Two steelmakers in south Taiwan this week announced carbon surcharges for deliveries from January 2024, to prepare for the country's looming carbon emission tax.
A prominent steelmaker in south Taiwan will place a carbon surcharge of NT$150/t ($4.63/t) on new orders for delivery from January 2024 onwards, according to a notice it issued to its trade partners. Another rebar manufacturer in the region also announced a similar arrangement on 9 November, for deliveries from 1 January 2024.
Taiwan is set to impose a carbon emission tax on 1 January 2024, but the country's ministry of environment has not yet announced the exact tariff. Both south Taiwanese mills said they will refund customers the excess charges if the final tariff is below NT$150/t, but will require additional payment if the tariff is set above $150/t.
Other steelmakers on the island have so far shown no intention to follow suit. Benchmark scrap price setter Feng Hsin in central Taiwan said it will not implement a similar system for now, and will instead wait for further announcements from local authorities before implementing any carbon fee. Carbon surcharges were widely expected, according to many trade sources, given that local authorities had previously hinted at green initiatives and policies aimed at reducing carbon emissions.
The Ministry of Environment said earlier in August that 512 companies that exceeded 25,000 t/yr of CO2 emissions would face a carbon emission tax in 2024, calculated from their emissions this year.
"It was just a matter of time," a trader said. "I think many, if not everyone, saw this coming. But I can't say this will be well-received. We all know, eventually, it's the end-buyers who are going to bear the brunt of this rising cost."
Some market participants agreed that a NT$150/t carbon tax is almost negligible, and will likely be shrugged off in the near future. But others said that this will further weigh on scrap and steel sales, which are already suppressed.
