company news about The impact of EU "carbon tariff" on my country's steel exports

According to statistics from the Bureau of Statistics, my country's total steel output in 2021 will be 1.337 billion tons, and the export volume will be 66.9 million tons, accounting for 5% of the output. Among the export destinations, Southeast Asia, South America, Africa, the Middle East and other regions accounted for more than half, and the seven EU countries accounted for only 4%. In fact, after 2015, the EU imposed high tariffs on Chinese hot coils, thick steel plates and other steel products on the grounds of repeated anti-dumping, and the EU stipulated that the annual import quota for 26 types of steel in China was only about 2 million tons. Therefore, in recent years, China Steel exports to the EU plummeted. In terms of quantity, the further marginal reduction of exports formed by the EU's carbon tariffs has little direct impact on my country's overall steel demand.

In terms of varieties, my country's exports to the EU are mainly plates. In 2020, my country will export 980,000 tons of plated sheets, 530,000 tons of coated sheets, and 460,000 tons of galvanized sheets to the EU, accounting for more than 50% of the total. Stimulated by the recovery of steel demand after the epidemic, the EU sheet market price is relatively high, and my country's exports to the EU are mostly high value-added varieties, so the export unit price is higher and the overall benefit is better. At present, my country's policy orientation is to restrict the export of low-end products and encourage the export of high value-added products. In the long run, the EU's consumer market is indispensable to the upgrading of my country's industrial structure.

At present, the carbon emission of the long process in my country is about 1.8~2.2t.CO2/t.CS, and the carbon emission of the independent electric furnace is about 0.4~0.8t.CO2/t.CS. Since the exports to Europe are mainly plates and most of them are large steel mills, we calculate Baosteel's carbon emissions per ton of steel at 1.94 tons. According to the EU carbon price of 76.39 euros / ton on March 11, starting from 2026, if other prices are not considered According to the impact factor, the price of steel exported from China to the EU will increase by about 148.2 euros/ton, which is about 12% higher than the current EU CFR HRC price. According to estimates by the Energy Foundation, the implementation of CBAM will increase carbon tariffs of 2.6-2.8 billion yuan on my country's steel products.

However, for local steel companies in the EU, they will no longer receive free carbon emission allowances by 2035. Compared with the carbon emissions of steel mills in the EU, Baosteel has no significant difference in carbon emissions from blast furnaces of large steel manufacturers in the EU, and the carbon emissions per ton of steel are even lower than those of Tata and ArcelorMittal. Therefore, the impact of carbon tariffs on the increase in my country's steel export prices is almost the same as that of the EU's local steel companies. To this end, the EU has added a new article to the draft legislation to include shipping emissions into the carbon market, with obvious intentions for foreign steel companies. With the implementation of my country's "dual carbon" strategy, if the leading steel enterprises can further reduce carbon emissions per ton of steel, the excess profits generated will still have the opportunity to form a competitive advantage.