Chinese Steel Loses Price Advantage in Europe under CBAM

CBAM Impacts on Chinese Steel Competitiveness in Europe

The CBAM (Cross-Border Carbon Adjustment Mechanism) will eliminate Chinese steel’s price advantage in Europe by 2026. Jingzhe Liu of Jingzhe Environment & Climate forecasts that the carbon costs for Chinese hot-rolled coil (HRC) will increase by about €65 per ton. This reflects direct emissions exceeding the EU benchmark of 1.494 tons CO2 per ton of steel. Meanwhile, European buyers will face higher import costs, reducing demand for low-cost Chinese steel and reshaping market dynamics.

Indian steel exports will see an even higher cost increase of €85/t due to elevated emissions per ton. In contrast, Turkish steel producers using electric arc furnaces will face only €12/t additional costs, making their imports more competitive in Europe. As a result, CBAM incentivizes lower-emission steel production and shifts import advantages toward cleaner producers.

Future Outlook: Chinese Steel and the Carbon Market

By 2027, rising carbon prices (~€120/t CO2) and further reductions in free allowances will push CBAM-related costs for Chinese steel above €80/t. This will completely eliminate the European price edge of Chinese steel, leaving the window of opportunity only for 2026 and 2027. Meanwhile, the EU-China-Brazil coalition formed before COP30 aims to harmonize carbon market standards, potentially impacting long-term steel trade and regulatory compliance.

The implementation of CBAM signals a global shift in steel trade economics, linking environmental performance directly to competitiveness. Steel producers with lower emissions or cleaner production technologies will gain market share in Europe as high-emission imports face higher costs.

SuperMetalPrice Commentary:

CBAM fundamentally alters the European steel market, penalizing high-emission imports from China and India. SuperMetalPrice expects Turkish and European electric arc furnace producers to gain a competitive edge. Investors and trading companies must account for CBAM payments when evaluating import strategies, as carbon costs will increasingly shape global steel pricing and supply chains.