28 April 2026 – Base metals mostly moved sideways in Asia today. Are looming supply shortages in metals expected? CBAM expansion: the extension of CBAM to downstream products is angering European industry, with a major association calling for an end to the CO2 tariff.
Base Metals Move Sideways
Base metals mostly moved sideways in Asia today, after some of them had posted significant gains in recent days. On the LME, too, base metals such as nickel, aluminium, and copper started trading calmly this Tuesday.
Looming Supply Shortages in Metals Expected?
Reports are currently mounting that companies have begun building up inventories of key raw materials and input materials. By doing so, they want to hedge against looming supply shortages expected in the coming weeks and months due to the situation in the Strait of Hormuz.
From North America, it is being reported that traders have deliberately begun building up larger stocks of scrap. At the same time, U.S. steel producers are expected to continue operating at very high capacity utilization due to the Section 232 tariffs, leaving little room for even more demand.
A similar trend can also be observed in Europe, where German steel producers have already significantly increased their crude steel production in the first three months of 2026, while prices for steel products have risen by more than 20% over the past six months. In the course of the expected successor to the safeguard measure, further price increases and supply bottlenecks in the EU are expected. Particularly for stainless steel, the EU’s Joint Research Centre assumes an import requirement of 25% due to a lack of production capacity.
CBAM Expansion: Should a failed system really be expanded?
At around 3,000 pages, the European CO2 tax (CBAM) is not only one of the most extensive pieces of EU legislation, but also one of the worst designed. Eighteen weeks after CBAM came into force, the regulation is still riddled with errors, making it impossible in many cases to calculate the resulting costs. Corrections are to be made ‘in due course’, but after four months of inaction, there is still no update or official statement on how the obvious and known errors are to be addressed.
At the same time, consultations are already underway on extending CBAM to downstream products – even though everyone knows perfectly well that the system still does not work. Extending CBAM to downstream products would also add thousands more pages of legal text and expose tens of thousands of primarily small and medium-sized enterprises to the heavy bureaucratic and costly burden of CBAM reporting.
CBAM Jeopardizes the Competitiveness of European Mechanical Engineering
The VDMA association has recognized this as well and has sharply criticized the current design of CBAM as a threat to the competitiveness of Europe’s mechanical and plant engineering sector. Thilo Brodtmann, VDMA Executive Director, recently said: “We therefore call for the entire CBAM mechanism to be abolished or at least fundamentally changed. The expansion plans to include additional industrially processed products must be stopped.”
CBAM Hits Domestic EU Companies Effectively Like a Tariff
CBAM does not only hit the mechanical and plant engineering sector effectively like a tariff on key input materials. Companies have to report certain emissions data, but they do not receive this data from their suppliers outside the EU. As a result, they have to work with drastically inflated default values and are forced to purchase significantly more CBAM certificates.
The responsible bodies at the European Commission had, as recently as December 2025, almost quadrupled the default values from the CBAM transitional period for many affected products without prior notice and, on top of that, added penalty surcharges for reporting using default values.
We expressly support the VDMA’s stance and demands regarding the abolition or complete overhaul of the CBAM, and would welcome it if other associations were to join in with the same demands, rather than continuing to kowtow out of fear of whoever or whatever.
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