerp was straightforward. European companies are not asking to avoid the transition. They are asking for competitive conditions that allow them to lead it. Public procurement, private buyer initiatives, and clearer climate rules could all help create that framework. As a result, CBAM certainty may prove just as critical as carbon pricing itself.

The Metalnomist Commentary

Europe is entering a more difficult phase of climate policy. Setting carbon rules was the first challenge, but making them industrially workable is the next one. If Brussels cannot deliver both stronger support and greater policy clarity, EU ETS and CBAM reform may protect ambition while weakening the industries expected to carry it.

EU CBAM aluminium benchmark lowered for primary and secondary imports

Aluminium

The EU CBAM aluminium benchmark will fall for primary and secondary imports under a leaked draft. The benchmark for primary aluminium drops to 1.423t CO2 per tonne from 1.464t. The secondary benchmark falls to 0.091t CO2 per tonne from 0.139t for scrap-rich metal.

What the new benchmarks mean across the aluminium value chain

The new benchmark directly changes how much emissions value importers can deduct from CBAM liability. The benchmark sets the “free allocation” amount that reduces an importer’s payable charge once CBAM starts in 2026. As a result, a lower benchmark can raise the remaining CBAM exposure when other factors stay constant.

The EU also adds fixed benchmark uplifts for downstream aluminium products. Most intermediate products, like bars, wire, plate, and sheet, add 0.056t CO2 per tonne to the base benchmark. End-of-chain products, like containers and foil, add 0.166t CO2 per tonne to the base benchmark.

Default values raise the stakes for data quality and compliance

The EU will apply CBAM default values when importers lack adequate origin-specific emissions data. These defaults estimate embedded emissions and can drive higher payable charges. Meanwhile, the compliance risk increases if authorities suspect circumvention.

Consultancy Redshaw Advisors warned about losing access to actual emissions reporting. Lead CBAM advisor Dan Maleski said circumvention findings could remove “actual data” rights for an entire country. Therefore, importers may face forced reliance on default values even when producers track real emissions.

The draft lists notable default values for key exporting countries and product types. Unwrought aluminium from China carries 3t Scope 1 CO2 per tonne, with intermediate products at 4.88t and foil at 5.56t. Aluminium from India carries 1.87t, with intermediates at 3.44t and foil at 4.13t. United Arab Emirates also sits at 1.87t for unwrought, but lower values apply downstream at 2.22t and 2.66t. In addition, the EU plans a 10% annual mark-up to defaults for three years to cover data gaps.

The Metalnomist Commentary

The lower EU CBAM aluminium benchmark increases the premium on verified, audit-ready emissions data. Therefore, producers that document low-carbon power and process efficiency can defend pricing. Meanwhile, high default values will punish weak traceability and accelerate supplier reshuffling.

EU Carbon Border Adjustment Mechanism Gains Parliamentary Support for 50-Tonne Threshold

EU CBAM

The EU carbon border adjustment mechanism (CBAM) received decisive parliamentary backing as the European Parliament's environment committee voted to implement proposed regulatory changes. The committee approved a minimum mass threshold of 50 tonnes for goods covered by the carbon border adjustment mechanism, effectively exempting approximately 90% of importers from CBAM requirements. This significant modification will streamline compliance while maintaining environmental effectiveness across key industrial sectors.

Parliamentary Vote Confirms CBAM Exemptions for Small-Scale Importers

The environment committee overwhelmingly supported the EU carbon border adjustment mechanism changes with 85 members voting in favor, only one against, and one abstention. Environment committee chair Antonio Decaro emphasized that amendments did not reopen other provisions of existing CBAM legislation. Therefore, the core framework of the carbon border adjustment mechanism remains intact while reducing administrative burden on smaller importers.

Meanwhile, the amendments clarify that CBAM applies to electricity importers but excludes power generated exclusively in European Economic Area countries. This exemption covers electricity from Iceland, Liechtenstein, and Norway imported into the EU. As a result, the EU carbon border adjustment mechanism maintains its focus on third-country imports while preserving regional energy cooperation.

