Key takeaways:

Brazilian companies are scrambling to improve emissions accounting and certification as CBAM shifts from a reporting exercise to a factor that directly affects competitiveness, pricing and market access.
CBAM’s impact differs by sector: aluminium exports have faced administrative and cost pressures, while Brazilian steel slab exports have benefited from Europe’s preference for lower-carbon feedstock and high carbon costs for domestic EU producers.
Brazil’s low-carbon advantage is not guaranteed. Without robust certification systems, bioenergy verification and a functioning domestic carbon market, producers risk losing competitiveness despite the country’s relatively clean energy mix.
CBAM moves from planning to compliance
“I see two waves. In 2023, we worked with some companies, mainly in the iron and steel sector, with the products that would be included in this initial phase, largely with the intention of already taking part in that stage. It wasn’t mandatory at the time, but they wanted to be prepared,” Della Barba told Fastmarkets on July 10. “Now we see those who did not prepare themselves rushing to understand their emissions.”

The shift comes as CBAM moves from a preparatory phase into a system that increasingly influences commercial decisions, exposing gaps in how Brazilian companies quantify and certify their carbon footprint.

While some companies — particularly in steel — began preparing earlier, most adopted a wait-and-see approach, delaying investments in emissions accounting and verification.

“There is a behavior of waiting to see how things will evolve before exposing themselves,” the specialist said. “Few companies want to take the first step.”

Accounting challenges and cost implications
Under CBAM, emissions must be calculated at a granular level, requiring companies to define specific product routes and ensure data traceability and auditability — a shift from traditional corporate-level inventories.

“As the objective is to compare emissions, you need to define a very clear scope: product, route, etc.,” Della Barba said.

Even companies that already publish emissions inventories are being forced to adapt their methodologies, while smaller producers are still building internal systems.

This gap has direct financial implications.

“If you cannot properly account for emissions, you end up using conservative values and lose potential efficiency benefits,” he added.

Brazil steel and aluminium exports feeling CBAM impact
After CBAM took effect in January 2026, Brazil’s aluminium ingot and billet exports to Europe fell compared with the same period of 2025, according to Brazilian government data.

Brazil exported about 4,261 tonnes of aluminium billet to Europe from January to June 2026, down by 43.9% from about 7,597 tonnes in the same period of 2025.

During the same period, aluminium ingot exports from Brazil to Europe totaled about 51,935 tonnes, down by 47.3% from 98,565 tonnes in the first half of 2025.

But after the Middle East conflict began in late February and European aluminium premiums rose sharply, Brazilian producers shipped more material to Europe from March to June 2026 than in the same period of the previous year.

Brazil exported about 40,564 tonnes of aluminium ingots to Europe from March to June 2026, up by 61.9% from 25,048 tonnes in the same period of 2025.

Fastmarkets assessed the aluminium P1020A premium, in-whs dp Rotterdam at $500-530 per tonne on Tuesday July 21, up from $320-350 per tonne on January 2 and from $360-390 per tonne on February 27, one day before the US-Israel war with Iran started. The assessment includes CBAM certificate costs.

Meanwhile, Fastmarkets assessed the fortnightly aluminium P1020A premium, low-VAT market, delivered São Paulo region at $300-330 per tonne on July 21, up from $220-250 per tonne on January 6 and from $230-260 per tonne on March 3.

Market participants said that Brazilian aluminium producers were achieving premiums of around $330 per tonne on P1020 aluminium exports to Europe in June.

Sources told Fastmarkets that the aluminium P1020 premium gap between Brazil and Europe was enough to cover all costs involved in these transactions, including CBAM.

“The premium differential between Brazil and Europe creates an opportunity for exports. People always look at the global market, and even with all the associated costs, such as CBAM, it is still worthwhile,” a first Brazilian aluminium trader source told Fastmarkets in mid-June.

But the same source also said that CBAM has become a factor that makes commercial transactions more difficult.

“CBAM just makes things more difficult. It’s highly bureaucratic and difficult to calculate. Many customers are reluctant to import from certain regions because of the complexity involved,” the first aluminium trader source said.

Brazilian steel exports gain momentum
In contrast to aluminium, Brazilian slab exports to the EU increased sharply in the first half of 2026, according to Brazil’s federal government trade database Comex Stat. Shipments totaled approximately 1.02 million tonnes between January and June 2026, compared with about 265,000 tonnes in the corresponding period of 2025, an increase of 283.7% year on year.

The comparison was partly influenced by a relatively low base in the first four months of 2025, when most shipments were concentrated in May and June.

Export volumes were particularly strong at the start of 2026, exceeding 200,000 tonnes in both January and February, while shipments reached about 260,300 tonnes in April. June exports totaled around 182,700 tonnes, up by 90.8% from the same month a year earlier.

Despite the additional reporting and compliance requirements associated with CBAM, the European market remained a key destination for Brazilian semi-finished steel exports.

According to Fastmarkets sources, the move was aimed at focusing on an origin perceived as inherently cleaner, potentially reducing future exposure to CBAM-related challenges.

