Uncertainty over the prices of raw materials affected by the Carbon Border Adjustment Mechanism has thrown markets into chaos: sales frozen and risk of shortages, especially for iron foundries

Milan, 3 February 2026 – The foundry sector is on the brink of a production shutdown. The full entry into force of the Carbon Border Adjustment Mechanism (CBAM), which took effect last 1 January, has triggered a phase of extreme criticality that goes far beyond a mere increase in costs: regulatory uncertainty is paralysing commercial transactions, putting the operational continuity of strategic supply chains for Italian and European industry at risk.
This is the alarm raised by Assofond, the Confindustria association representing Italian foundries, to the Minister of Enterprises and Made in Italy, Adolfo Urso, during the roundtable held at the MIMIT with the main energy-intensive industries.

Market chaos: an immediate emergency, especially for iron foundries

Even before the structural issues generated by the mechanism itself, foundries are concerned about the paralysis in the procurement of raw materials subject to CBAM, such as pig iron, ferroalloys and primary aluminium. The price of these essential production inputs for the sector is currently impossible to quantify, as it will depend on the value of CBAM certificates, which will only be known once importers are able to proceed with the purchase of the certificates themselves (i.e. from February 2027). This unprecedented situation has generated chaos, primarily affecting iron foundries: suppliers and buyers are currently unable to set a price, a condition that is leading to a freeze in sales and a tangible risk of material shortages.

The structural trap and the “gap” in customs codes

Beyond the operational standstill, the sector is reporting a serious design flaw in the mechanism. European foundries pay environmental duties on inputs (pig iron, ferroalloys, primary aluminium), facing cost increases of up to 35%, while most of their finished products enjoy no equivalent level of protection.
“The issue is technical, but the consequences are devastating,” explains Fabio Zanardi, President of Assofond. Our raw materials are not produced in Europe, except in quantities that are absolutely insufficient to meet domestic demand. We are therefore forced to import them from abroad at rising costs. Our non-European competitors, on the other hand, can use local raw materials or purchase them at low cost from Russia (which we cannot do due to sanctions), produce castings locally and import them into the EU without paying any duty: this is made possible by the fact that almost all customs codes identifying castings are not included in the CBAM. It is a clear incentive to delocalisation.” To address this distortion, Assofond and the European Foundry Federation (EFF) have identified over 35 specific customs codes (covering both ferrous and non-ferrous castings) for which they are calling for urgent inclusion in the mechanism.

A strategic sector under pressure

The sector is entering the full operational phase of CBAM in a state of extreme fragility, marked by declining demand in its main customer industries and by the repeated systemic shocks of recent years: from the pandemic to the energy crisis, from supply chain disruptions to tariffs and international sanctions that have drastically reduced sourcing options. In this context, CBAM does not represent a simple cost increase to be absorbed, but a structural distortion that risks making continued operations unsustainable for many companies, with direct effects on margins, employment and the resilience of the entire Italian foundry supply chain.

Requests to the Government and Europe: extension of the transitional period and new codes

To avoid irreversible deindustrialisation in Italy and Europe, Assofond has asked for support from the MIMIT: “We are asking the Government to act as a spokesperson in Europe for two urgent and non-deferrable demands,” Zanardi concludes. On the one hand, extend the transitional period that ended on 31 December to the 2026–2027 biennium, turning it into an ‘evaluation period’ to stabilise prices and avert a production shutdown. On the other hand, it is essential to expand the scope of CBAM to include the downstream customs codes we have identified. Without this correction, the mechanism as it is currently designed will not protect the environment, but will only destroy Europe’s most virtuous industry to the benefit of more polluting non-EU competitors.”