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. The pressure is already visible at Impol Seval, one of Serbia’s largest aluminium exporters. From January 1, 2026, iron and steel and aluminium fall within the definitive CBAM regime.
Impol Seval results highlight cost pressure
Impol Seval, based in Sevojno, reported a standalone first-half loss of RSD 346 million, around €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. 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.
The company exports around 96% of its production, mainly to the EU. Its results are presented as an indicator of commercial pressure building across Serbia’s metals industry. The shift described is not limited to whether Serbian producers can manufacture steel or aluminium cheaply enough to compete with European suppliers.
CBAM certificate pricing and 2026 compliance timeline
Under 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 Commission’s first two quarterly CBAM certificate prices were €75.36 per tonne of CO2 for Q1 and €75.28/t for Q2. This framework turns carbon intensity into a component of the commercial relationship between Serbian factories and European customers.
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.
Steel and aluminium exposures tied to EU markets
Trade estimates based on 2025 flows place Serbian exports within the existing CBAM iron and steel perimeter at around €912 million, making steel Serbia’s largest individual CBAM goods exposure. Aluminium accounts for roughly another €519 million. Together, the two metals represent 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. Broader 2025 trade data indicate that EU markets absorbed the large majority of Serbia’s combined primary iron and steel and steel-product exports, linking European carbon and industrial policy more directly to the operating environment for Serbian producers.
Embedded-emissions evidence flows through supply chains
The legal responsibility sits primarily with the European 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.
This creates a distinction between Serbian suppliers based on what emissions evidence can be provided for verification. One exporter may supply an installation-level monitoring methodology, production data, precursor information, controlled allocation methodology and verified embedded-emissions figures, while another may provide incomplete data that forces reliance on applicable default values.
Electricity sourcing affects costs but not direct CBAM liability under current rules
The definitive regime as currently structured subjects iron and steel and aluminium to 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 and include indirect emissions.
This means purchasing renewable electricity does not automatically reduce current CBAM certificate requirements for Serbian steel or aluminium exporters because electricity is greener. Electricity remains relevant because it is described as a major industrial cost for aluminium and increasingly important for steel as production routes move toward greater electrification.
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 is therefore described as both cost management and preparation for potential future carbon regulation changes.
CBAM shifts procurement discussions toward verifiable emissions data
The negotiating relationship between Serbian exporters and European customers changes as carbon exposure becomes another economic variable alongside delivered price considerations. A producer able to document lower actual embedded emissions can provide greater certainty over future CBAM costs for its European customer.
A producer unable to provide reliable verified information may face uncertainty that an importer seeks to address through lower purchase prices, contractual protections or switching suppliers. Although financial obligation remains with the EU declarant, importers can attempt to transfer CBAM exposure upstream through procurement negotiations.
This is described as particularly relevant because the EU remains Serbia’s dominant merchandise-trade partner, accounting for 58.6% of total Serbian goods trade in January-July 2026. Steel and aluminium producers are therefore presented as unable to treat CBAM as peripheral when principal customers operate inside that market.
Production mix adjustments at Impol Seval amid margin pressure
Impol Seval increased output to 26,119 tonnes, up 1.4% year on year, while revenue also increased during the first half period referenced. Profitability deteriorated because input costs rose faster than revenue growth. The company responded by increasing prices and shifting more production toward its foundry.
The shift includes producing less processed and lower-value products described as part of an effort that may protect utilisation while also reflecting weakness in competing primarily through volume. The same direction is described as applying across Serbian metals producers seeking products where processing, technical specification, traceability, lower emissions and verified data support higher value per tonne.
The next competitive test highlighted is whether producers can combine lower operating costs, cleaner electricity and verified emissions data strongly enough to protect margins when European buyers price carbon into contracts themselves. For steel and aluminium in 2026, immediate CBAM liability focuses on direct embedded emissions while electricity sourcing matters through cost impacts, buyer requirements and preparation for potential future inclusion of indirect emissions.
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