Industrial Sectors Maintain Comprehensive CBAM Coverage Despite Exemptions

The revised EU carbon border adjustment mechanism will continue covering 99% of total CO2 emissions from imports of iron, steel, aluminum, cement, and fertilizers. This comprehensive coverage ensures that the carbon border adjustment mechanism achieves its environmental objectives despite the small-importer exemption. However, the 50-tonne threshold significantly reduces compliance costs for smaller trading companies and specialized importers.

Parliamentary negotiations with EU member states will finalize the legal text under Antonio Decaro's leadership. EU states aim to agree their position by the end of May, setting the stage for final approval. Therefore, the EU carbon border adjustment mechanism implementation timeline remains on track for full enforcement across affected industrial sectors.

The carbon border adjustment mechanism represents a cornerstone of EU climate policy, targeting carbon leakage from high-emission industries. These amendments balance environmental effectiveness with practical implementation concerns raised by industry stakeholders.

The Metalnomist Commentary

This parliamentary approval demonstrates the EU's commitment to implementing CBAM while addressing legitimate concerns about administrative burden on smaller importers. The 50-tonne threshold strikes a practical balance that maintains environmental integrity while reducing compliance costs, positioning the carbon border adjustment mechanism as a more workable trade policy tool for the global metals and minerals industry.

EU-India FTA Could Improve Indian Aluminium Access, but CBAM Still Limits the Upside

Hindalco Industries

The EU-India FTA could improve the position of Indian aluminium suppliers in Europe. The deal would reduce EU tariffs on Indian base metal imports to zero from 10pc. That change could give Indian aluminium exports a stronger commercial opening. As a result, the EU-India FTA may improve competitiveness for producers such as Hindalco and Vedanta.

The tariff change matters because Indian suppliers have faced a clear disadvantage in Europe. Duty-free suppliers such as Norway, Iceland, and Canada already held an edge. Removing the tariff could narrow that gap. Therefore, Indian aluminium suppliers may enter the EU market on more equal terms.

However, the agreement does not remove every barrier. EU CBAM will still apply to imported goods, even after the tariff cut. That means carbon costs will remain a major factor in future trade economics. Consequently, the EU-India FTA improves access, but does not create a fully open market.

Indian Aluminium Exports Could Gain on Tariffs but Still Face Carbon Pressure

Indian aluminium exports could benefit immediately from lower tariff friction. Price-sensitive buyers in Europe may find Indian material more attractive under a zero-duty regime. That could support better trade flows from India to the EU. Meanwhile, producers are still waiting for final clarity on aluminium in the completed legal text.

CBAM remains the deeper long-term issue. The European Commission has already confirmed that the FTA offers no exemption from the carbon border measure. Importers will still face carbon-related obligations under EU climate policy. Therefore, Indian aluminium suppliers must think beyond tariffs and prepare for emissions competitiveness.

This is why industry optimism remains cautious rather than aggressive. Lower tariffs help, but they do not neutralize non-tariff costs. A trader in the article described CBAM as a continuing trade barrier. As a result, the full commercial benefit of the EU-India FTA may prove smaller than the headline suggests.

EU-India FTA Arrives as Indian Aluminium Exports to Europe Have Already Declined

Indian aluminium exports to the EU have already weakened in recent years. Rising domestic demand in India has reduced export availability. Lower export incentives have also weighed on overseas shipments. Therefore, the industry is entering this trade opportunity from a lower export base.

The recent numbers show that decline clearly. India’s primary aluminium exports to the EU fell sharply in 2024 from the previous year. Shipments in January to November 2025 also remained subdued. Consequently, the EU-India FTA may help stabilise exports first before driving a major surge.

The real opportunity will depend on how Indian producers balance three pressures. They must manage domestic demand, EU carbon costs, and international price competition. Tariff relief helps with one of those problems. However, it does not solve the other two. Therefore, Indian aluminium suppliers may gain an edge, but only within tighter structural limits.

