Serbian steel exporters are entering a more demanding phase of access to the European Union market as carbon accounting, import quotas and origin requirements increasingly affect the economics of cross-border sales. The European Commission published new sector-specific guidance on 14 August 2026 covering the calculation of embedded emissions for iron, steel and downstream products during the definitive phase of the Carbon Border Adjustment Mechanism (CBAM). For Serbian producers, the rules put greater emphasis on verified production data, emissions monitoring and documentation alongside the physical performance of steel plants.
- Steel remains central to Serbia’s industrial exports
- Integrated steelmaking faces detailed emissions accounting
- Scrap-based production has a different emissions profile
- Downstream manufacturers inherit the carbon cost of steel
- Verification is becoming part of export competitiveness
- EU quotas add a separate trade barrier
- CBAM and quotas alter the economics of European orders
The scale of Serbia’s exposure is considerable. The country exported about $731 million of iron and steel and $834 million of iron and steel products in 2025. EU customers purchased approximately $641 million of the first category and $573 million of the second. Taken together, EU buyers accounted for almost 78 per cent of Serbia’s exports across the two categories and close to 88 per cent of primary iron and steel exports.
Steel remains central to Serbia’s industrial exports
The customs figures represent a broader exposure rather than the precise CBAM tax base. Ferrous scrap is excluded, while some products classified within the wider iron and steel articles category are not currently covered. CBAM nevertheless extends across a substantial range of products, including hot- and cold-rolled steel, coated products, bars, wire, tubes, pipes, structures, fasteners and various fabricated components.
The implications reach far beyond Serbia’s two main steelmaking groups. The country’s wider metalworking and electrical-equipment sector generated approximately €15.2 billion in exports in 2025, representing 46.1 per cent of merchandise exports. The sector employs about 197,300 people, including more than 54,000 workers in fabricated metal products. Steel therefore feeds a broad industrial network covering construction products, machinery, vehicle components, energy infrastructure and privately owned manufacturers across Vojvodina, Šumadija and central Serbia. At the centre of the adjustment is HBIS Group Serbia, the Chinese-owned operator of the integrated steelworks in Smederevo and the tinplate operation in Šabac. HBIS acquired the Smederevo assets in 2016 and has since become one of Serbia’s largest industrial exporters and employers.
The company has finished-steel production capacity of approximately 2.2 million tonnes annually and supports more than 5,000 jobs. Reported environmental investment exceeds $300 million, although spending on environmental measures does not automatically translate into a lower CBAM liability.
Integrated steelmaking faces detailed emissions accounting
Smederevo operates an integrated blast furnace and basic oxygen furnace route. Under CBAM, emissions accounting therefore covers coke and other reducing agents, carbon contained in fuels and raw materials, carbonate consumption, graphite and electrodes, process gases, slag, waste streams and measurable heat flows. The calculation cannot simply divide total plant emissions by total steel production and apply one figure to every exported product. The Commission requires emissions to be assigned to defined production processes and transferred through the relevant precursor materials.
Sintered ore, pig iron, crude steel and rolled products have to be linked through mass flows that reflect production losses and differences between product categories. If more than one tonne of crude steel or slab is required to manufacture one tonne of finished product because of cutting, trimming, scale or rejects, the emissions associated with the larger precursor quantity remain connected to the saleable output. This has particular significance for HBIS because its production covers several customs classifications and multiple processing stages. Hot-rolled coil produced in Smederevo, cold-rolled products and tinplate processed in Šabac can share upstream emissions while producing different CBAM results. Each production route therefore requires documented transfers between installations and accounting that avoids both omissions and double counting.
The Commission permits an integrated “bubble” approach for installations producing two or more iron and steel categories where internally produced precursors are not separately sold. Once a precursor leaves the defined production process through an external sale, separate accounting is generally required. Waste gases are another potential source of accounting discrepancies. Blast furnace and coke oven gases can be used elsewhere within an installation to generate heat or electricity, but their carbon cannot be counted in both the original production process and the subsequent combustion.
In the Commission’s worked blast furnace example, correcting such double counting reduced reported direct emissions by almost 479,000 tonnes of CO₂. The example does not represent Smederevo’s actual emissions, but demonstrates how the accounting methodology can materially affect reported quantities.
