STEEL + TECHNOLOGY 01/2020 EXTRACT

66 | STEEL DISTRIBUTION
EU emission trading scheme
Will carbon border tax adjustments
represent a new frontier in trade policy?
The EU ETS scheme is fundamentally altering the economics of metals and fertilizer production in Europe. The
current pathway is unsustainable, amid high costs, weak market conditions and intensifying international
competition.
In this context, the EU Commission is
planning to impose carbon border tax
adjustment (CBTA) – a tariff levied on
carbon emissions embodied in imported
goods into the EU – to “level the playing
field”. Such measures have significant
potential to redraw the competitive landscape
for these strategically critical
industries. But their ultimate impacts are
highly uncertain and substantively
dependent on policy and market specificities.
What does is mean for your business?
European metals markets under
pressure with a fundamental
policy shift seeming likely
The EU ETS scheme is fundamentally
altering the economics of metals and
fertilizer production in Europe. The European
carbon price has rallied to over €25
a tonne of carbon dioxide (CO 2 ), and is
set to rise higher in the longer term, fundamentally
altering the economics of
metals and fertilizer production in
Europe.
With metal production costs in
Europe – already high by international
standards in many cases – rising faster
than among producers in competing
jurisdictions, the future of much of the
European metals industries looks uncertain.
It is likely that further policy reforms
will be required to ensure sustained
industrial activity in a higher carbon
price world.
The EU Commission is planning to
impose CBTA to “level the playing
field”. The new president of the EU
Commission, Ursula von der Leyen,
has made no secret of her plan to introduce
a CBTA (a proposal that has long
had support of powerful European
stakeholders, including the French
authorities). Officials are now understood
to be drafting guidelines for
potential carbon tariffs on steel,
cement and power industries. Aluminium,
copper and other base metals are
also likely to fall under the eye of the
policy makers.
About he authors: CRU offers unrivalled
business intelligence on the global
metals, mining and fertilizer industries
through market analysis, price assessments,
consultancy and events.
Since its foundation by Robert Perlman in
1969, CRU has consistently invested in
primary research and robust methodologies,
and developed expert teams in key
locations worldwide, including in hard-toreach
markets such as China.
CRU employs over 280 experts and has
more than 11 offices around the world, in
Europe, the Americas, China, Asia and
Australia. The office in Beijing opened in
2004 and Singapore in 2018.
• Ben Jones, CRU Managing Consultant
News brief
Metalshub adds long-term contracts to services
Metalshub, the digital platform for buyers
and sellers of metals and ferroalloys,
has launched a new feature enabling
long-term contracts in addition to spot
transactions.
The new feature of the trading platform
provides two new elements that simplify
negotiations for long-term contracts.
First, the multiple deliveries feature enables
buyers to specify the total quantity
of material with the possibility to include
volume optionality. Second, the new
index-based contract feature allows buyers
to choose from multiple indices in
the market and thus define the index
they want to base their contract price
on.
20 months after launch, more than
600 producers, consumers and traders of
commodities from over 50 countries have
registered, including industry leaders
such as Outokumpu, Saarstahl, Gerdau,
Traxys, Euromet, Hempel Intermétaux,
Rio Tinto, Glencore and Anglo American.
To date, over 2,500 negotiations have taken
place on the platform and the volume
of concluded binding contracts has
reached US$ 90 million. The platform currently
offers 17 product categories;
boron, chrome, cobalt, copper, manganese,
molybdenum, nickel, niobium,
phosphorus, pig iron, recarburiser, silicon,
sulphur, tin, titanium, tungsten and
vanadium, each metal with multiple subcategories.
By enabling long term contracts, Metalshub
expands its services and is taking
another step towards the team’s vision: To
reduce transaction costs for commodities
which are not traded over a liquid
exchange.
• Metalshub
STEEL + TECHNOLOGY 2 (2020) No. 1