The champagne corks in Brussels may have popped too soon. On January 14, 2026, the European Commission released a soaring press statement celebrating the official entry of the Carbon Border Adjustment Mechanism (CBAM) into its "Definitive Regime." In the official narrative, this was a triumph of digitalization: over 10,000 customs declarations verified in real-time, with the system running as smooth as silk. However, if we shift the lens from the desks of Brussels to the customs brokers in Hamburg, the steel traders in Rotterdam, and the customs officials currently drowning in paperwork across the continent, a starkly different picture emerges. What we are witnessing is a carefully whitewashed administrative "cardiac arrest." Forensic-level investigation into the first seven weeks of 2026 reveals that the landing of CBAM is far from the glitz claimed by officials. On the contrary, plagued by suspected low-level data errors, catastrophic approval backlogs, and teetering temporary patches, the mechanism is currently mired in a dual crisis of legality and operations. I. The Absurd "Default Values": When Taiwan’s Stainless Steel "Became" Indonesian Coal If one were to find a single representative footnote for this chaos, the "Default Value Controversy" would be the undisputed choice. For importers unable to obtain precise carbon emission data from upstream factories, the EU’s official "default values" are a lifeline. This was supposed to be a baseline derived from rigorous scientific calculation. Yet, in the 2,400-page document released on December 31, 2025, mere hours before the new rules took effect, industry experts witnessed a jaw-dropping scene. This is not merely a margin of error; it looks more like a metallurgical farce. Industry bodies have pointed out that when the Directorate-General for Taxation and Customs Union (DG TAXUD) established the carbon emission default values for stainless steel from the Taiwan region, the data tables contained suspected structural errors, bearing traces of a "copy-paste" job from Indonesian data structures. The consequence? In the physical world, processing a steel slab into a precision tube requires significant electricity, meaning the finished product should logically have higher emissions than the semi-finished one. Yet, in the table published by the EU, industry players have flagged phenomena where "Taiwanese semi-finished stainless steel allegedly emits more than the finished product," vehemently questioning its rationality. In metallurgy, this is impossible; in a bureaucratic Excel sheet, it became legal reference. More fatally, Taiwan’s stainless steel industry relies primarily on Electric Arc Furnaces (EAF) and scrap recycling, resulting in a relatively low carbon footprint. In contrast, the Indonesian stainless steel industry is highly dependent on Nickel Pig Iron (NPI) and coal-fired power, yielding extremely high emissions. This suspected "slip of the hand" by the EU is akin to forcefully assigning the calorie count of a rich braised pork belly to a light garden salad. This has directly resulted in European buyers of Taiwanese stainless steel facing artificially inflated financial costs. II. A 27% Pass Rate: The 15,000-Strong Army Blocked at the Gate If data controversies are "soft tissue damage," the backlog in administrative approval is a fatal "compound fracture." The core rule of the CBAM definitive stage is simple: without "authorized declarant" status, you cannot import. This means every company wishing to ship a screw or an aluminum sheet into Europe must first secure an "entry ticket." The reality is brutal. According to the Commission’s official press release, by January 7, over 12,000 operators across the EU had submitted applications, with just over 4,100 approved (a pass rate of roughly 34%). However, industry estimates suggest that by late February, applications swelled to approximately 15,000, causing the pass rate to slide to around 27%. Where did the massive remainder go? They are stuck in the overwhelmed approval systems of National Competent Authorities (NCAs). In Germany, due to the deluge of applications, logistics giant DSV issued a public notice stating it could not support clients with CBAM authorization and registration, bluntly forcing thousands of SMEs to crash into the complex reporting system like headless flies. In France, the labyrinthine digital authentication process has turned the application into a maze only a hacker could navigate. To prevent European ports from paralysis, the EU was forced to administer a "painkiller": Customs Code Y238. This is a temporary "hall pass" allowing companies that applied before March 31 but have not yet been approved to keep goods moving for now. But make no mistake, this merely lengthens the fuse on the bomb. III. The Strategy of Silence and the Risk of "Retroactive Reckoning" Faced with industry skepticism, Brussels seems to have chosen the oldest PR strategy: silence. Although industry giants like the Gerber Group issued detailed technical warnings as early as January 9, pointing out the absurdity of the Taiwan/Indonesia data, the industry notes that as of late February, no official "Corrigendum" has been issued to legally revise the default values. The updated Excel version released on February 13 merely added a disclaimer: "information only." This rigid attitude transfers all risk to the enterprises. For companies currently relying on the Y238 temporary arrangement, the real danger is not "whether goods are released," but "whether they will be retroactively penalized." Competent authorities have publicly warned that if an authorization application is ultimately rejected, member states can, under Article 26 (2)/(2a) of the CBAM Regulation, retroactively penalize goods imported during the waiting period. Such fines can, in certain cases, reach 3 to 5 times the standard penalty. In other words, this is not a procedural flaw; it is a compliance risk that could land directly on cash flows and balance sheets. Conclusion: Who Pays the Price for Hubris? CBAM was supposed to be the crown jewel of the EU’s climate ambition, a lighthouse for global green trade. But the opening scene of 2026 makes it look more like an unfinished Tower of Babel. From the "data ghosts" haunting the industry to the severely backlogged approval channels, this "hard landing" exposes a chasm between regulatory ambition and administrative capability. For European importers, every day now is an exercise in navigating through fog. They are forced to calculate not just carbon emissions, but the cost of policy uncertainty. And for the European Commission, if it cannot step out of this arrogant "silence" and clarify these glaring operational controversies, what CBAM loses will be more than just data accuracy; it will be the trust of its global trading partners.