The Metalnomist Commentary

This deal improves trade access, but it does not remove the real future test. European aluminium trade will increasingly depend on carbon performance as much as tariff policy. For Indian suppliers, the EU-India FTA is helpful, but CBAM will still decide who wins long term.

European Aluminum CBAM Flaws Warning Highlights Competitiveness Risks

European Aluminum CBAM

European Aluminum CBAM flaws emerged as critical concerns as the industry association warned that the EU's carbon border adjustment mechanism threatens bloc competitiveness ahead of tomorrow's European Parliament vote. The European Aluminum CBAM flaws assessment, conducted by Ramboll Management Consulting, identifies three fundamental design issues that could actively harm Europe's aluminum industry while providing unfair advantages to importers who avoid carbon costs across their full value chains.

Scrap Content Verification Creates Competitive Disadvantages

European Aluminum CBAM flaws include significant challenges in accurately verifying scrap content within aluminum products imported into the EU. The difficulty in verification enables importers to over-declare scrap content, avoiding carbon costs while redirecting higher scrap content products toward EU markets for financial incentives. This manipulation provides importers substantial advantages over EU producers who face carbon costs across their complete value chain operations.

Meanwhile, Ramboll recommends assigning default values to all imported primary and secondary metal to eliminate domestic disadvantages. This approach would prevent gaming of scrap content declarations while ensuring competitive parity between domestic and imported aluminum products. The current verification system's inadequacy undermines CBAM's intended purpose of leveling competitive playing fields.

Aluminum scrap

Alumina Inclusion Could Drastically Increase EU Costs

However, the study argues that adding aluminum feedstock alumina to CBAM parameters could raise EU alumina costs by 12-16% by 2030, escalating to 24% by 2034. These cost increases would severely impact European aluminum smelter competitiveness while potentially driving production offshore. Ramboll recommends excluding alumina from CBAM until comprehensive downstream sector coverage ensures balanced implementation.

Therefore, the report suggests creating dedicated emissions trading scheme benchmarks for alumina rather than incorporating it directly into CBAM mechanisms. This alternative approach would address carbon leakage concerns without imposing excessive cost burdens on European aluminum producers. The timing of alumina inclusion requires careful coordination with broader CBAM implementation phases.

Indirect Emissions Scope Expansion Presents Implementation Challenges

Furthermore, expanding CBAM beyond direct scope 1 emissions to include indirect scope 2 and 3 emissions would significantly increase CBAM fees and European aluminum costs. European producers face indirect carbon costs through electricity pricing that don't correlate with their actual emissions profiles. Third-country producers avoid equivalent carbon costs while CBAM lacks verification mechanisms for electricity-related emissions.

As a result, European Aluminum director general Paul Voss urged immediate CBAM implementation pause for aluminum until design flaws receive correction and competitiveness impacts undergo proper assessment. The association demands potential aluminum removal from CBAM scope if ongoing reviews demonstrate continued harm rather than protection. Alternative carbon leakage protection measures may require extension beyond 2030 if CBAM proves ineffective.

The Metalnomist Commentary

The European Aluminum association's CBAM critique highlights fundamental tensions between climate policy objectives and industrial competitiveness, demonstrating how well-intentioned carbon border mechanisms can inadvertently disadvantage domestic producers they aim to protect. The complexity of aluminum value chains, from alumina feedstock through scrap recycling, creates verification challenges that sophisticated importers can exploit, undermining CBAM's core premise of ensuring fair competition while driving global decarbonization.

CBAM to Add 15-25% Surcharge to EU Steel Import Costs Starting January 2026

EU Steel

The European Union's Carbon Border Adjustment Mechanism (CBAM) will impose 15-25% surcharges on CBAM steel import costs when full implementation begins January 1, 2026, according to Euranimi analysis. The European Association of Non-Integrated Metal Importers & Distributors warned that these additional costs will vary significantly depending on product type and country of origin. Steel importers face substantial cost increases as CBAM steel import costs rise through carbon pricing mechanisms designed to protect EU domestic steel producers from unfair competition.

