CBAM-induced imports may exacerbate EU oversupply
Some European stainless steel buyers expect an influx of materials into EU ports by the end of 2025, as importers try to avoid the additional administrative and cost burden associated with CBAM.
Currently, the Mechanism for Regulating Carbon Emission Limits, based on the European Commission, is in effect, and full implementation is scheduled for January 1, 2026. According to current plans, registered declarants – those who have been authorized by the Commission to import materials – will have to report all imports and their carbon content from that date.
They will also have to purchase and submit CBAM certificates reflecting greenhouse gas emissions generated during the production of the goods they buy. import into the EU. This means that they will actually pay a fee based on the amount of carbon released during the manufacturing process in the country of origin.
However, according to the changes proposed by the Commission in February, the acquisition of CBAM certificates will be postponed until February 1, 2027. This is part of a set of measures aimed at simplifying the process and further smoothing the transition period, which began in October 2023. The amendment was expected to be approved after the publication of the stainless steel review.
The need to report stainless steel imports and emissions will continue, regardless of the approval of the amendments. Consequently, some European Parliament respondents expect import volumes to rise in the fourth quarter. However, other experts stress that weak demand may mitigate any increase in imports.
Any increase in supplies to third countries would be an undesirable event for European factories. Respondents from the European Parliament claim that the use of slabs of Indonesian origin as the basis for the production of coils and lower prices for scrap metal may help to maintain the profits of some manufacturers. However, low selling prices reduce their profitability.
Meanwhile, inventories are rising due to a combination of low demand and a reduction in export business in the United States following the March 12 imposition of 25% Section 232 import duties. Changes to EU import guarantees in recent weeks have done little to reduce imports.
The UK plans to introduce its own CBAM scheme in 2027. The EU and the UK have agreed to work towards consolidating their emissions trading systems, effectively freeing supplies between them from CBAM-related costs and administrative burdens.
Factories are under pressure from prices
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