The definitive phase of CBAM, which commenced from the start of 2026, requires EU stainless steel importers to report and pay for embedded CO2 emissions. The absence of a fully functioning third-party verification system has forced importers to rely on high default values or significantly cut imports. Our analysis shows that reporting actual emissions would significantly reduce costs of CBAM stainless steel for most Asian exporters, incentivising importers to declare CBAM actual emissions and reduce their carbon footprint. While CBAM provides short-term benefits to European mills through higher prices and reduced import competition, the long-term impact is negative as rising costs will shrink the addressable market and drive end-users outside the EU.
The definitive phase of CBAM has started
As the definitive phase of CBAM started on 1 January 2026, importers of stainless steel into the EU must report embedded emissions and pay for those in 2027. Importers must declare CBAM actual emissions, verified by an accredited third party, or use country-specific default values defined by the European Commission.
The current framework for CBAM stainless steel requires submission of direct emissions linked to production, supplemented by emissions from relevant precursors such as nickel and chrome. These requirements were anticipated, as importers have been encouraged to report emission values since the start of the CBAM Transition Period (1 October 2023), although without independent verification or payments.
CBAM regulation will impact most of EU stainless imports
Imports play a significant role in the European stainless steel market. CRU estimates that stainless imports accounted for 25–30% of total market supply over the last five years. Imports of flat-rolled stainless steel (CRC, PMP, HRC) into the EU are dominated by material from Asia including South Korea, Taiwan (China), India, Vietnam, Indonesia and China. Imports of semi-finished slab into the EU are almost equally divided between the UK and Indonesia. UK slab imports into the EU are part of Marcegaglia's internal operations, as the company combines a UK-based melt shop with EU-based rolling assets. Most Asian rolled stainless imports into the EU are CRC, with Asian mills supplying 71% of total EU CRC imports (9M 2025, GTT).
The existing CBAM framework encourages importers to declare actual emission values to avoid high cost options of default values. However, importers do not yet have access to fully functioning third-party verification services, forcing them to either rely on default values or minimise their exposure to imports altogether.
We analysed the new set of CBAM documents published by the European Commission in December 2025. The documents contain benchmark and default values for CBAM stainless steel products from individual countries, enabling us to estimate the cost of CBAM liabilities for key exporting countries.
Our analysis indicates that imports from Taiwan (China) – a leading supplier of rolled stainless steel to the EU – will be most significantly affected. The import quota for CRC and strip from Taiwan (China) were filled by 6% while the same quota was filled by 100% in the first few days of 2024–25. The European Commission set default values for Taiwan (China) at levels very close to those for Indonesia – a country with very high CO2 emissions. This allocation likely reflects the assumption that most Taiwanese (China) stainless steel is rolled from Indonesian stainless semis. These high default values will incentivise Taiwanese (China) importers to disclose actual CO2 emissions and motivate local mills to reduce their carbon footprint.
Reporting CBAM actual emissions will be beneficial for most stainless importers
As the verification process for actual emissions becomes clearer, we modelled CO2 emissions for selected stainless steel producers. The CBAM regulatory framework considers stainless steel a complex good. Calculating CO2 emissions requires accounting for both direct emissions generated during production and emissions embedded in precursors used in the production process.
Total Emissions = Direct Emissions + ∑ (Embedded Emissions of Precursors)
For CBAM stainless steel, this means summing direct production emissions with emissions from key raw materials – nickel and chrome. We modelled a standard EAF mill using the CRU Emissions Analysis Tool with varying nickel sources (Brazil, New Caledonia, Indonesia) as the highest emission-intensity component.
Our model assumptions include 100% ferrous scrap and primary alloys, based on CRU Nickel Market Outlook and CBAM publications on nickel and chrome (see our latest Chrome Market Outlook here or request a demo here).
Our analysis indicates that CO2 emission costs for producing austenitic stainless steel (CR 304) using nickel-bearing material from Brazil (€141 /t) or New Caledonia (€160 /t) would be significantly lower than the lowest default values among key exporting countries, such as Japan (€311 /t).
Switching to Indonesian Nickel Pig Iron (NPI) as the primary nickel source raises emission costs substantially to €380 /t, but this remains below default values for China, India, Taiwan (China) and Indonesia (€572–904 /t). This cost differential should incentivise producers in these countries to record and declare CBAM actual emissions and increase their use of stainless steel scrap to reduce their carbon footprint. Switching to scrap-based sources will reduce CBAM cost significantly.
For ferritic stainless grades (CR 430), our analysis reveals an even larger gap between modelled emissions (€91-100 /t) and default values (€311 /t and above). Despite ferritic grades having little or no nickel content, CBAM default values do not differentiate between austenitic and ferritic grades. This creates an additional incentive for ferritic stainless steel importers to declare CBAM actual emissions.
European CBAM stainless steel industry: Short-term gain but long-term pain
The definitive phase of CBAM has imposed additional financial and administrative costs on importers. With complications in declaring and verifying CO2 emissions, importers have been forced to rely on default values. European buyers initially responded by shifting from imports to domestic supply, which increased lead times and improved capacity utilisation at European mills.
This shift supported higher prices as domestic mills capitalised on declining import volumes. However, weak European demand capped price increases at €40–50 /t monthly (CRU clients can access the latest Stainless Steel Flat Product Monitor for more information. If interested, request a demo here). We forecast continued upward price movement, supported by tightening supply until prices reach equilibrium, with CBAM-bearing imports once emission verification becomes available.
Our analysis suggests that once actual CO2 emissions can be reported, Asian stainless exports to Europe on a DDP basis will trade at a €100–110 /t discount to European domestic prices (EXW), returning to historical levels.
CBAM's long-term impact on the European stainless market is likely to be negative unless the regulation extends further downstream. While rising prices will benefit domestic mills and distributors in the short term, they will inevitably shrink the addressable market as end-users reconsider their manufacturing locations. The home appliances sector has already experienced significant competitive pressure from imported products, particularly from Turkey and China.
Our CBAM projections and analysis are underpinned by detailed knowledge of Stainless Steel, Chrome and Nickel sectors, supplemented by CRU Sustainability carbon price forecasts and a technical understanding of CBAM regulations. If you would like to explore the analysis in more detail, contact us here.