CBAM Calculation Formula Creates Variable Cost Impact Across Origins

The CBAM surcharge calculation uses a specific formula measuring the difference between embedded emissions and 97.5% of EU benchmark standards multiplied by emissions trading system (ETS) pricing. This methodology ensures that steel imports face carbon costs comparable to EU domestic production under the emissions trading system. Meanwhile, Euranimi recommends that suppliers introduce separate CBAM surcharge lines in commercial offers, similar to existing alloy surcharge practices in steel trading.

Market participants anticipate significant import pattern changes as CBAM implementation approaches, with potential steel import surges in the fourth quarter of 2025. Importers may accelerate purchases before January 2026 to avoid initial CBAM steel import costs and associated compliance complexities. However, steel imports could decline sharply after January as buyers adjust to higher costs and new administrative requirements.

Implementation Timeline Creates Uncertainty for Steel Trade

Euranimi collaborates with the European Commission to develop "manageable" CBAM implementation procedures that minimize trade disruption while achieving environmental objectives. The association requests June publication of temporary benchmarks and default values for 2026 imports to provide market clarity. As a result, transitional benchmarks should be less strict initially while default values require reasonable levels to manage compliance costs.

Steel importers face significant uncertainty because verified emission data from non-EU suppliers won't be available until late 2026 at the earliest. Default values will play crucial roles in managing CBAM steel import costs during this transition period without verified supplier data. Therefore, appropriate default value settings prevent excessive financial exposure from unforeseen corrections and compliance adjustments.

The CBAM implementation represents a fundamental shift in global steel trade dynamics, creating competitive advantages for low-carbon steel producers while penalizing high-emission suppliers. European steel importers must adapt business models to incorporate carbon costs into pricing strategies and supplier selection processes. Consequently, CBAM steel import costs will reshape trade flows and encourage global steel industry decarbonization efforts through market mechanisms.

The Metalnomist Commentary

The 15-25% CBAM surcharge on steel imports marks a pivotal moment in global trade policy, potentially reshaping steel supply chains as importers seek lower-carbon suppliers to minimize carbon border costs. This mechanism could accelerate global steel industry decarbonization by creating economic incentives for cleaner production technologies, though it also risks disrupting established trade relationships and creating competitive disadvantages for developing country steel producers lacking access to clean technology.

CBAM certificate exemption debate exposes EU steel and aluminium fault lines

Assofermet

European metals companies are intensifying calls for a CBAM certificate exemption as the carbon border regime nears full implementation. The demand for a temporary CBAM certificate exemption reflects deep concern that missing benchmark values and default parameters could destabilise trade in steel and aluminium. Without clarity on CBAM certificate obligations, EU importers are being asked to place orders blind, with no way to predict final embedded carbon costs.

Importers warn of blind CBAM exposure and supply risk

Assofermet argues that a CBAM certificate exemption is needed for imports cleared from 1 January 2026 until several months after default values are published. The association stresses that the absence of final CBAM benchmarks forces buyers to commit to steel and aluminium imports today without knowing future certificate prices. As a result, many traders see the current framework as an unacceptable risk, especially for long-lead contracts and financially constrained small and mid-sized firms.

The proposed CBAM certificate exemption would cover a transition window of up to five months after the release of default values. During this period, importers would not need to surrender CBAM certificates, allowing them to honour existing supply contracts and avoid sudden cost shocks. However, policy uncertainty remains high, as Brussels continues to refine CBAM methodologies, rules for recognising third-country carbon prices, and the interaction with free ETS allocations. Meanwhile, downstream users fear that simultaneous measures, including “melted and poured” origin rules and potential extensions of steel and aluminium safeguards, could combine with CBAM to sharply reduce available import volumes.

Downstream steel users fear a pincer movement on competitiveness

Metals distributors and processors warn that CBAM certificate obligations, when combined with new safeguards, risk forming a regulatory pincer on the EU manufacturing base. Assofermet says the current steel and metals action plan prioritises primary producers while overlooking the needs of re-rollers, processors and trading firms that depend on diverse import flows. If imports drop too sharply, many downstream players could face supply gaps, higher input costs and further margin compression in an already weak economic environment.

