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| EU Carbon Border Adjustment Mechanism HRC |
Discounted Imports Reflect CBAM Cost Expectations
Traders are offering imported hot-rolled coil (HRC) at discounts to the north EU HRC index inclusive of CBAM. Indian HRC trades at €10/t below the May 2026 monthly average, while Indonesian material is offered at even steeper discounts. These discounts suggest traders expect CBAM costs to be absorbed into domestic pricing rather than paid at default values. As a result, domestic material may retain a premium, making marginal tonnes from local mills more valuable under the EU carbon border adjustment mechanism.
Shift to Delivered Duty Paid Terms
Meanwhile, increased CBAM complexity drives buyers towards delivered duty paid (DDP) contracts, transferring duty risk to traders. DDP offers have risen from €570/t to €600–620/t recently, reflecting higher default values and expectations of price growth in early 2026. Traders are actively adjusting offers to account for carbon costs and safeguard revisions, which affects pricing dynamics and import strategies.
CME Trading Volumes Signal Market Activity
Consequently, trading on the north EU HRC contract at CME Group has accelerated. A 15,000t deal for Q4 2026 traded at €684/t on 16 December, considered an attractive purchase. Weekly volumes rose to 36,700t from 11,260t the previous week. This activity indicates that the market is actively pricing in CBAM expectations and DDP adjustments, while importers seek to balance costs and regulatory compliance.
ScrapInsight Commentary
CBAM is reshaping NW EU HRC trade by increasing import costs and domestic premiums. Traders leverage DDP offers to mitigate duty risk, influencing margins. Market participants should monitor carbon-adjusted pricing closely, as it will affect both European supply chains and global HRC flows.
