Oct 10, 2023
CBAM risks creating two-tier market: Assofermet meeting

The Carbon Border Adjustment Mechanism (CBAM) needs a major review. Its implementation in the current form will create two parallel markets, a high-end steel market of EU product made in an expensive sustainability policy environment, and a consumer market outside of Europe, says the founder of consultancy T-Commodity.

Speaking at last week’s meeting organised by Italian steel trade association Assofermet in Rome, Gianclaudio Torlizzi said the right conditions do not exist to impose European green steel standards uniformly across all countries of the world.

Volatility is a key aspect of the post-pandemic market. “Today, companies find themselves operating in a completely different market than the one we were used to until a few years ago … We are witnessing new difficulties in business, and creating long-term strategies becomes particularly complex,” Torlizzi observed.

The event focused on sustainability and new challenges. “The theme of the conference underlines how much the green wave is changing the way of life and the way of doing business,” Assofermet says in a note obtained by Kallanish.

“For those who deal with steel, decarbonisation is an economic-financial and technological commitment strongly influenced by the political context,” notes merchant bar maker Beltrame’s chief commercial officer, Enrico Fornelli.

The CBAM mechanism could lead to an increase in steel import prices of around 15%. It currently applies only to some steel products, which impacts end-users and downstream companies, exposing them to unfair competition with importers of competing finished products who would face no restrictions or taxation, Assofermet stated last month.

If not radically revised, it risks undermining the competitiveness of an important part of the EU manufacturing sector.

The transitional CBAM period will expire on 31 December 2025. Until that time, buyers will have to fulfil only a part of the mechanism’s regulations. Assofermet hopes that before the start of the definitive period, on 1 January 2026, the EU will be able to modify the measure to reconcile the environmental transition with the economic consequences that arise from the implementation of the EU Green Deal and Fit For 55.

Natalia Capra France

Source: Eurometal