The EU Emissions Trading System (ETS) has entered Phase IV, which has seen further tightening of the regulations for EU steel mills. Meanwhile, CO2 allowances have been trading on the ETS at prices of almost €100/t of CO2, and the Fit for 55 package implemented by the European institutions will phase out free allowances for the EU steel industry by 2034 and likely drive ETS prices further upwards. All these developments will have profound consequences for European integrated steel mills, but also for mining companies and other suppliers to the EU steel industry. In addition, the Fit for 55 package will see the introduction of a Carbon Border Adjustment Mechanism (CBAM), which in the future will require foreign steel mills exporting steel to the EU and EU importers importing steel to report their embedded emissions and pay charges based on the ETS system. Furthermore, iron ore pellets exported to the EU will also become subject to the CBAM, which will have key implications for iron ore pellet exporters.

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