The European Union’s Carbon Border Adjustment Mechanism (CBAM) currently covers some ferroalloys while leaving others outside the mechanism. EU imports of ferro-tungsten and ferro-niobium are heavily concentrated, with China and Brazil supplying the largest shares of those markets in 2025. Alongside these two ferroalloys, two other strategically important products are also excluded from the current CBAM scope.
Ferro-manganese, ferro-chromium and ferronickel are covered under the relevant CBAM framework. In contrast, ferro-tungsten, ferro-vanadium, ferro-molybdenum and ferro-niobium fall outside the relevant Chapter 72 scope. The resulting boundary affects how carbon-related costs apply when European producers compete with imports.
Concentrated sourcing in EU ferroalloy imports
European trade data for 2025 show that China accounted for 68% of EU ferro-tungsten imports by value. Brazil supplied 83% of EU ferro-niobium imports. These shares point to concentration risks in two key ferroalloy markets.
Tungsten alloys are used in tooling and high-performance manufacturing. Niobium is used in specialised steels and other advanced materials. Vanadium and molybdenum contribute to steel performance and are used in construction, transport and other industrial sectors.
The materials described can also support defence-related supply chains. The supply picture is linked to the EU’s Critical Raw Materials Act, which aims to strengthen European supply chains and reduce reliance on individual third countries for strategic raw materials. Under the current CBAM framework, the treatment of these ferroalloys is not consistent.
EU ETS costs versus CBAM certificate obligations
The exclusion of selected ferroalloys can affect competition between European manufacturers and overseas suppliers. EU producers may face carbon-related costs through the EU Emissions Trading System (EU ETS). At the same time, imports of ferro-tungsten, ferro-vanadium, ferro-molybdenum and ferro-niobium are not subject to a CBAM certificate obligation under the current scope.
This difference does not indicate that excluded products necessarily have higher emissions than covered alternatives. Emissions depend on production technology, energy sources and facility efficiency. Comparable industrial processes can receive different carbon-cost treatment based on customs classification.
For European manufacturers, the gap creates uncertainty about how far CBAM can support domestic production while limiting carbon leakage. The mechanism’s existing product boundaries reflect earlier scope decisions rather than a comprehensive ranking of ferroalloys by emissions intensity or strategic importance.
Implications for processing investment decisions
The current exclusions also influence investment planning for specialised processing. Companies considering European tungsten conversion, niobium-alloy production or other specialised ferroalloy processing cannot assume that strategic importance will translate into CBAM protection against competing imports.
Project economics may instead depend on long-term offtake agreements, supply-security premiums, recycling opportunities, government support and technical specifications required by industrial customers. For developers, reliable raw material supplies and access to specialised markets may be more significant than expected benefits from carbon border measures.
Investors also need to account for carbon costs borne by European operations and the competitive position of imported products that remain outside CBAM. These factors are particularly relevant for projects aimed at reducing reliance on concentrated supply chains while establishing commercially viable processing capacity in Europe.
Possible direction for future CBAM product coverage
Extending CBAM coverage to additional ferroalloys would require policymakers to balance competing priorities. A broader scope could make carbon-cost treatment more consistent and potentially support European processing. However, adding products would increase administrative complexity and could raise input costs for downstream manufacturers.
Excluding strategically important materials could also weaken incentives for domestic investment when carbon costs materially affect competitiveness. The policy challenge is to balance carbon leakage prevention, strategic supply security and the competitiveness of European industry without imposing disproportionate costs on manufacturers relying on specialised alloys.
Future discussions are expected to focus more on individual product codes and their industrial applications rather than treating the ferroalloy sector as a single category. The exclusions for tungsten, vanadium, molybdenum and niobium illustrate a broader limit of the current framework at the EU customs border.