During the Chinese New Year holiday, the chrome market maintained stable operation. In Inner Mongolia, the price of high-carbon ferrochrome held at 8,500–8,600 yuan/mt (50% metal content), while in Sichuan, offers stood at 8,500–8,700 yuan/mt (50% metal content). The main factors supporting firm prices were the arrival of previously high-priced chrome ore and continued ore price increases due to pre-holiday stockpiling purchases, which kept production costs high for ferrochrome producers and supported high ferrochrome offers. However, downstream stainless steel mills mostly implemented production cuts and adopted a wait-and-see approach toward ferrochrome purchases. Holiday sentiment prevailed, and trading activity largely paused. Meanwhile, ferrochrome producers in northern China largely maintained normal production, effectively offsetting lower supply from south China and imports, resulting in a slight overall surplus. Looking ahead, the chrome market is expected to remain stable, pending the announcement of March tender prices for high-carbon ferrochrome by major stainless steel mills. Current market expectations are mostly bullish. From a supply-demand perspective, post-holiday production resumptions at downstream steel mills, coupled with stimulus from the peak consumption season of "Golden March, Silver April," are expected to support a recovery in ferrochrome procurement demand. However, given that most ferrochrome producers maintained normal operations during the holiday and new capacity continues to be released, the overall market is projected to remain in a slight surplus to tight balance. On the cost side, chrome ore prices remain high, keeping ferrochrome production costs elevated. Most producers maintain a firm and bullish price stance, and post-holiday ferrochrome offers are expected to hold steady.

The fundamental challenge in the 304 stainless steel industrial chain is Instrument Asymmetry, a scenario where the dominant cost driver, Nickel Pig Iron (NPI), lacks a direct futures contract and forces participants to manage 75% of their risk using standardized proxies like pure nickel. This creates a lethal threat not from price volatility itself, but from the Basis Risk that occurs when physical assets and hedging tools decouple.

