The launch of the EU’s Carbon Border Adjustment Mechanism (CBAM) has so far had a limited impact on steel prices, with only modest increases recorded in the opening weeks of 2026, according to market data from MEPS International.
MEPS reports that its Europe Average price across all coil products rose by €13 per tonne in January, while long products increased by €9 per tonne. Many market participants suggest these gains are insufficient to offset the additional emissions-related costs now faced by both importers and domestic producers.
Ordering activity remains subdued, particularly on the import side. EU buyers are still assessing the European Commission’s long-awaited publication of country-specific default emissions values, released on December 17, which are used to calculate CBAM liabilities when verified mill data are unavailable. Several respondents described the default values applied to major steel-exporting countries as “punitive”.
Using those default emissions factors and an EU carbon price of €90 per tonne under the Emissions Trading System (ETS), MEPS estimates CBAM costs of around €115 per tonne for Turkish hot rolled coil, €125 per tonne for Ukrainian material, and as much as €295 per tonne for Indian-origin HRC. Similar disparities are evident in long products, with Turkish rebar attracting an estimated CBAM charge of €105 per tonne, while Egyptian and Norwegian rebar could face costs of around €305 per tonne.
These calculations are sensitive to carbon pricing, which remains volatile. CBAM charges in 2026 will be based on the quarterly average ETS price. However, ETS prices are already rising, increasing pressure on both importers and EU producers. After standing at around €84 per tonne in mid-November, the ETS price climbed to €92 per tonne by late January – up 57% since April 2025. MEPS forecasts carbon prices could reach approximately €120 per tonne by 2030.
Domestic steelmakers are also being drawn more deeply into the carbon cost regime. As part of CBAM implementation, free ETS allowances will be reduced by 2.5% in 2026, followed by steeper cuts in subsequent years, culminating in the full removal of free allocations by 2034. So far, only a limited number of mills have explicitly reflected these rising costs in their price lists, typically indicating carbon surcharges of €30–35 per tonne in January. As a result, much of the recent price uplift is expected to be absorbed internally rather than passed on to customers.
In parallel, market participants increasingly see the future of EU steel pricing being shaped more by trade policy than by CBAM alone. Many buyers expect the replacement of existing EU safeguard measures – which expire at the end of June – to provide stronger support for domestic prices. Several quarterly import quotas were already filled in the first days of January, including India’s 222,830-tonne hot rolled coil quota, despite the prospect of high CBAM charges.
Some large traders and Asian producers are offering steel on a delivered-duty-paid basis, incorporating projected CBAM costs into prices. This strategy reflects expectations that once actual mill emissions are verified, CBAM liabilities will be significantly lower than those implied by default values. However, uncertainty remains over timing. The European Commission is expected to publish a list of approved emissions verifiers in the third quarter of 2026, after which the verification process can begin.
For now, MEPS concludes, the “definitive phase” of CBAM is characterized less by immediate price disruption than by unresolved uncertainty around carbon costs, verification procedures, and the interaction between CBAM and existing trade defense instruments.