Indonesia has moved closer to the centre of Europe’s steel supply picture in the first half of 2026, even as overall EU steel imports declined. EUROFER data show Indonesian deliveries of finished steel increased sharply year on year, lifting the country’s share of EU finished-steel imports. The shift is drawing closer scrutiny from buyers and compliance teams on how emissions intensity is determined for each shipment and how trade rules may limit further expansion.
In the first six months of 2026, Indonesian deliveries of finished steel to the EU rose 70% year on year, according to EUROFER. That performance translated into an 8.8% share of EU finished-steel imports. The same period saw total EU steel imports fall by 5%, alongside declining shipments from several established suppliers.
While the numbers underline Indonesia’s growing role in regional and international metals supply chains, they do not prove that the Carbon Border Adjustment Mechanism (CBAM) directly drove European buyers to switch sourcing. Other market factors, including purchasing timing and inventory behaviour, have also been linked to the observed delivery pattern. For importers, the key question is how emissions calculations and trade constraints will affect delivered costs for future volumes.
Indonesia’s industrial scale and export logistics provide a platform for supplying European hot-rolled steel markets. Its expansion combines large-scale production facilities, Asian investment, access to international shipping routes and a product mix aligned with demand in Europe. However, emissions exposure is not uniform across producers or production routes within the country.
Producers using coal-intensive electricity or blast-furnace routes may embed higher emissions than facilities relying on different technologies, higher scrap inputs or lower-carbon electricity. Because emissions associated with an imported product must be established at the installation and product level, country-level averages cannot be treated as a proxy for every shipment. This installation- and product-specific requirement increases the compliance burden for distributors handling multiple mills and grades.
The CBAM framework entered its definitive phase in January 2026, making emissions calculations a more direct input into the economics of covered steel imports. Where verified actual emissions data are not available, default values may increase calculated liabilities. For importers assessing Indonesian supply, this can change cost expectations even when physical volumes and grades appear comparable.
The third-quarter 2026 CBAM certificate reference price was €82.32 per tonne of CO₂ equivalent. That reference price does not translate into a single uniform charge per tonne of imported steel because final obligations depend on the applicable emissions calculation method. Importers also need to account for adjustments tied to the relevant free-allocation benchmark and any qualifying carbon price already paid abroad.
Beyond carbon pricing, trade dynamics are also influencing how quickly Indonesian volumes can grow in practice. Market analysis pointed to unusually large quantities of Indonesian hot-rolled coil shipped ahead of the January 2026 CBAM deadline, followed by a sharp reversal early in the year. These inventory-driven movements complicate interpretation of first-half figures as an indicator of full-year export trajectories.
Further constraints were introduced through a separate EU steel trade regime launched in July 2026. The measure sets annual tariff-free import quotas of approximately 18.3 million tonnes and applies a 50% duty on imports exceeding those quotas. As a result, even if delivery patterns remain strong at the start of the year, quota utilisation and access can limit additional expansion later in 2026.
For European distributors, CBAM-related cost exposure depends on how each consignment is treated under customs timing and documentation status. Steel customs-cleared before 2026 sits outside the same assessment logic as new covered imports evaluated using applicable default emissions values. New covered imports supported by verifiable actual emissions data can carry different effective delivered costs even when grade and supplier match.
This distinction makes documentation quality and administrative status central to purchasing decisions and inventory planning. It also raises operational requirements for firms managing mixed portfolios across time periods and mill sources. In parallel, investment decisions linked to Indonesian capacity increasingly incorporate emissions monitoring needs rather than focusing only on production costs and port infrastructure.
Projects aiming to supply EU customers increasingly require robust environmental monitoring, traceable precursor inputs and demonstrable reductions in process emissions. In this context, Indonesia’s gains have positioned it as a significant supplier of finished steel to the European Union during 2026’s first half. Whether that position holds will depend on how quota utilisation interacts with verifiable production emissions and how stable supply contracts remain with European customers.
Taken together, the EU import data show rapid growth in Indonesian deliveries alongside declining total EU volumes, but they do not establish CBAM as the sole driver behind buyer switching. The definitive CBAM phase from January 2026 raises sensitivity to default versus verified emissions calculations, while July 2026 quota rules constrain volume expansion through tariff-free limits and higher duties beyond them. For exporters and importers alike, compliance outcomes will hinge on installation- and product-level emissions evidence, customs status timing and inventory patterns that can shift shipments around regulatory deadlines.