A proposed Europe’s Carbon Border Adjustment Mechanism (CBAM) tax will likely affect Brazilian steel exports, according to a media report by Folha.
The mechanism is expected to be introduced in Europe in the next few months. It’s currently under analysis and a report should be voted in May.
A recent report by the United Nations Conference on Trade and Development (UNCTAD) showed Brazil ranks as the eighth most exposed country to the CBAM mechanism.
Russia ranks first, followed by China, Turkey, the UK, Ukraine, South Korea, and India.
Brazilian steel is the nation’s most vulnerable product under the CBAM mechanism. The tax over Brazilian steel exports could reach $3.3 per mt.
Gustavo Pinheiro, coordinator of the economy area of low carbon impact at the Climate and Society Institute, ICS, said the European market will demand high quality and more sophisticated products.
If Brazil stops targeting steel exports to Europe due to the CBAM mechanism, it could lose an opportunity to produce products with a higher added-value, Pinheiro said.
In October 2021, a Brazilian minister wrote an opinion article criticizing the mechanism.
Constanza Negri, foreign trade manager at the Brazilian Confederation of Industries, CNI, the mechanism will increase export prices and will demand adequation costs for Brazilian companies.