Tata Steel Europe to implement carbon surcharge

Tata Steel Europe is introducing a €12/t carbon surcharge for all new steel contracts in the UK and Europe with immediate effect.

The surcharge is designed to help the company buy the future carbon emissions allowances it will need. Prompt emissions allowance costs have increased dramatically over the past year, from a low of €15.47/t on 23 March 2020 to €43.56/t on 9 April 2021, according to Argus data.

Tata Steel Europe's emissions per tonne of crude steel were 1.98 in 2019-20, according to its annual report, with the current cost of its emissions close to the surcharge level.

The surcharge comes amid a current tightness in the steel market and rising coil prices since the last northern hemisphere summer. Argus' benchmark northwest EU hot-rolled coil index has risen from €384.50/t on 26 June last year to €901/t on 9 April.

Some buyers have already accepted the surcharge, although they have little choice given the lack of alternatives in the marketplace. Other steel mills are likely to follow suit and are currently in discussions with their customers.

By Colin Richardson