The same example calculated embedded emissions of 1.567 tonnes of CO₂ per tonne of finished steel, comprising 1.539 tonnes of direct emissions and 0.028 tonnes linked to electricity used for sinter production. After the relevant free-allocation adjustment, an import of 10,000 tonnes of rails required 3,690 CBAM certificates, equal to 0.369 certificates per tonne. These figures cannot be applied as default assumptions to HBIS. Actual emissions at Smederevo depend on fuel efficiency, burden composition, yields, waste-gas treatment and product mix.
Their importance lies instead in the value of plant-specific evidence. Without verified actual data, a Serbian supplier can leave its European customer dependent on conservative default values, potentially increasing certificate requirements and reducing the price offered for the steel.
Scrap-based production has a different emissions profile
Metalfer Steel Mill in Sremska Mitrovica represents Serbia’s other principal steelmaking route. The privately owned producer operates an electric arc furnace and rolling facilities with annual capacity of approximately 0.5 million to 0.6 million tonnes. Its output includes reinforcing bar, rebar in coils and wire rod, while its primary raw material is steel scrap sourced in Serbia. The scrap-based production model produces a different CBAM profile. Scrap generally enters the calculation with zero embedded precursor emissions, although its carbon content must still be incorporated into the installation’s carbon mass balance.
Direct emissions continue to arise from fuels, electrodes, carbon additions, alloys and other inputs. Producers must also document scrap origin, grade and pre-consumer content. Electric arc furnace production requires substantial electricity, but current CBAM rules distinguish between direct and indirect emissions. For iron and steel products listed in Annex II, only direct emissions are generally included. Indirect electricity emissions are currently counted for sintered ore, but not separately charged on most finished steel products.
Renewable electricity can nevertheless reduce Metalfer’s operating costs, exposure to power-price fluctuations and future regulatory risks. It does not automatically lower the current CBAM certificate obligation for each tonne of exported rebar or wire rod. Metalfer has already obtained financing for measures in this area. Austria’s Development Bank provided a €25 million facility in 2022, followed by a further €20 million facility in 2023. The combined €45 million package supports renewable energy, solar capacity, wastewater treatment, energy efficiency and emissions reductions.
The company’s financing illustrates the growing importance of capital linked to measurable environmental and operating improvements.
The quality of production records remains critical. The Commission guidance requires weighted averages when production routes, precursor sources, reporting periods or electricity supplies are combined. Producers must also disclose information including scrap consumption per tonne, pre-consumer scrap shares, alloy composition and the carbon and metal content of ferroalloys. A low-emission production claim that cannot be supported by auditable material flows does not provide the required basis under the definitive CBAM system.
Downstream manufacturers inherit the carbon cost of steel
The effect extends into Serbian metal fabrication, where companies can carry much of the embedded carbon of the steel they purchase. Unipromet, a family-owned manufacturer headquartered in Čačak, was founded in 1989 and employs approximately 650 people. It reports annual turnover of about €102 million and operates production facilities in Čačak and Kraljevo.
Its products include road safety barriers, welded steel pipes, noise barriers, traffic signs and steel structures used for solar installations and carports. The company recently supplied approximately 65 kilometres of steel safety barriers for the Vrnjačka Banja–Vrba section of the Morava Corridor.
Such manufacturers operate between domestic infrastructure projects and international markets, while their exposure to CBAM can originate primarily from purchased steel rather than their own fabrication processes. In the Commission’s worked examples, precursor steel represented more than 90 per cent of total embedded emissions for certain fasteners and 94.3 per cent in one stainless-steel electric arc furnace example. These are not Serbian company-specific figures, but demonstrate the significance of upstream steel emissions for downstream exporters.
Cutting, welding, coating and finishing emissions can fall outside the defined process boundary for some iron and steel goods. However, the steel purchased before fabrication losses remains relevant. Where 1.18 tonnes of steel input are required to manufacture one tonne of fasteners, the embedded emissions attached to the full input quantity are allocated to the tonne sold. Selling fabrication scrap does not eliminate the upstream emissions attributed to the purchased steel. For companies such as Unipromet, this means identifying the customs classification of every exported product, documenting the origin and embedded emissions of the steel used, establishing the relevant production period and confirming whether supplier emissions data have been verified by an appropriately accredited verifier. A generic declaration that steel is “green” is insufficient as evidence.
