Western Balkan exporters are facing an uneven competitive challenge under the EU Carbon Border Adjustment Mechanism (CBAM), where carbon-related costs apply to existing covered imports. Policymakers are also considering extending the mechanism to additional manufactured metal products. The exposure is linked to how trade flows and production structures map onto CBAM-covered goods.
Regional exposure varies across countries. Serbia has significant trade links in steel, aluminium and electricity, while Bosnia and Herzegovina combines exposure to power generation and metals. North Macedonia’s exposure is tied to electricity and industrial production, and Montenegro’s position is more heavily centred on electricity and its remaining aluminium processing chain. Manufacturers and electricity trade in Albania operate under different product and transmission conditions.
Comparisons across the region therefore require a product-by-product approach. Analysts need to base assessments on CN codes, individual installations and export routes rather than relying on a single regional emissions average. This is intended to reflect differences in how emissions are associated with specific products and delivery pathways.
Changing EU steel import flows provide market context
European import patterns are also shifting, according to EUROFER. EUROFER reported that finished-steel imports from Indonesia rose by 70% and imports from China increased by 40% in the first half of 2026. Shipments from Türkiye declined by 16% over the same period, while total EU steel imports fell by 5%. The figures provide context for Western Balkan exporters competing in Europe.
The reported changes do not establish that carbon charges drove shifts in purchasing patterns. The data is presented as background for exporters assessing their position in the EU market rather than as evidence of causality. Carbon border adjustment obligations are discussed separately from broader trade movements.
CBAM obligations and July 2026 steel quota rules affect pricing separately
Exporters are required to assess two distinct EU policy measures affecting steel-related sales. Under CBAM, carbon-related obligations apply to imports of covered steel, aluminium, cement, fertilisers, hydrogen and electricity. Separately, an EU steel measure introduced in July 2026 limits annual tariff-free imports to approximately 18.3 million tonnes. It also imposes a 50% duty on volumes exceeding the applicable quota.
For Western Balkan steel producers, quota availability can affect whether a sale remains commercially viable before CBAM liability is calculated. Carbon costs and quota restrictions therefore need separate assessment when preparing quotations, negotiating contracts and evaluating access to EU customers. The two measures create distinct cost pressures for exporters selling into the EU.
Electricity exports depend on conditions for using actual emissions values
Electricity exports involve a different compliance challenge under CBAM. Importers seeking to use actual emissions values must meet specific legal conditions covering electricity generation, contractual arrangements and physical cross-border delivery. A guarantee of origin or renewable-energy label does not, by itself, establish eligibility to apply actual emissions values under CBAM.
The planned reform of electricity emissions calculations remains a proposal. Current imports must therefore be assessed under the rules already in force rather than calculations that may apply after future legislative change. This means exporters’ documentation needs align with existing requirements for electricity deliveries.
Installation-level data and product traceability shape supplier readiness
Steel and aluminium exporters need reliable emissions measurements at installation level under CBAM-related reporting requirements. They also need traceability for raw materials and precursor inputs, along with controlled allocation of emissions to the products being sold. Where upstream materials originate in a third country, processors must obtain supporting evidence needed for the relevant product-level calculation.
A generic national electricity-grid emissions factor or an annual company-wide emissions statement cannot replace the required product-specific calculation. Cooperation among exporters, upstream suppliers and European importers becomes more important where production involves several facilities or countries. This affects how evidence is compiled for exports into CBAM-covered categories.
The potential expansion of CBAM to downstream products could increase exposure for component manufacturers in Serbia and other Western Balkan industrial centres. European importers may request emissions documentation before final legislation is agreed. Exporters with established data and verification procedures may be positioned to retain customers during this transition period.
Banks financing new industrial capacity also need to consider both current CBAM coverage and plausible future product classifications. Investment assessments that account only for today’s obligations may underestimate compliance requirements associated with products that could fall within a broader mechanism. This links financing decisions to expectations about how coverage might develop.
Verified emissions data can affect customer cost estimates
The Western Balkans’ geographical proximity to the EU and established commercial supply relationships are described as advantages for exporters. However, these advantages may not be sufficient if customers cannot reliably determine emissions associated with imported products. Under CBAM-related purchasing processes, buyers’ ability to assess delivered costs depends on available documentation quality.
Producers that integrate emissions measurement, traceability and verification into their operations can provide European buyers with a clearer basis for assessing delivered costs and compliance exposure. Exporters relying on unverified assumptions risk receiving more conservative cost estimates from customers. This could weaken their competitive position even before any proposed downstream expansion becomes law.