“The approaching implementation of CBAM will certainly enhance our competitiveness and market penetration in Europe. CBAM will make it more difficult to import materials with weak emissions controls — which is not the case for slabs produced in Brazil,” a Brazilian slab producer source told Fastmarkets in October 2025. “This increases competitiveness against mills in Asia, India and Russia.”

At the end of last year, as slab prices were rising, CBAM was among the factors supporting Brazilian producers’ expectations that Brazilian steel could gain ground in the bloc.

“Maybe not to raise prices in the short term, but it’s good to find a more demanding market for Brazilian capacity,” a second Brazilian slab producer source told Fastmarkets in November 2025.

In February, Fastmarkets reported that European mills booked more than 300,000 tonnes of Brazilian steel slab, with producers potentially choosing to feed their rolling mills with imported feedstock rather than increase their own steel production because of high carbon permit costs.

At the same time, while some saw it as an opportunity, others viewed it with caution, citing regulatory uncertainty.

“The CBAM issue remains very unclear, almost a shot in the dark, with the risk of retroactive payments later on, which makes everyone cautious. The regulation is so broad that there isn’t enough capacity to properly enforce it,” a trader source told Fastmarkets in April 2026.

Fastmarkets’ weekly price assessment for steel slab export, fob main port Brazil was $575-585 per tonne on Friday July 17, down by $5 per tonne on the upper end of the range from $575-590 per tonne a week earlier.

At the recent peak, on April 10, Fastmarkets assessed the market at $600-615 per tonne.

Certification gap undermines Brazil’s low-carbon edge
Brazil’s relatively clean energy matrix, often seen as a competitive advantage, is not automatically translating into lower CBAM costs.

“But incorporating this into accounting is complex, and the [metals] sector is not yet prepared,” Della Barba said.

A key challenge lies in capturing the benefits of bioenergy and renewable inputs, which require certification aligned with international standards such as the EU’s Renewable Energy Directive (RED).

“Accounting alone is not enough. Incorporating the differential of Brazil as a bioenergy provider is more complex because it requires integration with the supply chain,” he added.

Although some market participants still view CBAM as a future concern, its effect is already visible in commercial negotiations.

Rather than immediately altering trade flows, the mechanism is first reshaping how contracts are structured and how risk is allocated between buyers and suppliers.

“The clearest impact will come with audits,” Della Barba said.

Steel, aluminium sectors moving, but not ready
According to Della Barba, Brazil’s steel and aluminium sectors are relatively advanced in emissions accounting compared with other industries but still face a critical gap in verification and certification.

One near-term pathway to compliance has been the use of secondary (recycled) material, which can more easily be incorporated into emissions calculations.

Nevertheless, broader compliance requires supply-chain alignment and certification — a process that “can take around six months,” the specialist told Fastmarkets.

He added that CBAM’s methodology creates additional constraints, including the inability to allocate emissions benefits selectively across production.

“CBAM does not accept mass balance. You cannot concentrate the benefit in part of the production. It requires an average,” he added.

Despite Brazil’s structural advantages, delays in certification and system readiness could result in lost market share.

“Yes,” Della Barba said when asked whether Brazil could lose its competitive edge. “Without incorporating bioenergy and certification, Brazil does not have a real advantage.”

Domestic carbon market seen as a critical next step
At the same time, producers in other regions have already made significant gains in efficiency, narrowing the gap. “There is also the need to structure a domestic carbon market,” he added.

China, for instance, despite lacking natural competitive advantages, already has a more advanced carbon market than many other countries.

In 2024, China topped the ranking of total emissions at 15,536 MtCO2e per year, with the US a distant second at 5,912 MtCO2e, and India with 4,731 MtCO2e, according to data from the Emissions Database for Global Atmospheric Research (EDGAR).

However, China’s Emissions Trading System (ETS) is the largest carbon market in the world. Launched in 2021, it was already capable of regulating around 8 billion tonnes of CO2 per year by 2024, according to the International Carbon Action Partnership (ICAP).

In Brazil, discussions are now focused on implementing the domestic carbon market established under Law No. 15.042/2024. While the legal framework is already in place, the government is still developing the regulations and institutional structure needed for the Brazilian Emissions Trading System (SBCE) before the market becomes fully operational.

For Brazil, the implementation roadmap foresees the regulatory phase through 2026, followed by the operational rollout of emissions reporting in 2027. Companies will then be required to monitor and report emissions during 2028-29, while the first allocation plan and trading of emission allowances are scheduled to begin in 2030. Full implementation of the SBCE will follow after the end of the first allocation period.

Scope expansion and future CBAM adjustments
Looking ahead, CBAM is expected to evolve, with the potential inclusion of Scope 2 emissions and broader product coverage.

“There is pressure and concern,” Della Barba said. “There should be a review around 2028, 2029.”

In the near term, regulators are focused on closing loopholes and preventing circumvention strategies, such as importing semi-finished products to avoid the mechanism.

This could lead to an expansion of the range of products covered under CBAM.

The next critical milestone for exporters will be the rollout of audits, which are expected to begin taking shape in the coming months.

For now, “the system is in a phase of learning and refinement.”

From: Fastmarkets