A parallel warning comes from steel distributors who highlight a surge in imports of steel-intensive finished goods that fall outside current trade defence instruments and CBAM coverage. Products such as drive axles, electric motor components, fabricated assemblies and metal furniture embed significant steel content but enter the EU under less restrictive regimes. Industry groups argue this asymmetry accelerates deindustrialisation: raw and semi-finished steel face tight controls and rising costs, while finished imports gain a competitive edge. Many therefore call not only for targeted CBAM certificate exemption windows, but also for broader reform to extend CBAM and trade defence tools to steel-containing goods with high import growth and proven steel intensity.

The Metalnomist Commentary

The struggle over CBAM certificate exemption shows how climate policy can collide with industrial realities when timelines and technical details are misaligned. Unless benchmarks, default values and scope definitions are finalised quickly, the EU risks pushing critical downstream manufacturers into supply insecurity just as it needs them to invest in green technologies. A more calibrated rollout, including temporary exemptions and better coverage of steel-intensive finished goods, will be essential to protect both decarbonisation goals and Europe’s industrial backbone.

EU Steel Demand Faces CBAM Risk Before 2028 Downstream Extension

EU Steel

EU steel demand could face significant pressure between 2026 and 2028 as carbon border adjustment costs apply to steel before they fully extend to downstream steel-consuming goods. European market participants warn that this timing gap could encourage imports of finished steel derivatives and weaken demand for EU-made steel.

The risk comes from the structure of CBAM implementation. Steel products will carry annual CBAM-related mark-ups before many downstream products are covered. As a result, imported finished goods with high steel content could become more competitive than goods manufactured inside the EU using CBAM-exposed steel.

EU steel demand is therefore exposed to a policy mismatch. CBAM aims to protect European industry from carbon leakage, but an uneven rollout could shift pressure from steel imports to finished product imports. That would create a new competitiveness problem for service centres, distributors, fabricators, machinery producers, vehicle parts makers, and appliance manufacturers.

Downstream Imports Could Undermine European Steel Consumption

Downstream steel-consuming goods are becoming a central concern for European industry. Product categories under discussion include car parts, specialised vehicle components, home appliances, machinery parts, and yellow goods. These sectors consume large volumes of steel and play a major role in sustaining regional industrial demand.

A proposed response is to create safeguards for selected downstream products before the 2028 CBAM expansion. The idea is to identify key HS codes for EU-manufactured products with high steel content and establish a quota system similar to existing steel safeguards.

This approach reflects a growing concern that steel protection alone may not protect the steel value chain. If downstream manufacturers lose competitiveness, EU steel demand could weaken even if direct steel imports fall. The strategic issue is not only steel trade, but the survival of manufacturing demand inside Europe.

Steel Safeguards and Weak Orders Add Pressure to the Market

The new version of EU steel safeguard measures is still expected to take effect in July. However, market participants remain concerned about World Trade Organisation compliance, especially as the EU negotiates free-trade agreements that may include country-specific quotas.

Market sentiment is already weak. European service centres reported soft order intake in February, with some seeing volumes 10-20pc lower than a year earlier. This points to sluggish industrial activity and limited confidence across the steel distribution chain.

Import reliance may also decline this year. Some service centres expect imported material to fall to around 20pc of flat steel use, compared with as much as 40pc in previous years. That shift may support EU mills, but it also reflects a more controlled and uncertain market environment rather than a broad recovery in demand.

The Metalnomist Commentary

The EU’s steel challenge is no longer only about protecting mills from imported coil. The real risk is demand leakage, where downstream production moves outside Europe before CBAM fully covers finished steel-intensive goods.

EU CBAM Threatens to Halve Value of South African Aluminium Exports

EU CBAM

Hulamin Warns of Severe Economic Hit Without Decarbonisation Measures

High Scope 2 Emissions Pose Greatest Risk Amid Transition to Green Trade Standards

South African aluminium exports to the European Union could lose over 50% of their value under the EU’s Carbon Border Adjustment Mechanism (CBAM), warns Hulamin, the country’s leading aluminium manufacturer. The policy, which begins full enforcement in 2026, targets the embedded greenhouse gas (GHG) emissions of imported goods, making energy-intensive products particularly vulnerable.

