Chinese steel enterprises to face rising costs as EU CBAM comes into full force

• Default values may raise compliance costs
• Accurate emissions reporting critical

Mysteel Global: Chinese steel enterprises will face rising costs and complex compliance requirements as the European Union’s (EU) Carbon Border Adjustment Mechanism (CBAM) moves into full implementation in January 2026, according to Gao Huan, chief operating officer of CarbonEase, a Chinese carbon solutions provider for manufacturing industries.

Speaking at a sub-forum during Mysteel’s annual conference held in Shanghai over 19-21 December, Gao highlighted the implications for Chinese steel producers and exporters.

CBAM, introduced in 2021 to address “carbon leakage” and ensure fair competition, initially covers high-carbon sectors including cement, iron and steel, aluminium, fertilizers, electricity, and hydrogen. During the transitional period from 2023 to 2025, exporters only need to report carbon emissions, while full compliance and tax payments will begin in 2027.

Although the legal responsibility for reporting and payment lies with European importers, Chinese steel enterprises must provide accurate carbon emissions data, which also plays a key role in cost allocation negotiations with EU importers, Gao said.

He noted that relying on EU default emission values rather than actual measurements could lead to substantially higher CBAM costs for Chinese steel enterprises, potentially undermining their competitiveness in the EU market.

Gao emphasized that Chinese steel manufacturers and exporters must act immediately to enhance carbon accounting, improve production efficiency, and adopt low-carbon measures such as green electricity, waste recycling, and other emission reduction technologies.

Establishing close collaboration with EU importers for accurate quarterly reporting is critical. Furthermore, Chinese steel enterprises should monitor changes in EU CBAM rules and carbon pricing trends to anticipate cost pressures and adjust strategies proactively.

With CBAM entering full implementation in 2026, systematic carbon management, precise emissions calculation, and proactive low-carbon transformation will be essential for Chinese steel producers and exporters to maintain competitiveness and manage future export costs in the EU market, Gao concluded.

Note: This article has been written in accordance with a content exchange agreement between Mysteel Global and BigMint.