The Carbon Boundary Regulation Mechanism (CBAM) has not yet had a full impact on steel prices in the European Union, however, its further extension to subsequent production stages may become critically important for distributors. Participants of the EUROMETAL regional conference on Central Europe, held this week in Warsaw, said that the European market needs to adapt faster to changing customer demands, and Europe itself needs to adapt to the new global reality if the industry wants to remain resilient.
According to Marcin Matisiak, Head of long products procurement at Konsorcjum Stali, the cost of electricity and labor remains the key pricing factors in the EU. CBAM affects the market, but so far its effect is limited by large stocks accumulated before the introduction of the tariff quota mechanism and system.
"Now the market just has to digest these stocks, and that will happen," Matisyak said.
Roland Fazekas, executive director of Carboferr, said that CBAM did add about 5% to the cost of steel in the EU in the first quarter, but the main challenge for the region is to maintain production using steel.
He recalled that ten years ago his company invested in the development of mechanical processing and engineering in order to produce parts for the automotive industry. However, competition is intensifying from two sides at once — from manufacturers and suppliers of components, as well as from factories outside Europe.
Fazekas said that the company had previously supplied parts for BMW production in Hungary, but faced questions from the counterparty due to the transfer of part of the work to China.
"The effective import duty on Chinese precision instruments in the EU is approximately 1.5%. If we talk about quartz rolled slabs imported directly from China, it reaches 70%. I think the Chinese are just laughing at us and asking why we are so stupid," he said.
Wojciech Gruska, CEO of the Eastern ArcelorMittal Distribution Solutions division, emphasized that distributors are located between manufacturers and end customers, which means that it is customer demand that determines the market.
"If we allow metal production and processing to be moved outside of Europe, we will lose. We see that customers are starting to switch to importing semi—finished products in order to reduce costs," he said. According to him, CBAM is "the right direction, but it is not enough."
Fazekash added that the introduction of duties on processed goods may face resistance from the authorities due to the risk of retaliatory measures against exports of manufacturing products from the EU.
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