Futures: Overnight, LME lead opened at $1,965/mt, fluctuating downward during the Asian session; it dipped to $1,948.5/mt upon entering the European session, but then rose due to a weakening US dollar index, touching a high of $1,976.5/mt before finally settling at $1,974.5/mt. Overnight, the most-traded SHFE lead 2603 contract opened at 16,665 yuan/mt, briefly touched a low of 16,560 yuan/mt early in the session, then rebounded as bears reduced positions, reaching a high of 16,680 yuan/mt before finally settling at 16,665 yuan/mt, up 0.48%, forming a doji star. On the macro front: As markets awaited a series of US economic data, a weaker US dollar made dollar-denominated commodities more attractive to overseas buyers; spot gold extended gains. The White House's Hassett predicted worsening employment: AI boosts productivity, reduces labor demand. Alphabet planned to raise about $15 billion by issuing US dollar bonds. China's Ministry of Commerce held a symposium with automakers: Multiple measures to promote the expansion and quality improvement of auto consumption. The Shanghai, Shenzhen, and Beijing Stock Exchanges announced a package of measures to optimize refinancing. Seven departments including the Ministry of Human Resources and Social Security provided administrative guidance on employment to leading platform companies and courier firms. Three departments including the Ministry of Finance issued an announcement on tax incentives for re-exported cross-border e-commerce goods. : SHFE lead stopped falling and stabilized, but as the Chinese New Year holiday approached, logistics vehicles halted in some regions, leading to reduced shipments and quotations from suppliers. Only some cargoes self-picked up from primary lead smelters were quoted at premiums of 0-50 yuan/mt against the SMM #1 lead average price ex-works. In the secondary lead sector, more smelters were on holiday and reluctant to sell at low prices, with most enterprises suspending quotations; a few secondary refined lead offers were at discounts of 25 yuan/mt to premiums of 50 yuan/mt against the SMM #1 lead average price ex-works. Downstream enterprises generally entered the year-end wrap-up phase, with minimal inquiries, resulting in thin trading in the spot market. Inventory: On February 9, LME lead inventory decreased by 100 mt to 232,750 mt. As of February 9, SMM lead ingot social inventory across five regions rose to a five-month high. Today's lead price forecast: With previously in-transit lead ingots by rail concentratedly arriving at warehouses, social inventory of lead ingots increased significantly, mainly reflected in Jiangsu and Zhejiang region warehouses. Last week, lead prices fell, prompting lead-acid battery enterprises to conduct relatively concentrated stockpiling of lead ingots, leading to a noticeable decline in lead smelters' in-factory inventory. This week being the last before the Chinese New Year, the final batch of lead-acid battery enterprises will enter the holiday state, further weakening lead consumption. Meanwhile, with the start of the Spring Festival travel season, migrant workers have returned to their hometowns, and the number of vehicles in operation has gradually decreased. Currently, some regions no longer support road transportation. It is expected that the growth momentum of social inventory for lead ingots will slow down, and the inventory buildup of lead ingots is anticipated to be more reflected in the smelters' plant inventories. Overall, lead prices are in the doldrums ahead of the holiday. Data Source Statement: Except for publicly available information, other data are processed by SMM based on public information, market communication, and SMM's internal database model, for reference only and do not constitute decision-making advice.

Around the Chinese New Year holiday, the lithium carbonate market exhibited a pattern of first declining then rising, with intensified volatility before the holiday. From late January to early February, prices came under pressure and declined, with battery-grade lithium carbonate dropping to a low of 134,500 yuan/mt. However, in the final week before the holiday, driven by improved macro sentiment and industrial capital flows, the futures market warmed up, and the most-traded contract once broke through the 150,000 yuan/mt level. During the Chinese New Year holiday, the Guangzhou Futures Exchange was closed, and the spot market saw sluggish trading as logistics were largely halted. Supply side, lithium chemical plants showed clear price-firming sentiment during the pre-holiday price decline phase, with a generally weak willingness to sell spot orders. Meanwhile, February coincided with a period of concentrated maintenance at upstream lithium chemical plants, and domestic lithium carbonate production is expected to drop about 15% MoM for the month. Demand side, downstream material plants entered a stockpiling cycle before the holiday, and purchase willingness significantly strengthened when prices fell to relatively low levels, with increased inquiry and trading activity. Benefiting from the progress of downstream buying the dip, industry inventory structure underwent dynamic adjustments. As of February 12, 2026, the downstream inventory share in SMM's total lithium carbonate sample inventory rose to 43.2%, up nearly 2 percentage points from the previous week; meanwhile, upstream and other segment inventories saw pullbacks, down 7.8% and 4.4% WoW respectively. Overall inventory showed a downward trend, though the direction of inventory changes varied across segments. Looking ahead, on the supply side, as lithium chemical plants complete maintenance and gradually resume production, coupled with new capacity coming online, domestic lithium carbonate production is expected to rebound gradually. On the demand side, from after the holiday to late February, downstream material plants will start the March stockpiling cycle and are expected to maintain a strategy of buying the dip. Under a pattern of simultaneous supply and demand growth, market competition may intensify.

During the last working week before the Chinese New Year, the EMM market saw a significant narrowing of its decline after a cumulative drop of 600 yuan/mt the previous week, gradually entering a state of weak stabilization. The mainstream tax-inclusive ex-factory prices in the Manganese Triangle Region (Chongqing Xiushan, Hunan Huayuan, Guizhou Songtao) and Guangxi were quoted at 17,200-17,400 yuan/mt, while distributor prices at Tianjin Port and Huangpu Port ranged from 17,400-17,600 yuan/mt, with the lower end of the price range approaching the key threshold of 17,000 yuan/mt...