The market believes that the current costs of the mechanism are underestimated throughout the supply chain

In 2026-2028, before the planned expansion of the cross-border carbon adjustment mechanism, there may be a significant risk to steel demand at the lower end of the supply chain.

This was discussed at a meeting between Eurometal and Assofermet Southern Europe in Milan, according to Argus Media.

Participants at the meeting suggested that the current costs of CBAM are underestimated throughout the supply chain.

Annual CBAM surcharges actually encourage imports of finished steel derivatives, said Piotr Sikorski, president of the Polish Steel Distributors Association. Although the mechanism is expected to be extended to lower-tier products in 2028, steel surcharges will have been in place for three years by then, which is likely to continue to make imports of derivatives more competitive.

Cinzia Vezzosi, president of Assofermet, writes SteelOrbis, noted that CBAM, created to restore competitive balance, risks becoming a burden on the distribution and processing sectors, which already operate in global markets and serve lower-level production. The competitive gap, in her opinion, could become structural, triggering deindustrialization.

Vezzosi called for a change in the pace of the European approach, consistency between the green transition and competitiveness. According to her, the industry is asking for environmental policy to be accompanied by an appropriate industrial strategy, and for the protection of production not to lead to the punishment of distribution and processing.

Eurometal President Alexander Julius reminded that the supply chain does not end with primary steel, and that the distribution and consumer sectors are crucial.

He stressed that the current combination of trade measures and environmental regulations, with rising costs and still unclear details, is creating a dangerous level of uncertainty. In his opinion, this affects not only companies’ accounts, but also their ability to plan and invest.

The president of Eurometal expressed concern that many companies are not ready for CBAM and only partially take these costs into account in their calculations, which may come as a surprise closer to the end of 2027, when it will be time to pay.

Participants at the event in Milan agreed that the speed of deindustrialization in the EU and the relocation of production remains a priority issue. Eurometal is preparing a pan-European initiative for joint action on this issue to strengthen cooperation between national associations.

In December, the EU announced the strengthening of the CBAM, adding a wide range of industrial goods to it, mostly those containing steel or aluminum. In total, there are 180 new products.