Verification is becoming part of export competitiveness
The Commission guidance requires monitoring plans and emissions reports to be available in English, while supporting documentation must be retained for six years. Actual precursor data from another installation may be used only when the associated verification is valid for the appropriate sectoral scope and reporting period. Otherwise, the European importer may need to use default values. That creates particular pressure for smaller Serbian fabricators. Large European customers can require standardised emissions data, contractual warranties and mechanisms that transfer calculation errors back to suppliers.
Smaller exporters, meanwhile, may need verified information from steelmakers with significantly greater negotiating power. This can create a two-tier supply chain in which companies with verified product-level emissions retain access to major customers while those relying on default values compete through lower prices.
Although the formal CBAM liability rests with the authorised European importer, the economic impact can move through commercial contracts. Buyers can reduce ex-works prices, introduce carbon-adjustment clauses, request security against future corrections or move to suppliers offering more reliable emissions information. Serbian exporters could also encounter longer payment cycles while European customers reconcile certificate requirements. The financial impact can be illustrated without forecasting the future EU carbon price. Using €80 per tonne of CO₂, the reference figure used by the Commission when assessing unreasonable monitoring costs, a difference of 0.1 tonnes of certifiable emissions per tonne of steel represents €8 per tonne of product.
For annual sales of 500,000 tonnes, that difference amounts to €4 million. A discrepancy of 0.5 tonnes of CO₂ per tonne between verified actual emissions and an unfavourable default assumption would correspond to €20 million. The Commission’s illustrative blast furnace rail case would equal approximately €29.50 per tonne after the free-allocation adjustment at that carbon price. Its stainless-pipe example would result in almost €77 per tonne.
The examples involve different products, alloys, precursor assumptions and production routes, so they cannot be directly transferred to Serbian companies. They nevertheless demonstrate how product-level emissions documentation can have a substantial effect on margins.
EU quotas add a separate trade barrier
Carbon compliance is being introduced alongside tighter conventional controls on steel imports.
From 1 July 2026, the EU reduced its tariff-free steel import quota to 18.3 million tonnes annually, approximately 47 per cent below the volume permitted under the previous safeguard regime. Imports above the quota face a 50 per cent tariff, compared with the former rate of 25 per cent.
The revised system also introduces a “melt and pour” origin requirement designed to establish where steel was originally produced rather than where final processing occurred. The Commission’s timetable calls for detailed implementation by the end of August, with application from 1 October 2026. Serbian exporters will therefore have to demonstrate both the carbon characteristics and metallurgical origin of their products.
For HBIS, Chinese ownership of the Serbian company does not determine the steel’s origin. Steel genuinely melted and poured at Smederevo is Serbian-origin steel under the new requirement. The supporting evidence must nevertheless be sufficiently detailed to withstand customs checks. The position becomes more complicated for downstream Serbian manufacturers using imported coils, slabs or wire rod because fabrication in Serbia does not necessarily change the melt-and-pour origin.
CBAM and quotas alter the economics of European orders
The combined effect of CBAM, tariff quotas and origin requirements is likely to enter corporate investment and sales decisions. A product may have verified emissions and still become commercially unattractive once the tariff-free quota has been exhausted. Conversely, a product can remain inside the quota but lose orders if its carbon cost exceeds that of an EU producer or another foreign supplier.
European customers will increasingly evaluate landed cost by combining the steel price with transport, CBAM certificates, quota availability, tariff exposure and compliance risk. This calculation also affects Serbian financing conditions. Banks will need to incorporate these variables into credit assessments. Exporters unable to quantify CBAM exposure could face tighter working-capital limits, higher collateral requirements or wider credit spreads. Companies with verified low-emission production, diversified customer bases and long-term financing for modernisation should be better placed to protect cash flow. Development institutions can supply part of the required capital, but commercial lenders will still require credible emissions information before treating decarbonisation investment as a reduction in borrower risk.
At the national level, Serbia’s reliance on European industrial demand makes steel and metalworking competitiveness relevant to export earnings, employment and the current account. The exposure extends beyond the largest steelworks to transport companies, scrap collectors, engineering firms, construction-product manufacturers and financial institutions. The most valuable industrial capabilities under the definitive CBAM system will consequently include verified monitoring systems, reliable precursor contracts, documented production yields and the ability to connect every exported customs code with an auditable production record. For Serbian steel exporters, emissions data is becoming an integral part of the product sold into Europe and a growing factor in the price European buyers are prepared to pay.
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