Davis Index: Market Intelligence for the Global Metals and Recycled Materials Markets

Tata Steel Europe has added a carbon surcharge of €12/mt to new steel sales across all steel products in the EU and UK to compensate for the carbon allowance expense. 


The surcharge is close to the cost of emissions credits for Tata. The steelmaker produced 1.98/mt of emissions per mt of crude steel produced in FY2020, according to media reports.


The additional carbon emissions surcharge comes in a period of high worldwide hot-rolled coil prices (HRC), including the EU, and given the high demand and limited inventories, buyers have few options but to absorb the additional cost. Mills face higher production costs both in regards to strong raw material prices and emission rights access. 


Revenue from surcharges will be invested to improve steel production towards lower pollution technology. Carbon allowance costs have increased ten-fold from €4/mt to up to €42/mt in March 2021. Carbon allowance prices are forecast to be about €100/mt by 2030.


Tata Steel has pledged to reduce its carbon emissions footprint by 40pc by 2030 and down to carbon neutral by 2050. The application of the surcharge is expected to be followed by other regional producers. 

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