The metals sector faces a technologically complex and lengthy transition to low carbon-emitting practices, due to a lack of tested, cost-efficient technology and the scarcity of raw materials. This will leave it exposed for longer to the risk of materially higher carbon costs that could prove negative for metals companies' credit quality. Steel producers using more carbon intensive blast furnace-basic oxygen furnace (BF-BOF) technology, and which are based in the EU or have significant exports to the EU, are the most immediately exposed to carbon costs that will increase progressively from 2026. EU regulations could ultimately reshape the global metals sector, with broad implications for decarbonization costs and economic growth in the longer term. Differences in regional carbon prices, the ability to pass through costs, and government support for decarbonization efforts could all materially affect credit quality.