Serbia’s steel and aluminium producers are facing a more complex competitive environment in the European Union as weak industrial demand, elevated energy costs and the Carbon Border Adjustment Mechanism (CBAM) increasingly affect export economics. The pressure is already evident at Impol Seval, one of Serbia’s major aluminium exporters. The Sevojno-based producer recorded a standalone first-half loss of RSD 346 million, about €2.9 million, compared with RSD 86.7 million a year earlier.
Operating revenue increased from RSD 10.5 billion to RSD 11.6 billion, but operating costs rose faster, reaching RSD 11.9 billion. Higher raw-material, energy and service expenses outweighed increased production and internal efficiency measures. Around 96% of Impol Seval’s output is exported, mainly to the EU, leaving the company highly exposed to European industrial demand, aluminium prices, energy costs and changing trade conditions.
Steel and aluminium within CBAM
Iron and steel and aluminium have been 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 first two quarterly CBAM certificate prices were €75.36 per tonne of CO₂ in the first quarter and €75.28/t in the second quarter. The mechanism adds an emissions-related cost calculation to the conventional delivered price of Serbian metal. European buyers increasingly need information about both the price of a tonne and the embedded emissions associated with that tonne.
Serbia’s largest CBAM metals exposure
Steel represents Serbia’s largest individual metals exposure under the current CBAM framework. Estimates based on 2025 trade flows put Serbian exports within the existing CBAM iron and steel perimeter at approximately €912 million, while aluminium accounted for about €519 million. Together, the two metals represented approximately €1.43 billion of Serbian exports exposed to the current CBAM framework before electricity, fertilisers and cement are included.
The Serbian steel exposure includes HBIS Serbia’s Smederevo steelworks, Metalfer Steel Mill and other producers and processors supplying rolled products, tubes, structures, fasteners and other steel products to European markets. EU markets absorb the large majority of Serbia’s combined primary iron and steel and steel-product exports, making European carbon and industrial policy an increasingly important part of the commercial environment for Serbian producers.
Emissions data move through the supply chain
The formal CBAM obligation rests primarily with the European side of the transaction. The authorised CBAM declarant is responsible for declaring embedded emissions and surrendering the required certificates. Much of the information needed for that calculation originates with the non-EU producer.
For imports made during 2026, the first annual CBAM declaration is due. Where actual emissions are used instead of applicable Commission default values, the non-EU producer must supply information capable of supporting verification. This creates differences between suppliers depending on the quality of their emissions data. A producer may provide an installation-level monitoring methodology, production figures, precursor information, controlled allocation methodology and verified embedded-emissions data. Another supplier may provide incomplete information, leaving the importer dependent on applicable default values.
The result is that products with similar physical characteristics can carry different effective costs for European buyers depending on the emissions information available. CBAM is therefore becoming relevant to sales contracts, procurement, pricing and supplier selection, rather than remaining solely an environmental compliance matter.
Electricity remains a separate cost factor
Electricity sourcing is also becoming more important for Serbian metals producers, although the current CBAM rules distinguish between direct and indirect emissions. Under the definitive regime, iron and steel and aluminium are subject 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, with indirect emissions included in their CBAM treatment.
As a result, renewable electricity does not automatically reduce the current CBAM certificate liability for Serbian steel or aluminium simply because the electricity has lower emissions. Electricity nevertheless remains a significant industrial cost, particularly for aluminium, while its importance is increasing for steel as production processes become more electrified. Competitively priced renewable electricity can therefore affect operating costs even where its indirect emissions are not currently included in the CBAM charge. It can also support Serbian suppliers dealing with European industrial customers that have their own decarbonisation targets and product-carbon-footprint requirements.
Future rules and production emissions
The European Commission is examining how indirect emissions could be extended to additional CBAM sectors, including circumstances in which actual electricity emissions could be recognised through direct technical connections, power purchase agreements and verification. For Serbian producers, electricity strategy therefore has implications beyond current CBAM liabilities. Renewable electricity alone cannot eliminate the direct emissions associated with carbon-intensive production routes. CBAM competitiveness also depends on the emissions profile of the production process, precursor emissions, production data and the ability to verify the resulting calculations. The European Commission issued definitive-period guidance for iron and steel and aluminium in August, together with separate guidance covering calculation methodology and verification.
CBAM enters commercial negotiations
The new requirements add another variable to negotiations between Serbian exporters and European customers. Buyers previously compared factors such as price, product specifications, quality, delivery reliability and payment terms. Carbon exposure now forms an additional economic consideration. A Serbian producer able to document lower actual embedded emissions can provide its European customer with greater certainty about future CBAM costs. Incomplete or unreliable information can instead create uncertainty that buyers may address through procurement terms, contractual protections or supplier selection.
The financial obligation remains with the EU declarant, while the commercial implications can extend upstream through procurement negotiations. This is particularly significant because the EU accounted for 58.6% of Serbia’s total goods trade in January-July 2026.
Impol Seval highlights pressure on margins
Impol Seval’s first-half results demonstrate the pressure facing exporters. Production reached 26,119 tonnes, an increase of 1.4% year on year, while revenue also increased. Nevertheless, the company recorded a substantially larger loss because input costs increased faster than sales. The company has responded by raising finished-product prices and increasing use of its foundry capacity, including production of products with a lower degree of processing and lower added value. Higher production volumes therefore do not necessarily translate into stronger earnings when the product mix shifts toward lower-value material while energy, raw-material, logistics and other costs remain elevated.
For Serbia’s metals producers, the competitive calculation increasingly includes production efficiency, processing level, emissions performance, traceability and the ability to provide verified information alongside the physical product. This places greater importance on documented production routes, precursor data, embedded-emissions calculations and verification as Serbian steel and aluminium move into the EU market. For steel and aluminium exporters, the immediate CBAM liability remains focused on direct embedded emissions, while electricity sourcing continues to affect operating costs, customer requirements and preparedness for potential future changes to indirect-emissions rules.
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