The merchant slab market totalled around 25 Mt in 2025. Russia, Brazil and Iran were the top three exporters, while the main importers were Mexico, Tukey and the USA. Over the past few years, the slab market has changed significantly – Iran filled the position previously occupied by Ukraine before the war, Brazilian merchant slab supply fell and the introduction of CBAM drew more interest into slab imports to the EU.
The recent conflict in the Middle East, combined with stronger demand from Europe, has led to current market tightness and higher prices.
CBAM advantage over ETS costs has triggered EU interest in slab imports
The introduction of CBAM this year has increased interest in slab imports among EU flat steel producers, particularly for Brazilian slab. While slab imports are not subject to safeguard import quotas, emissions costs can be significantly lower than those associated with ramping up domestic production.
Incremental crude steel production in the EU incurs ETS costs for the CO2 emissions generated. Assuming a €75/t CO2 price and 2 tCO2/t steel for emissions intensity for the BF-BOF route, ETS costs for BF-based slab production in the EU amount to €150/t. By contrast, in 2026, imported Brazilian slab faces a CBAM default value (i.e. worst-case scenario) of 1.771 tCO2/t versus a benchmark of 1.364 tCO2/t, implying a CBAM cost of around €30 /t. It is therefore unsurprising that Brazilian slab exports to the EU have surged so far in 2026.
Conflict in Iran adds risk to ~2 Mt/y slab exports
Since the start of the Ukraine war in 2022, Iran has moved up in the ranking to become the world’s third-largest slab exporter. The country has steadily supplied around 2 Mt/y of slab to the global market, particularly to Southeast Asia and China. Low production costs, supported by domestic availability of natural gas and iron ore, together with efficient infrastructure, have helped some Iranian mills position themselves in the export market.
Khouzestan Steel Company’s asset Ahwaz – helped by its proximity to Imam Khomeini port – is the largest exporter of semi-finished steel in Iran, and Hormozgan Steel Company, near Bandar Abbas port, is another major exporter. Recent targeted attacks on Khouzestan Steel assets, along with other war-related implications, have added significant risk to the continuation of Iranian slab exports.
Other exporters could fill a gap, but price incentives will be needed
If Iranian slab exports decline, we expect the slab market to tighten quickly. Among the top exporters, Russia is better positioned to increase exports, as Brazilian supply is largely tied up in internal transactions. Since the two merchant slab producers in the country – Companhia Siderúrgica do Atlântico and Companhia Siderúrgica do Pecém – were acquired by Ternium and ArcelorMittal, respectively, Brazilian slab exports have become increasingly focused on captive flows, with slab being used in their own rolling mills in Mexico, the USA and the EU.
Other slab exporters could fill a gap left by lower Iranian exports, though the price spread between slab and finished products will be key to incentivise such exports. Possible substitutes for Iranian slab include:
- China – Although China has been a major destination for Iranian slab exports, we believe the country could both import less and export more slab in response to changing market conditions. China has been increasing semi-finished steel exports significantly. In 2025, Chinese slab exports increased by 95% y/y to 1.5 Mt, with Italy and other EU countries as the main destinations. While increasing exports to the EU is challenging due to the CBAM costs and other trade barriers, higher exports to other Asian countries could be more likely in the absence of Iranian supply.
- India – Indian slab exports more than doubled y/y in 2025, from 0.3 Mt to 0.7 Mt. However, most of the additional volume was attributed to intercompany trade between Tata Steel assets in India and the UK. As Indian slab capacity is integrated with rolling lines, a significant increase in slab exports would represent a reduction in flat products output. This would only make sense if the price spread between slab and finished products narrowed considerably and/or trade barriers could be avoided.
- North and Southeast Asia – In Southeast Asia, Vietnam and Malaysia are slab net exporters. Similarly to India, slab exports in the region are made by finished steel producers, so increasing slab exports from Southeast Asian mills would require a price advantage over finished steel. In Northeast Asia, Japan is a relevant slab exporter, but relatively high production costs and decarbonisation targets will limit growth in slab production and exports from the country.
- Domestic supply growth in Europe and North America – New slab capacity started up in the US in 2025 and will start up in Mexico in 2026, replacing imports. As a result, slab net imports into North America will fall by around 30% y/y this year.
In Europe, we expect cost advantages to continue driving demand for slab imports in the short term. However, with a ‘melted and poured’ clause likely to be incorporated into the EU’s new safeguard system in July 2026, the value proposition of domestic slab production will improve. In fact, two BF restarts were announced recently in France and Italy to support the increasing demand for domestic production. Nevertheless, further restarts are less likely given high financial and operational liabilities. As a result, any increase in European domestic slab supply will be limited, and slab imports will remain necessary.
Implications for slab and flat products prices
Steel flat products prices started 2026 on an uptrend in most markets, supported by trade barriers and a slight improvement in demand. Slab export prices have also increased so far this year, supported by additional demand from Europe and supply limitations.
The possibility of Iranian supply disruptions, along with stronger demand, will add upward pressure to slab prices in the short time. However, higher slab prices will not necessarily be passed on to flat product prices, particularly because price spreads between flats and slab have widened since 2025 Q4, indicating there is still room to absorb additional slab costs in flat product prices.
