With less than four months until the UK’s Carbon Border Adjustment Mechanism (CBAM) comes into force on 1 January 2027, the steel supply chain is entering its final quarter of preparation. For traders, importers and manufacturers alike, the mechanism marks one of the most significant regulatory shifts the industry has faced in years.
What CBAM Means for Steel
CBAM is designed to place a carbon price on imported goods, including steel, that reflects the emissions associated with their production. The aim is to prevent “carbon leakage”, where manufacturing shifts to countries with weaker climate policies, and to support a more level playing field between UK producers and overseas suppliers who are not subject to equivalent carbon costs.
In principle, the objective is widely supported across the industry. In practice, the transition into a live CBAM regime is proving far more complex, particularly for businesses that operate on long lead times and forward commitments.
A Regime Still Taking Shape
As the fourth quarter begins, several critical pieces of guidance remain outstanding. Default emissions values, verification requirements and the detailed mechanics of how the CBAM charge will be calculated and applied are still being finalised. For an industry that typically agrees pricing and terms many months ahead of delivery, this leaves a considerable gap between commercial decision-making and regulatory certainty.
Steel bought and shipped today may not land in the UK until well into 2027, by which point CBAM will already be live. Businesses are therefore required to price and commit to contracts without a complete picture of the emissions-related costs that will ultimately apply.
Uncertainty Layered on Uncertainty
This is not a new dynamic for the sector. Throughout 2026, businesses have already had to navigate significant uncertainty around import quota volumes and safeguard duties. CBAM adds a further layer of complexity at a time when the market is still adjusting to those earlier changes.
For traders in particular, this creates a genuine commercial challenge. Contracts require a fixed or forecastable price, yet a core component of that price, the emissions cost payable on arrival, cannot currently be calculated with confidence. The result is that pricing decisions are increasingly being made on the basis of intelligence-led forecasting rather than confirmed figures.
Preparing Without Full Clarity
Despite the outstanding guidance, businesses across the supply chain are using this final quarter to prepare as far as possible. This includes reviewing supplier emissions data, engaging with customers on how CBAM-related costs may be reflected in future pricing, and building flexibility into contracts wherever it can be achieved.
The direction of travel is clear, even if the detail is not yet complete. What the market now needs, with just months remaining, is confirmation of the outstanding figures and guidance in good time to allow businesses to plan with confidence into 2027.
Almet Trading’s View
One of the biggest challenges facing steel traders today is UK CBAM, which comes into force on 1 January 2027.
We are already negotiating and committing to steel orders today that may not arrive in the UK until 2027 – yet we still don’t have the final default emissions values and all of the detailed guidance needed to accurately calculate the CBAM cost. How do you agree a fixed price with a customer today when the ’emissions cost’ payable when the steel arrives may be unknown?
For a trader, that creates a very real commercial problem as we have to proceed based on intelligence-based forecasts. The supply chain therefore needs to proceed based on uncertainty, which has already been the case during 2026 with the lack of certainty around import quota volumes.
This is not simply a trading issue. Ultimately, that uncertainty has to be managed somewhere within the supply chain.
We continue to support the principle of a level playing field between UK and overseas steel producers. But if the objective is to encourage investment and maintain secure, competitive supply, businesses need clarity early enough to make commercially responsible decisions.
With CBAM only months away, certainty should have already been provided.