Indian steel producers are most at risk from Europe’s new carbon tax due to their high sales in the region and mills’ elevated emissions intensity, a report of Goldman Sachs said on Friday, February 16.
According to the report, there is a potential for an additional $102-190/mt in tax charges on flows of Indian steel to Europe over the next decade, with the range assuming a carbon price of $70/mt or 15 percent to 28 percent of current hot rolled coil (HRC) prices.
Europe’s Carbon Border Adjustment Mechanism (CBAM) aims to subject imported goods such as steel to a levy to ensure its own strengthened pollution standards are not undermined by trading partners.
Indian steel producers operate at a carbon intensity level well above the EU and global level, potentially exposing them to elevated charges, as they rely mainly on coal-based processes, the report said.
Indian mills have been among the most vocal about the potential impact of the tax, dubbing it a “trade barrier,” and New Delhi has been in discussions with the EU for concessions.