Iron and steel

Your business imports steel coil for a service centre, sections and plate for a fabricator, rebar for a contractor, pipe for a utility, wire rod for a fastener maker, fasteners for a distributor, tanks and drums for a filler, or pig iron and ferro-alloys for a foundry. Iron and steel is the largest of the five sectors by number of covered headings, by the length of its production chains and by the tonnage most importers will carry. Pig iron, ferro-chromium, stainless coil and a pallet of bolts all take the same price per tonne of embodied emissions in a given quarter.

The excepted codes are 7202 21, 7202 30, 7202 50, 7202 70, 7202 80, 7202 91, 7202 92, 7202 93, 7202 99 10, 7202 99 30, 7202 99 80 and 7204. HMRC's scope guidance for the sector, published on 16 July 2026, lists Except 7202 21 and Except 7204. Ferro-silicon under 7202 29 is not among the excepted codes in the Act, and the scope guidance says the same, while HMRC's policy summary annex lists 7202 2 as excepted; an importer of ferro-silicon under 7202 29 should count it as caught until a correcting instrument or a revised annex appears.

The nine categories and the chain

Table 1e of the System Boundaries Document maps the covered codes to nine categories: sintered ore for 2601 12, pig iron for 7201, the four ferro-alloys ferro-manganese, ferro-silicon, ferro-chromium and ferro-nickel for 7202 1, 7202 29, 7202 4 and 7202 6, direct reduced iron for 7203, crude steel for 7206, and iron or steel products for every other covered heading in chapters 72 and 73. For every category the relevant gas is carbon dioxide alone.

Crude steel, in point 3.17, is where the two routes that matter most to importers diverge. A basic oxygen converter is charged mainly with hot metal from a blast furnace, and the blast furnace's emissions, with the sinter plant's inside them, arrive as precursor emissions. An electric arc furnace is charged mainly with scrap, and scrap is not a precursor in the document, so nothing arrives with it except the carbon it contains, which the mass balance counts; the electricity that melts the scrap is outside the boundary, because the document counts direct emissions only. HM Treasury's factsheet, which is guidance, states that the inclusion of indirect emissions within scope will be delayed until 2029 at the earliest.

Iron or steel products, in point 3.18, is the category for most of what a UK importer buys. Monitoring covers fuels and flue gas treatment across re-heating, re-melting, casting, hot and cold rolling, forging, annealing, coating, galvanising, wire drawing and pickling, and excludes plating, cutting, welding and finishing. The precursors are crude steel, pig iron, direct reduced iron, the four ferro-alloys and iron or steel products, each where used, and that last precursor is what makes the chain long: an importer of fasteners under 7318 whose supplier bought wire rod from a mill that bought billets from another mill has four installations in its chain, and the intensity on its return is the sum of all four.

The crude steel figure is the one to chase

In a chain of products the direct emissions of each rolling, drawing or coating step are small beside the emissions of making the steel in the first place, and the importer's tax will move most with the crude steel precursor's intensity and the route by which it was made. A supplier of finished products that cannot say which mill made its steel has left the largest part of the figure to the default value for crude steel. Scrap under 7204 is outside the tax as a good and inside it as carbon: an importer of scrap for a UK furnace pays nothing on it, while scrap charged to a furnace abroad is counted by the mass balance for the carbon it contains. A supplier who describes its steel as recycled has said something about its route and nothing about its verified figure.

Classification carries three traps. Heading 7308 excludes prefabricated buildings of heading 9406, so steel framing that arrives as a prefabricated building is outside and the same framing as parts of structures is inside. Heading 7326 is the residual heading for articles of iron or steel, and heading 7318 covers fasteners; both catch businesses that buy finished goods by the pallet. The commodity code on the declaration decides, under the customs rules that paragraph 2(2) of Schedule 16 applies.

Regulation 4 of SI 2026/802 fixes the weight as net of packing at the time of import: coil net of strapping, paper and skids, bundled bar net of the bundling wire, fasteners net of the boxes and the pallet. The UK-origin precursor exemption in section 147(3) is most useful in this sector, since UK-made coil galvanised abroad or UK-made billet rolled abroad carries out the emissions attributable to the UK precursor. Carbon price relief needs form CarbonVP1 for the mill and, under regulation 12(3) of SI 2026/809, for each precursor installation in another jurisdiction.

Questions for an iron and steel supplier

For any product: which installation made the crude steel, by which route, and does that installation have a verification report under regulation 14 of SI 2026/995 for the year concerned. For a re-roller, a coater or a tube mill: which precursors were used, from which installations, and is each precursor's intensity verified or defaulted. For an integrated mill: is the intensity reported per commodity code with crude steel, pig iron and sintered ore inside it. For an electric arc furnace: are electrodes and the carbon in the scrap charge inside the mass balance. For a stainless or alloy mill: are the ferro-alloys counted as precursors, and from which installations. For a fastener or structure maker: are cutting, welding and finishing excluded from its own emissions, and is everything upstream inside. For every supplier in a jurisdiction with a carbon price: can form CarbonVP1 be completed for the mill and for each precursor installation abroad.

The check to run

Take the twelve months of customs declarations for goods under 2601 12, chapter 72 and chapter 73, sort them by eight-digit code, and test each line for whether it is covered. For the covered lines, set against each the category from Table 1e, the installation that made the goods, and the installation that made the crude steel behind them if different. A business that can name the steelmaker for every line has found the figure that will decide most of its tax. Chapter 28 of UK CBAM for Importers sets out the sector in full.