Serbia’s steel and aluminium exporters are facing a tougher competitive phase in the European Union as weak industrial demand, high energy costs and the EU’s Carbon Border Adjustment Mechanism increasingly affect the price European buyers are willing to pay. The pressure is visible at Impol Seval, one of Serbia’s largest aluminium exporters. From January 1, 2026, iron and steel and aluminium fall under the definitive CBAM regime.
Impol Seval results reflect cost pressure
Impol Seval reported a standalone first-half loss of RSD 346 million, about €2.9 million, compared with a loss of RSD 86.7 million in the same period 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 output, mainly to the EU. Its financial performance is presented as an indicator of commercial pressure across Serbia’s metals industry. The shift in profitability is linked to input costs rising faster than operating revenue.
Definitive CBAM expands into steel and aluminium
Under the definitive CBAM regime starting January 1, 2026, 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 per tonne for Q2. This framework increases the role of carbon intensity in commercial terms between Serbian producers and European customers.
The implications are described as particularly significant for Serbia’s steel industry. 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 to about €1.43 billion before electricity, fertilisers and cement are added.
EU market concentration shapes compliance-driven competition
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. The EU is described as particularly important to this supply chain. Broader 2025 trade data indicate that EU markets absorbed the large majority of Serbia’s combined primary iron and steel and steel-product exports.
This means European carbon and industrial policy increasingly forms part of the commercial environment for Serbian producers operating in EU markets. For exporters within the CBAM perimeter, the mechanism creates an additional competitive calculation alongside the conventional delivered price of steel. European customers increasingly need information not only on factory-gate cost per tonne but also on embedded emissions attached to shipments.
Embedded-emissions evidence flows through suppliers
The legal responsibility sits primarily with the European side of the border, where an 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 supplying covered goods. This structure pushes 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. The resulting differences can affect how much certainty an importer can obtain about future CBAM costs.
An exporter may provide installation-level monitoring methodology, production data, precursor information, controlled allocation methodology and verified embedded-emissions figures. Another may provide incomplete data that forces reliance on applicable default values even when physical products are similar. The effective cost to the European buyer can therefore differ between suppliers based on evidence quality.
Electricity sourcing affects costs but not direct CBAM liability
The current definitive regime distinguishes between direct embedded emissions subject to CBAM and indirect emissions from electricity consumed during production that are not included in certificate liability for iron and steel and aluminium. Cement and fertilisers are treated differently because they include indirect emissions. As a result, purchasing renewable electricity does not automatically reduce current CBAM certificate requirements for Serbian steel or aluminium exporters.
Electricity sourcing remains relevant because it affects production economics: electricity is described as a major industrial cost for aluminium and 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 current CBAM charges. It can also support positioning with European industrial buyers pursuing decarbonisation targets and product-carbon-footprint requirements.
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 a cost-management decision and preparation for potential future carbon regulation changes.
CBAM becomes part of procurement terms alongside product specifications
The mechanism is described as shifting negotiations between Serbian exporters and European customers by adding carbon exposure as another economic variable alongside price, specification, quality, delivery reliability and payment terms. A producer able to document lower actual embedded emissions can provide greater certainty over future CBAM costs for buyers. A producer unable to provide reliable verified information can create uncertainty that importers may seek to address through lower purchase prices, contractual protections or supplier changes.
The financial obligation remains with the EU declarant, but importers may attempt to transfer CBAM exposure upstream through procurement negotiations. Verified emissions data can become comparable in importance to other product specifications during supplier selection. For Serbia, this is linked to EU market dominance in merchandise trade, with the EU accounting for 58.6% of total Serbian goods trade in January-July 2026.
Output changes at Impol Seval coincide with margin deterioration
Impol Seval increased output to 26,119 tonnes, up 1.4% year on year, while revenue also increased during the first half period referenced in its results reporting. 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 as part of its response strategy. The company’s results are used to illustrate how timing can be difficult when costs rise faster than operating revenue even as tonnage increases. The same competitive issue is described as applying across Serbian metals producers seeking higher value per tonne supported by processing characteristics, technical specification, traceability, lower emissions and verified data.
The next competitive test for Serbia’s steel and aluminium exports is whether producers can combine lower operating costs, cleaner electricity procurement approaches and verified emissions data strongly enough to protect margins when European buyers incorporate carbon pricing into contracts themselves. For 2026 under current rules, immediate CBAM liability focuses on direct embedded emissions while electricity sourcing influences competitiveness through cost impacts and preparation for possible future inclusion of indirect emissions.
Elevated by CBAM.Clarion.Engineer