Serbia’s steel and aluminium exporters are entering a more difficult phase of competition in the European Union as weak industrial demand, high energy costs and the EU’s Carbon Border Adjustment Mechanism increasingly affect the price European buyers are prepared to pay.
The pressure is already visible at Impol Seval, one of Serbia’s largest aluminium exporters.
Impol Seval loss widens as costs rise
The Sevojno-based producer reported a standalone first-half loss of RSD 346 million, around €2.9 million. This was more than four times the RSD 86.7 million loss recorded a year earlier.
Operating revenue increased to RSD 11.6 billion from RSD 10.5 billion, but costs rose faster to RSD 11.9 billion. Higher raw-material, energy and service expenses outweighed increased production and internal efficiency measures.
Impol Seval exports around 96% of its production, mainly to the EU. The company’s results are presented as an indicator of commercial pressure building across Serbia’s metals industry.
Definitive CBAM regime starts for iron, steel and aluminium
From January 1, 2026, iron and steel and aluminium are among the sectors covered by the definitive CBAM regime. EU importers above the applicable threshold must account for embedded emissions in covered imports and ultimately surrender CBAM certificates linked to the EU carbon price.
The European Commission’s first two quarterly CBAM certificate prices were €75.36 per tonne of CO₂ for Q1 and €75.28/t for Q2.
Under the approach described for covered goods, carbon intensity becomes part of the commercial relationship between Serbian producers and European customers through the CBAM exposure attached to shipments.
Scale of Serbia’s CBAM exposure in steel and aluminium
Trade estimates based on 2025 flows put Serbian exports within the existing CBAM iron and steel perimeter at around €912 million. This makes steel Serbia’s largest individual CBAM goods exposure.
Aluminium accounted for roughly another €519 million. Together, steel and aluminium represented around €1.43 billion of Serbian exports exposed to the current CBAM framework before electricity, fertilisers and cement are added.
The steel exposure is centred on HBIS Serbia’s Smederevo steelworks, Metalfer Steel Mill, and a wider network supplying rolled products, tubes, structures, fasteners and other steel products to European markets.
Compliance information flows from non-EU producers
The legal responsibility primarily sits on the European side of the border under CBAM rules. The authorised CBAM declarant must declare embedded emissions and surrender required certificates.
The information needed to calculate actual embedded emissions originates largely with the non-EU producer. For imports made during 2026, the first annual CBAM declaration is due by September 30, 2027.
Where actual emissions are used instead of Commission default values, the non-EU producer must provide emissions information capable of supporting required verification. This creates a potential difference between Serbian suppliers based on what data they can provide for verification purposes.
Direct emissions covered; electricity treatment differs
Under the definitive regime as currently structured, iron and steel and aluminium are subject to CBAM on direct embedded emissions. Indirect emissions from electricity consumed during production are not currently included in their CBAM certificate liability.
Cement and fertilisers are treated differently and include indirect emissions. As a result, purchasing renewable electricity does not automatically reduce current CBAM certificate requirements for Serbian steel or aluminium exporters solely due to greener power supply.
Electricity remains relevant because it affects industrial costs: it is described as a major cost factor for aluminium production and increasingly important for steel as production routes move toward greater electrification.
Commission work on potential inclusion of indirect electricity emissions
The European Commission is examining how indirect emissions could be extended to additional CBAM sectors. The review includes conditions under which actual electricity emissions might be recognised through mechanisms such as direct technical connections, power purchase agreements and verification.
This is described as shaping electricity strategy for Serbian metals producers as both a cost-management decision and preparation for potential future carbon regulation changes related to indirect emissions.
CBAM affects procurement terms alongside delivered product pricing
The shift described in the rules changes how European customers negotiate with Serbian suppliers. In addition to price, specification, quality, delivery reliability and payment terms, carbon exposure becomes another economic variable in procurement decisions.
A producer able to document lower actual embedded emissions can provide greater certainty over future CBAM costs for European buyers. A producer unable to provide reliable verified information may face uncertainty that importers seek to address through lower purchase prices, contractual protections or supplier changes.
The financial obligation remains with the EU declarant, but importers may attempt to transfer CBAM exposure upstream through procurement negotiations. Verified emissions data is therefore treated as comparable to product specification in supplier discussions.
EU market share increases relevance for Serbian exporters
The EU remains Serbia’s dominant merchandise-trade partner, accounting for 58.6% of total Serbian goods trade in January-July 2026. This is presented as relevant because principal customers operate within that market where CBAM applies.
The competitive impact is therefore not limited to compliance documentation at shipment time but extends into contract pricing considerations tied to embedded-emissions calculations used by importers.
Production shift at Impol Seval reflects margin pressure
Impol Seval’s first-half figures show output rising while profitability deteriorated. The company increased output to 26,119 tonnes, up 1.4% year on year, alongside higher revenue.
Profitability fell because input costs rose faster than revenue growth. The company responded by increasing prices and shifting more production toward its foundry, including less processed and lower-value products.
Next competitive test: costs plus verified emissions data
The next competitive test described for Serbian steel and aluminium exports is whether producers can combine lower operating costs, cleaner electricity and verified emissions data strongly enough to protect margins when European buyers start pricing carbon into contracts directly.
The immediate CBAM liability for steel and aluminium in 2026 focuses on direct embedded emissions. Electricity sourcing is described as relevant through cost impacts, buyer requirements and preparation for potential future inclusion of indirect emissions in CBAM liability calculations.
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