European Union (EU) is likely to impose additional tariffs on imported steel products which emit carbon during production, by 2026. The European Commission, Council of Ministers and the European Parliament have agreed to introduce the Carbon Border Adjustment Mechanism(CBAM).
However, variables such as application criteria, exemptions, free and paid quotas have not yet been finalised. South Korea’s electrical steel export volumes were recorded at 28.8 million tonnes (mnt) in 2021, out of which EU countries imported 3.03 mnt during the period. South Korea’s exports of electrical steel to Europe were at 3.31 mnt during January-November, 2022.
Furthermore, the scope and amount of allocation has not been finalised due to which it is difficult to predict the amount of damage. Also, detailed regulations on whether EU’s carbon border adjustment system will be implemented have not finalised.
If CBAM is implemented, followed by quota, then it is likely that there will be a certain level of cost burden and restrictions on export price competitiveness.
Note: This article has been written in accordance with an article exchange agreement between SteelDaily and SteelMint.
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