EU Steel Competitiveness Faces Pressure as ETS, CBAM and Import Tariffs Reshape the Market

At Ecomondo 2026 in Rimini, Italy, siderweb and RICREA - the Italian national consortium for the recovery and recycling of steel packaging - held a conference on November 5 titled “ETS and CBAM: What Are the Implications for Raw Materials and Steel?” Participants examined how EU climate and trade policies could reshape Europe’s steel market in the coming years, affecting production costs, steel prices, and competitiveness across the value chain.

As the Carbon Border Adjustment Mechanism (CBAM) enters its definitive phase on January 1, 2026, and free allowances under the EU Emissions Trading System (EU ETS) are gradually phased out through 2034, these measures aim to drive industrial decarbonization and reduce the risk of emissions-intensive activity shifting to countries with weaker environmental rules.

EU Steel Faces Tighter Import Rules

At the conference, the regulatory framework presented for the EU’s trade measures included a new tariff-rate quota system designed to protect domestic steel production. Import quota volumes would fall by approximately 47 percent compared with those under the previous safeguard system, while the out-of-quota duty would rise from 25 percent to 50 percent. The framework also introduces a melt-and-pour requirement: importers must identify and certify the country where the steel was first melted and poured, improving traceability. These measures come amid rising carbon costs.

Stefano Ferrari, head of Siderweb’s research department, said that if demand remains strong enough, reduced competitive pressure from imports could support EU steel prices, producers’ margins, and capacity utilization rates. However, potential gains must be weighed against higher energy costs, growing carbon-related expenses, and the substantial investment needed to adopt low-emission steelmaking technologies. 

Rising Steel Costs Threaten EU Competitiveness

Rising steel prices may put European distributors, steel service centers, and manufacturers that rely on steel as a raw material at a disadvantage compared with competitors outside the EU. At the panel discussion, Paolo Sangoi, CEO of Sangoi Group and president of Assofermet Acciai, said distributors were increasingly concerned that the additional costs created by the new measures would have to be passed on to customers. Whether end users can absorb those increases remains uncertain, particularly when finished goods from third countries are not subject to comparable requirements. Sangoi urged the EU to adopt policies that bolster industrial production and consumption, cautioning that the added costs could accelerate the relocation of manufacturing activities outside Europe.

• Steel buyers are increasingly distinguishing conventional from low-emission products, with greater attention to carbon footprints, product origin and traceability.
• Demand for sustainability-related information and supply chain transparency continues to grow, making reliable, verifiable emissions data increasingly important for steel producers.
• Isabella Manfredi, chief sustainability officer at Feralpi Group and president of Sustainability Makers, said decarbonization efforts continue despite revisions to certain EU regulatory requirements.
• Ferrous scrap remains strategically important to the European steel industry as electric arc furnace (EAF) steelmaking takes on a greater role in decarbonization.
• Italy imports approximately 7–8 million metric tons of scrap annually to meet the needs of its domestic steel industry, said RICREA president Domenico Rinaldini.

Decarbonizing Steel Without Losing Competitiveness

• Maintaining domestic scrap collection volumes and strengthening recycling activities are essential to securing raw material supplies and supporting the sector’s decarbonization targets.
• Rinaldini said the EU Packaging and Packaging Waste Regulation (PPWR) is expected to introduce changes to existing packaging management and extended producer responsibility systems.
• The economic viability of investments in low-emission steelmaking depends largely on sufficient demand from buyers willing to pay a premium for lower-carbon steel products.
• Discussions at Ecomondo underscored that the future of the European steel industry depends on balancing environmental objectives with economic sustainability.
• The effectiveness of the EU ETS, CBAM and tighter import measures will depend on protecting domestic production, reducing emissions, competitively priced energy, investment in new technologies and sustained industrial demand.
• The central challenge is advancing lower-emission steelmaking while preserving the competitiveness of European steel producers, distributors and downstream manufacturers.
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