CBAM to Add Complexity and Costs to Steel Trading from 2026

Steel 

Europe’s carbon adjustment rules set to reshape import economics and supply chain coordination

The European steel sector faces mounting uncertainty as the Carbon Border Adjustment Mechanism (CBAM) inches closer to full implementation, with significant cost implications for steel importers starting in 2026. Discussions at Italy’s Made in Steel exhibition, as reported by Fastmarkets, highlighted widespread concern about industry readiness.

CBAM Timeline and Financial Impact

CBAM is scheduled to take effect on January 1, 2026, but the financial liabilities from the mechanism will be enforced starting May 2027, said Alexander Julius, President of Eurometal, the European Steel Distributors Association.

Julius explained that the EU’s digital platform for certificate trading is not yet operational, prompting the delay in fiscal enforcement. However, postponing payment does not alleviate the financial burden—importers must pay retroactively in 2027 for all CBAM-linked goods imported in 2026.

The initial compliance burden will be low—only 2.5% of emissions costs must be paid in 2026—but this will rise to 100% by 2034. The estimated carbon-related cost in 2026 is €56/t, with carbon prices indexed to the EU ETS.

Scope of CBAM and Supply Chain Implications

Importers must register on the EU’s CBAM platform and file declarations for Scope 1 and 2 emissions, with Scope 3 emissions to follow later. Non-EU suppliers will also be expected to register their production facilities, and emissions data will be independently verified by EU-accredited certifiers.

Around 100,000 companies may be granted CBAM purchasing rights, according to Julius.

“Much closer cooperation will be needed among importers, processors, and end-users,” Julius said. “Contracts must begin including emissions tracking, digital reporting tools, and pre-coordination throughout the supply chain.”

Call for Flexibility and Wider Concerns

As various European sectors grapple with the looming carbon costs, Ukraine's industrial associations, including Ukrcement and the National Association of Extractive Industries, have urged the EU to delay CBAM enforcement for Ukraine. GMK Center estimates Ukraine could lose $7.2 billion in GDP by 2030 under the current framework.