25/12/24
Viewpoint: CBAM to reshape Med cement trade flows
Viewpoint: CBAM to reshape Med cement trade flows
London, 24 December (Argus) — Europe's Carbon Border Adjustment Mechanism (CBAM)
is set to reshape seaborne cement and clinker trade flows from the eastern
Mediterranean and North Africa, diverting volumes away from the EU toward other
growing markets such as west Africa, the Middle East and parts of South America,
with exporters likely to lower fob prices to compete for new buyers. CBAM,
scheduled to begin on 1 January, will impose a charge on imported cement and
clinker with embedded carbon emissions above an established benchmark. The EU's
preliminary implementing acts published last week have set these benchmarks
lower than earlier proposals , which will likely mean higher CBAM costs for most
imports. If the policy is implemented as currently proposed, a grey Portland
cement producer from Egypt that has not had its emissions intensity verified by
the EU would be subject to a country default value of 1.419t of CO2 equivalent
(CO2e)/t of cement in 2026. This is more than twice the free allowance benchmark
value of 0.666t of CO2e/t, meaning an importer would owe a significant portion
of the EU emissions trading system (ETS) allowance price for each tonne of
cement. The ETS price now stands at more than €85/t of CO2e after rising earlier
this week to its highest level since 2023. Fob prices for Egyptian or Turkish
bulk cement are in the high $50s/t to low $60s/t, or roughly high €40s to low
€50s/t on a euro dollar basis. Not only do the CBAM costs eliminate the price
gap that has historically favoured suppliers from Turkey and North Africa
exporting into the EU, but there is also additional risk in taking these
imports.CBAM fees for next year's imports will not be calculated until 2027,
when the EU ETS prices could be even higher. CBAM could divert millions of
export tonnes EU companies were ramping up imports from Turkey and North Africa
this year, likely to stock up ahead of CBAM. The new CBAM costs are likely to
make much of this volume uncompetitive in the EU. Exporters may respond either
by lowering fob or delivered prices in order to absorb some of the CBAM cost and
defend EU market share, or by diverting volumes to non-EU markets, such as the
US, west Africa, Middle East, or South America. Turkish cement exports to core
EU buyers — Spain, Romania, Italy, France, Greece and Bulgaria — rose to 2.06mn
t in January-September, up from 1.39mn t in the same period a year earlier, the
latest Global Trade Tracker (GTT) data show. Clinker shipments to these buyers
reached 2.12mn t in January-September, up from 1.55mn t over the same period
last year and above the 2.08mn t shipped in the whole of 2024. Turkey accounted
for about two-fifths of EU cement and clinker imports in 2024, Cembureau data
show. North African exporters focused on clinker, with combined shipments to
Europe at 2.14mn t in January-September, up from 1.64mn t a year earlier,
according to GTT. Key destinations included Italy, Ireland, Croatia, Greece,
France, Spain and Belgium. Much of this volume is now likely to move to
countries that are seeing robust import growth. For cement, these include Syria,
Iraq, Libya, Ghana, Guyana, Haiti, Guatemala, Peru and Jamaica. For clinker,
demand growth is strongest in Syria, Senegal, Cameroon, Togo, Liberia,
Mauritania, Guinea, Ghana, Guyana, the Dominican Republic, Colombia and Ivory
Coast. These markets are structurally dependent on imports and highly
price-sensitive. Mediterranean exporters will likely need to lower prices in
order to attract new buyers in these regions as South Asian exporters have also
been competing to export more to these markets. Vietnam continues to offer some
of the lowest-priced clinker to west Africa and South America, supported by its
surplus capacity and competitive Atlantic freight. Pakistan is expanding its
exports into east Africa, the Mideast Gulf and south Asia and is now probing
Atlantic markets with aggressive pricing. And Saudi Arabia is emerging as a
major supplier of cement and clinker, particularly to the Middle East and
Africa. Spot cement offers from Pakistan and Vietnam were recently in the
mid-to-high $30s/t fob, compared with the mid-to-high $50s/t fob from Turkey and
Egypt. In the clinker market, Turkish and Egyptian exporters are keeping offers
at $44-45/t fob against $29-31/t fob from Asian producers. Vietnamese exporters
also offer larger shipments, including on Panamax and Capesize vessels, which
allow them to move more volume at lower freight costs. Another potential drag on
cement and clinker prices in 2026 is a slowdown in the US cement market. The US
is a major global importer and has been increasing its intake from suppliers
like Turkey, Egypt and Vietnam. But imports are forecast to hit a bottom of
around 17mn t in 2026, according to analyst Ed Sullivan of The Sullivan Report,
as the US struggles with an uncertain policy landscape, new tariff costs, and
low home affordability. But while market fundamentals and upcoming policies
point to downward pressure on export prices across the Mediterranean and beyond,
Mediterranean cement producers could find it difficult to significantly lower
prices in order to compete in new export markets. Prices lower than current
levels would mean losses for Turkish producers, one Turkish exporter said
earlier this month. By Alexander Makhlay and Lauren Masterson Send comments and
request more information at feedback@argusmedia.com Copyright © 2025. Argus
Media group . All rights reserved.
