LONDON/BRUSSELS, 31 OCTOBER 2026 — European demand for lower-emission imported steel is expected to expand over the next decade, while tighter trade restrictions could affect how foreign manufacturers convert cleaner production investments into higher export volumes.
Forecasts published by Fastmarkets on 30 October 2026 indicate that EU imports of hot-rolled coil (HRC) produced via electric arc furnace (EAF) routes could rise by more than 25% by 2035. At the same time, overall steel imports are expected to remain constrained by the EU’s revised trade protection framework.
The projections connect the Carbon Border Adjustment Mechanism (CBAM), tariff-rate quotas and changes in steel production economics. For international suppliers, emissions performance is increasingly relevant for competitiveness, but access to the EU market also depends on customs restrictions, applicable duties and available import quotas.
Green steel volumes projected to increase under emissions thresholds
Fastmarkets estimates that imports classified as green steel—defined in the forecast as production with emissions below 0.8 tonnes of CO2 equivalent per tonne of steel—could increase from about 300,000 tonnes to 1.6 million tonnes by 2035. That would be more than five times the current reference volume used in the forecast.
The projected rise is linked to increased market interest in lower-emission manufacturing routes, particularly EAFs using recycled scrap and direct-reduced iron (DRI). Compared with coal-intensive blast-furnace production, these technologies can deliver lower emissions.
The carbon intensity of these routes is not fixed and depends on production variables including electricity mix, raw material inputs, fuel consumption and characteristics of individual installations. EAF output also does not automatically qualify as green steel under the forecast threshold.
The emissions threshold applied in the Fastmarkets outlook must be distinguished from regulatory requirements and methodologies used under CBAM. The figures are forward-looking market projections rather than measured changes in EU imports during 2026.
EU trade protection changes introduce quota limits and extra tariffs
A separate constraint comes from the EU’s revised steel trade protection arrangements introduced on 1 July 2026. The update replaced the previous safeguard framework with a tariff-rate quota system.
Under the framework examined by Fastmarkets, imports exceeding applicable quotas face an additional 50% tariff. This adds a commercial consideration for manufacturers investing in lower-emission production.
Even if a foreign producer reduces embedded emissions and potentially lowers its CBAM exposure, quota availability may still limit deliveries to European customers. Conversely, suppliers with access to available quota volumes may continue exporting even when operating more carbon-intensive installations.
As a result, competitiveness of imported steel depends on combined factors including emissions intensity, customs classification, quota eligibility, applicable tariffs, transportation costs and competing offers. For international producers, cutting emissions is only one element of securing access to the European market.
CBAM exposure grows for blast-furnace routes as ETS free allowances decline
Fastmarkets expects steel produced through more emissions-intensive blast-furnace routes to face increasing competitive pressure as CBAM obligations develop. The EU mechanism calculates carbon-border liabilities using embedded emissions.
The calculation includes adjustments reflecting treatment of comparable EU production and qualifying carbon prices already paid in the country of origin. The financial impact is introduced progressively alongside reductions in free allowances under the EU Emissions Trading System (EU ETS).
Because of this phased approach, importers do not currently face the full theoretical carbon cost associated with every tonne of embedded emissions. For coal-intensive producers, future exposure depends on installation-level emissions, the applicable regulatory calculation methodology and developments in European carbon prices.
Investments in EAFs, scrap processing, direct-reduced iron and lower-emission electricity supply could improve manufacturers’ emissions performance. The return on such investments also depends on whether producers can secure sufficient access to export markets.
Energy costs and downstream procurement pressures linked to quotas
The combination of CBAM and import quotas could strengthen the competitive position of European steel producers against certain foreign suppliers. Domestic manufacturers still need to manage substantial decarbonisation expenditure and energy costs.
EAF operations require access to competitively priced electricity. Hydrogen-based ironmaking involves significant investment in production technology, energy supply and supporting infrastructure.
These requirements create financing challenges even where imported steel faces additional trade and carbon-related costs. Downstream manufacturers also face exposure to changes in steel availability and pricing.
Automotive producers, machinery manufacturers, construction businesses and other industrial consumers could encounter higher procurement expenses if domestic output and permitted import volumes are insufficient to meet demand at competitive prices. The relationship between import protection and industrial competitiveness therefore extends beyond primary steel production into costs faced by steel-consuming industries.
Serbia, Türkiye and Ukraine face combined customs classifications and CBAM considerations
The revised European framework is particularly relevant for Serbia, Türkiye, Ukraine and other steel-producing economies supplying the EU market. Serbian steelmakers and metal-processing companies need to account for interactions between customs classifications, embedded production emissions, tariff-rate quota availability and product pricing.
Even manufacturers with relatively low production emissions may encounter limitations when seeking to expand European sales if their products fall within restricted quota categories. Similar considerations apply to international producers evaluating investments in cleaner manufacturing facilities intended primarily for supplying European customers.
For industrial lenders, expected savings from lower CBAM exposure cannot be treated as equivalent to guaranteed growth in export revenue. Investment assessments also need to establish whether resulting production volumes can enter the intended market under applicable trade restrictions.
Investment decisions depend on carbon intensity alongside landed costs
Fastmarkets projections indicate that by 2035 lower-emission steel could represent a substantially larger share of external supply into Europe while total imports remain subject to trade restrictions. This affects investment decisions for both European and international production capacity.
The outlook suggests potential support for additional development of lower-emission manufacturing within the EU while limiting export opportunities for foreign producers serving European industrial customers. The commercial outcome depends on interactions among CBAM costs, tariff-rate quotas, industrial investment levels, energy prices and demand across the steel value chain.
For traders and industrial buyers, assessment extends beyond the carbon component to complete landed cost of imported steel. For manufacturers and financiers, investment calculations must incorporate emissions performance, customs access, production economics and availability of commercially viable export volumes.