Some traders are starting to offer imported hot-rolled coils at various discounts compared to the HRC baseline for the northern EU Argus, which includes a carbon boundary adjustment mechanism (CBAM), suggesting that they do not believe they will have to pay by default. to get acquainted with the material.
This week, one trader offered the Indian HRC at a discount of 10 euros per ton to the monthly average of the Argus index for May 2026. CFR's Indian fixed price offers are around 470 euros per tonne, while April is currently trading at 665 euros per tonne under the CME Group's contract for the supply of HRC to Northern Europe, for which the Argus index is the basis for cash settlements. This means that the trader believes that he will not have to pay for the default material; the default cost in India is 4.7 tons, and the corresponding benchmark is 1.37, which means a CBAM cost of almost 270 euros per ton and a total cost of 740 euros per ton with a carbon price of 80 euros/t.
Another trader reportedly offered Indonesian material at a greater discount to the index for April delivery. The default cost for Indonesia of more than 9 tons, compared to the benchmark of 1.37 per ton, would mean that the carbon cost alone would be more than 617 euros per ton, which also implies that Indonesia will not pay the default cost. The company in question informed market participants that the intensity of direct emissions is about 1.2 tons.
. Unsurprisingly, traders expect CBAM costs to be factored into the domestic market price, as reflected in the Argus index. They also suggest that traders believe that domestic raw materials will retain an advantage over imported ones: at the recent Eurometal conference in Dusseldorf, some buyers suggested that domestic raw materials from one or two factories could actually become a marginal tonne as CBAM increases import costs.
The increased complexity of the import is mainly due to CBAM. and the revision of the EU's protective measures is steadily pushing the market to buy on duty-free terms, which means that buyers are not exposed to tax risk. As a rule, traders use it.
Most ddp proposals have grown in recent weeks in response to the flurry of leaked CBAM documents. A few weeks ago, traders offered about 570 euros per ton per day, but now these offers have mostly increased to 600-620 tons per day, reflecting higher default values and the expectation of price increases in the first quarter, which will allow traders to make more profit. Yesterday, we received a message about an offer from Asia for April-May.
