Jul, 23, 2026Posted by Gabriel Malheiros
Brazilian steel and aluminum exporters are accelerating efforts to measure, verify and certify emissions as the European Union’s Carbon Border Adjustment Mechanism moves from a future compliance concern to a factor already shaping trade decisions.
The change is especially relevant for companies selling into Europe, where CBAM is beginning to influence contracts, sourcing strategies and risk allocation between buyers and suppliers.
Rafael Della Barba, climate risk and decarbonization coordinator at WayCarbon, said Brazilian companies have responded in two waves. Some, mainly in the steel sector, started preparing in 2023, even before compliance became mandatory. Others delayed investments and are now rushing to understand their emissions exposure.
The shift comes as CBAM increasingly affects how Brazilian exporters quantify, document and certify the carbon footprint of products shipped to Europe.
Under the mechanism, emissions must be calculated at a detailed product level, including specific production routes, traceability and audit-ready data. That marks a shift from traditional corporate emissions inventories, forcing even companies that already publish emissions data to adjust their methodologies.
The lack of reliable emissions accounting can have direct cost implications. Companies unable to prove lower emissions may be forced to rely on conservative default values, reducing the potential benefit of Brazil’s cleaner energy matrix.
Aluminum exports face pressure
Brazilian aluminum exports to Europe showed signs of pressure in the first half of 2026, according to government data cited by Fastmarkets.
Brazil exported about 4,261 tonnes of aluminum billet to Europe from January to June, down 43.9% from around 7,597 tonnes in the same period of 2025. Aluminum ingot shipments fell 47.3% to about 51,935 tonnes, compared with 98,565 tonnes a year earlier.
The trend shifted after late February, when the conflict in the Middle East pushed European aluminum premiums higher. From March to June, Brazil shipped about 40,564 tonnes of aluminum ingots to Europe, up 61.9% from 25,048 tonnes in the same period last year.
The price differential between Brazil and Europe helped offset the additional costs linked to CBAM, creating export opportunities despite the mechanism’s added bureaucracy.
Fastmarkets assessed the aluminum P1020A premium in Rotterdam at $500-$530 per tonne on July 21, up from $320-$350 per tonne on January 2. The assessment includes CBAM certificate costs.
In Brazil, the low-VAT aluminum P1020A premium delivered in the São Paulo region was assessed at $300-$330 per tonne on July 21, up from $220-$250 per tonne on January 6.
Market participants said Brazilian producers were achieving premiums of around $330 per tonne on P1020 aluminum exports to Europe in June. Even so, traders said CBAM is making transactions more complex, with some European buyers reluctant to import from certain regions because of the difficulty of calculating and managing compliance costs.
Steel exports gain ground
Brazilian steel exports have moved in the opposite direction. Slab shipments to the European Union rose sharply in the first half of 2026, supported by demand for semi-finished steel from an origin seen as less exposed to carbon-related risk.
According to Comex Stat data cited in the2 million tonnes from January to June, compared with roughly 265,000 tonnes in the same period of 2025. That represents a 283.7% year-on-year increase
The comparison was partly influenced by a low base in early 2025, when most shipments were concentrated in May and June. Still, volumes were strong at the start of 2026, exceeding 200,000 tonnes in both January and February and reaching about 260,300 tonnes in April. June exports totaled around 182,700 tonnes, up 90.8% from the same month last year.
Despite the additional reporting and compliance requirements, Europe remained a key destination for Brazilian semi-finished steel. Markets a potentially cleaner alternative to supply from regions with weaker emissions controls
Fastmarkets reported in February that European mills booked more than 300,000 tonnes of Brazilian slab. Producers were seen as potentially choosing imported feedstock rather than raising their own steel output, given high carbon permit costs in Europe.
Fastmarkets assessed Brazilian slab exports at $575-$585 per tonne FOB main Brazilian port on July 17, slightly lower than the previous week and below the recent April peak of $600-$615 per tonne.
Certification gap could weaken Brazil’s advantage
Brazil’s relatively clean energy matrix is often cited as a competitive advantage under CBAM. But that advantage is not automatic.
Della Barba said incorporating Brazil’s renewable and bioenergy profile into emissions accounting remains complex, especially for the metals sector. Capturing those benefits requires supply-chain integration and certification aligned with international standards, including the EU’s Renewable Energy Directive.
That creates a critical challenge for exporters. Brazil may have lower-carbon production in several areas, but without verified data and internationally recognized certification, companies may be unable to convert that profile into lower CBAM costs or stronger negotiating power.
The first major impact is likely to come through audits. According to Della Barba, Brazil’s steel and aluminum industries are more advanced than many other sectors in emissions accounting, but still face gaps in verification and certification.
Secondary, or recycled, material can offer a short-term compliance pathway because it is easier to incorporate into emissions calculations. Broader compliance, however, will require stronger supply-chain alignment and certification, a process that can take about six months.
CBAM rules also limit the way emissions benefits can be allocated. The mechanism does not accept mass balance, meaning companies cannot concentrate a low-carbon benefit in only part of their production. Instead, emissions must be calculated on an average basis.
Without stronger certification systems, Brazil risks losing part of the competitive edge it could otherwise have in Europe.
Carbon market seen as next step
Della Barba also pointed to the need for Brazil to structure its domestic carbon market. Other major exporting economies have already made progress in emissions regulation and efficiency, narrowing Brazil’s potential advantage.
Brazil approved the legal framework for its emissions trading system under Law No. 15,042/2024, but the market is not yet fully operational. The regulatory phase is expected to continue through 2026, followed by the rollout of emissions reporting in 2027.
Companies will be required to monitor and report emissions in 2028 and 2029, while the first allocation plan and trading of emission allowances are scheduled to begin in 2030.
For exporters, the timeline matters because CBAM is already influencing commercial negotiations in Europe. The mechanism is also expected to evolve, with possible inclusion of Scope 2 emissions and broader product coverage in future reviews around 2028 and 2029.
Regulators are also focused on closing loopholes and preventing circumvention, including the use of semi-finished products to avoid carbon costs. That could expand the range of products covered by CBAM over time.
For Brazilian trade and logistics players, the message is clear: CBAM is no longer a distant regulatory risk. It is already affecting pricing, contract structure, sourcing decisions and the competitiveness of Brazilian steel and aluminum exports to Europe.
Companies that move faster on emissions accounting, verification and certification will be better positioned to defend market share and capture opportunities created by Europe’s shift toward lower-carbon supply chains.
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