Indonesia increased its presence in the European Union steel import market in the first half of 2026, with shipments rising sharply while overall EU import volumes declined. The shift has drawn attention to the emissions intensity of Indonesian production and the potential costs linked to EU carbon and trade rules.
EU steel data cited by EUROFER show Indonesian deliveries of finished steel to the bloc rose by 70% year on year in the first six months of 2026. The same period gave Indonesia an 8.8% share of EU finished-steel imports. This contrasted with a 5% decline in total EU steel imports and reduced shipments from several established suppliers.
The reported figures indicate a larger role for Indonesia in regional and international metals supply chains. They do not, however, establish that the Carbon Border Adjustment Mechanism (CBAM) directly prompted European buyers to switch to Indonesian steel.
Emissions vary by production route and installation
Indonesia’s industrial expansion combines large-scale production facilities, Asian investment, access to international shipping routes, and a product mix that can supply European hot-rolled steel markets. Despite this capacity base, Indonesian producers do not have a single emissions profile across mills.
Mills relying on coal-intensive electricity or blast-furnace production routes may produce higher embedded emissions than facilities using different technologies. Differences can also reflect variations in scrap inputs and the use of lower-carbon electricity.
For CBAM-related purposes, emissions associated with an imported product need to be established at the installation and product level. The country of origin alone does not determine the carbon intensity of a specific shipment.
CBAM pricing and methodology affect covered import liabilities
The EU’s CBAM entered its definitive phase in January 2026, increasing the importance of emissions calculations for covered steel imports. Where verified actual emissions data are not available, applicable default values can lead to higher calculated liabilities.
The reference price for CBAM certificates in the third quarter of 2026 was €82.32 per tonne of CO₂ equivalent. The reference price does not translate into a uniform charge for every tonne of imported steel.
The final obligation depends on the emissions calculation used for each import. It also reflects adjustments tied to the relevant free-allocation benchmark and any qualifying carbon price already paid abroad, which importers must account for when calculating carbon-related costs.
Inventory timing and July 2026 safeguards shape trade outlooks
Shipment growth is also linked to changes in purchasing and inventory patterns. Market analysis identified unusually large volumes of Indonesian hot-rolled coil shipped ahead of the January 2026 CBAM deadline, followed by a sharp reversal early in the year.
A separate EU steel trade regime introduced in July 2026 further limits delivery expansion. The measure sets annual tariff-free import quotas of approximately 18.3 million tonnes and applies a 50% duty on imports above the applicable quotas.
These elements complicate projections based on first-half trade data. A 70% year-on-year increase in shipments does not by itself indicate full-year export growth because inventory movements and quota access can influence results.
Customs status and documentation drive different delivered costs
European distributors are required to distinguish between steel customs-cleared before 2026, new covered imports assessed using applicable default emissions values, and new covered imports supported by verifiable actual emissions data. Even when physical grade and supplier are identical, these categories can result in different effective delivered costs.
Documentation, customs status, and the applicable emissions methodology therefore affect purchasing and inventory decisions. The approach taken for each shipment determines how carbon-related cost elements are calculated under CBAM rules.
Financing EU supply increasingly requires emissions monitoring
For investors financing Indonesian steel capacity, access to the European market involves factors beyond production costs and port infrastructure. Projects seeking to supply EU customers increasingly need robust environmental monitoring, traceable precursor inputs, and demonstrable reductions in process emissions.
The first-half gains have positioned Indonesia as a significant supplier of finished steel to the European Union. Whether that position persists depends on how quota utilisation aligns with verifiable production emissions and how stable supply contracts remain with European customers.