CBAM Set to Undercut South African Aluminium Pricing

Hulamin’s environmental sustainability head Hendrik de Villiers stated that South African aluminium typically carries an emissions intensity of around 18t CO₂e per tonne. With a projected levy of €80 per tonne of CO₂e, this translates to €1,440 per tonne of aluminium exported — over 50% of its market value, assuming an LME price of €2,500/t.

By 2034, CBAM will apply to both Scope 1 (direct) and Scope 2 (indirect) emissions. The latter, largely tied to South Africa’s coal-fired electricity grid, poses the most significant risk to exporters. As of 2023, the EU accounted for 35% of South Africa’s aluminium exports, highlighting the economic stakes.

Mitigation Strategies: Renewables, Carbon Tax, and Grid Reform

To reduce exposure to CBAM penalties, De Villiers proposed a multi-pronged strategy. First, aluminium producers must increase energy efficiency and integrate renewable energy into their operations. However, due to South Africa’s grid structure, this cannot be achieved without national infrastructure reform.

Second, De Villiers suggested aligning the country’s carbon tax — currently R134/t CO₂e (around $7) and targeting $30 by 2030 — with CBAM. By using the tax to fund decarbonisation, the country could both retain revenue and offset CBAM costs, as EU regulations allow for recognition of domestic carbon pricing.

CBAM’s full enforcement from January 2026 introduces a new global trade reality for emissions-heavy economies. As South Africa ranks as the 15th largest GHG emitter, and 80% of its power comes from coal, aluminium producers must adapt quickly to preserve export competitiveness in a greener global economy.

European Parliament Approves Key Carbon Border Changes to CBAM

CBAM

90% of Importers to Be Exempt Under Revised CBAM

The European Parliament has approved significant revisions to the Carbon Border Adjustment Mechanism (CBAM), introducing a 50-ton de minimis threshold that is expected to exempt around 90% of importers. This adjustment aims to streamline implementation by alleviating the compliance burden on smaller importers while keeping the focus on bulk emissions from high-carbon goods like steel, aluminum, cement, and fertilizers.

The parliament also pushed back the start date for CBAM certificate sales to 1 February 2027, citing continued uncertainty around the original 2026 implementation timeline. Another clarification confirms that electricity imported from Iceland, Liechtenstein, and Norway—European Economic Area (EEA) members covered under the EU Emissions Trading System (ETS)—will not fall under CBAM’s scope, avoiding double regulation for intra-European electricity trade.

Meanwhile, bulk fertilizer shipments and other high-emission imports will remain fully subject to CBAM compliance. The European Commission emphasized that the changes preserve the mechanism’s core function: to ensure imported goods face a comparable carbon price as EU-produced products, thus preventing carbon leakage and supporting the EU’s decarbonization goals.

WTO Challenge Raises Trade Policy Stakes

The CBAM reform arrives amid rising international scrutiny, as Russia has launched a formal World Trade Organization (WTO) dispute process, claiming the policy constitutes an "alleged export subsidy." Despite this challenge, the EU maintains that CBAM is a climate-focused mechanism and not a form of protectionism, reinforcing its commitment to aligning trade with environmental policy.

The exemption for low-volume imports will likely ease trade tensions with smaller exporters while ensuring that larger, carbon-intensive producers prepare for full compliance. As a result, CBAM may set a precedent for similar carbon pricing measures in other jurisdictions, potentially reshaping global trade dynamics around emissions accountability.

The Metalnomist Commentary

The revised CBAM rules reflect a pragmatic approach by the EU to balance environmental ambition with trade flexibility. By exempting small importers while maintaining strict oversight on bulk emissions, the EU is strengthening its green trade infrastructure. The outcome of the WTO dispute may ultimately determine whether CBAM becomes a global blueprint or a contested policy outlier.