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 converge in the price European buyers are prepared to pay. From January 1, 2026, iron and steel and aluminium fall under the definitive CBAM regime, with EU importers required to account for embedded emissions in covered imports and ultimately surrender CBAM certificates linked to the EU carbon price.
Pressure is visible at Impol Seval, one of Serbia’s largest aluminium exporters. The Sevojno-based producer reported a standalone first-half loss of RSD 346 million, about €2.9 million, compared with a loss of RSD 86.7 million a year earlier. Operating revenue rose to RSD 11.6 billion from RSD 10.5 billion, while costs increased faster to RSD 11.9 billion, driven by higher raw-material, energy and service expenses that outweighed increased production and internal efficiency measures.
Impol Seval exports around 96% of its production, mainly to the EU, making its results a reference point for commercial pressure across Serbia’s metals sector. The shift is not limited to whether Serbian producers can manufacture steel or aluminium cheaply enough to compete with European suppliers. It also reflects how CBAM moves into pricing decisions for covered goods.
CBAM coverage expands for iron and steel and aluminium
The definitive CBAM regime requires EU importers above the applicable threshold to account for embedded emissions in covered imports and surrender certificates linked to the EU carbon price. The Commission’s first two quarterly CBAM certificate prices were €75.36 per tonne of CO₂ for Q1 and €75.28/t for Q2.
The steel segment represents Serbia’s largest exposure within the current CBAM framework. Trade estimates based on 2025 flows place Serbian exports within the existing CBAM iron and steel perimeter at around €912 million. Aluminium accounts for roughly another €519 million, bringing combined exposure from the two metals to around €1.43 billion 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 of producers and processors supplying rolled products, tubes, structures, fasteners and other steel products to European markets. Broader 2025 trade data indicate that EU markets absorbed the large majority of Serbia’s combined primary iron and steel and steel-product exports. That means European carbon and industrial policy increasingly forms part of the commercial environment for Serbian producers.
Embedded emissions information flows through supply chains
CBAM creates an additional competitive calculation alongside the conventional delivered price of steel for exporters selling into the EU market. European customers increasingly need information on both the cost per tonne at the Serbian factory gate and the embedded emissions attached to that tonne, which determines resulting CBAM exposure.
The legal responsibility sits primarily with the EU side of the border: the authorised CBAM declarant must declare embedded emissions and surrender required certificates. However, information needed to calculate actual embedded emissions originates largely with the non-EU producer, pushing part of compliance requirements back through the supply chain to Serbia.
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 can create differences between Serbian suppliers even when physical products are similar. One exporter may provide installation-level monitoring methodology, production data, precursor information, controlled allocation methodology and verified embedded-emissions figures, while another may provide incomplete data that leads importers to rely on applicable default values. As a result, carbon-related evidence can influence procurement choices and contract terms.
Direct emissions are in scope; electricity affects costs differently
Electricity sourcing is also becoming a competitive issue for Serbian metals producers under current CBAM rules. Under the definitive regime as structured, iron and steel and aluminium face CBAM on direct embedded emissions, while indirect emissions from electricity consumed during production are not currently included in their CBAM certificate liability. Cement and fertilisers are treated differently because they include indirect emissions.
This structure means purchasing renewable electricity does not automatically reduce current CBAM certificate requirements for Serbian steel or aluminium exporters based solely on greener electricity supply. Electricity remains relevant because it is a major industrial cost for aluminium and becomes increasingly important for steel as production routes move toward greater electrification. Competitive renewable electricity can improve operating economics even where indirect emissions are not included in today’s CBAM liability.
The European Commission is examining how indirect emissions could be extended to additional CBAM sectors, including conditions under which actual electricity emissions might be recognised through mechanisms such as direct technical connections, power purchase agreements and verification. For Serbian metals producers, electricity strategy therefore functions as both cost management and preparation for potential future regulatory inclusion of indirect emissions.
Impol Seval output rises while losses widen
Impol Seval’s first-half figures show how cost timing can affect margins even when volumes increase. The company increased output to 26,119 tonnes, up 1.4% year on year, while revenue also increased. Profitability deteriorated because input costs rose faster than revenue.
The company responded by increasing prices and shifting more production toward its foundry, including less processed and lower-value products. This approach may protect utilisation but also highlights reliance on competing through volume rather than higher value per tonne.
The next competitive test for Serbia’s steel and aluminium exports is whether producers can combine lower operating costs, cleaner electricity procurement strategies and verified emissions data strongly enough to protect margins when European buyers incorporate carbon costs into contracts. For 2026 shipments under current rules, immediate CBAM liability focuses on direct embedded emissions; electricity sourcing affects competitiveness through cost structures, buyer requirements for evidence readiness, and preparation for potential future inclusion of indirect emissions.
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