Serbia’s steel industry is entering the definitive EU Carbon Border Adjustment Mechanism just as Brussels tightens another set of rules governing steel access to the bloc, putting a trade worth around €1 billion a year under simultaneous carbon, customs and industrial-policy pressure.
EU imports from Serbia in 2025 included about $640.7 million of iron and steel under HS Chapter 72 and another $573.5 million of articles of iron or steel under Chapter 73, creating a gross trade envelope of roughly $1.21 billion.
Not all of those goods are covered by CBAM.
But a large majority of Serbia’s main steel exports — including hot-rolled, cold-rolled and coated flat products and a range of downstream structures, tubes and fasteners — fall within the current carbon-border perimeter.
At the same time, EU data used in a new steel safeguard framework show imports of the steel products concerned from Serbia rising from 657,318 tonnes in 2024 to 760,234 tonnes in 2025, an increase of almost 16% in a single year.
The result is a double border test.
Serbian steel exporters must preserve physical access to their largest market while also proving the carbon content of the material they send there.
For HBIS Group Serbia, downstream fabricators and their EU customers, competitiveness is moving beyond price, specification and logistics toward a fourth variable: verified embedded emissions.
Serbia’s exposure extends far beyond one steel plant
The Smederevo steelworks remains the obvious starting point.
HBIS Group Serbia is the country’s dominant primary steel producer and sits at the centre of a supply chain extending into processors, fabricators, construction-product manufacturers, machinery suppliers and exporters.
But treating CBAM as only an HBIS problem misses a significant part of Serbia’s exposure.
EU imports from Serbia under Chapter 73 alone were worth more than $570 million in 2025.
Among the largest lines were approximately $209 million of steel structures and structural parts, almost $147 million of other iron and steel articles, around $40 million of tubes and hollow profiles, and more than $26 million of screws, bolts and related fasteners.
Many Serbian companies exporting such goods do not operate blast furnaces or produce crude steel.
Their CBAM problem can nevertheless begin upstream at the steel mill.
For a downstream manufacturer, the emissions incorporated in a qualifying precursor may become central to the emissions assigned to the final CBAM good.
That means a Serbian fabricator can have efficient machinery, modern production halls and relatively low direct emissions at its own site but still face substantial CBAM exposure because of the embedded emissions in the steel it buys.
The carbon file follows the material.
The €1 billion number needs to be handled carefully
The broad steel trade value should not be confused with exact CBAM exposure.
CBAM applies according to specified CN codes, not broad industry labels.
Most of Chapter 72 is included, but there are exclusions. Ferrous waste and scrap under HS 7204, for example, is outside the current Annex I list, as are specified ferro-alloys.
Chapter 73 is even more selective.
Some downstream product families are explicitly covered while others are not.
A first-pass mapping of Serbia’s 2025 trade suggests around €960 million of the roughly €1.07 billion broad HS72-plus-HS73 envelope falls clearly inside current CBAM headings.
That would put indicative coverage close to 90%.
The number should ultimately be reconciled at CN8 level before being treated as an audit-grade total.
But the strategic conclusion is already difficult to avoid: CBAM reaches deep into Serbia’s EU-facing steel industry.
The largest Chapter 72 flows illustrate the point.
EU imports from Serbia in 2025 included around $384 million of hot-rolled flat iron and non-alloy steel, $124 million of coated or plated flat products and $63 million of cold-rolled flat products.
Together those three categories accounted for almost $570 million.
By comparison, ferrous scrap — a major obvious exclusion — represented about $25 million.
This is not therefore a regulatory issue concentrated in marginal products.
It sits in Serbia’s core steel export basket.
A second EU constraint is arriving at the same time
The carbon-border shift comes as the EU is also tightening steel trade protection.
In August, the European Commission adopted rules implementing bilateral safeguard measures for steel products originating in countries with which the EU has free-trade agreements, including Serbia.
The Commission’s analysis showed imports of the products concerned from Serbia at 664,743 tonnes in 2023, 657,318 tonnes in 2024 and 760,234 tonnes in 2025.
The EU described the increase over the 2023-2025 period as 14%. The jump between 2024 and 2025 was larger, at about 15.7%.
The safeguard product basket is not identical to the CBAM product basket.
The two mechanisms should not be conflated.
But commercially, they meet at the same factory gate.
A Serbian producer may simultaneously need to manage tariff-rate or safeguard constraints, product origin, EU customer demand, carbon data and the price of CBAM certificates.
That gives Serbia’s steel industry a broader challenge than simply calculating emissions.
It must protect market access while reducing the carbon cost of that access.
2026 has already exposed weakness in basic metals
The domestic production backdrop has also weakened.
Serbian industrial production data show output in basic metals down 12.5% year on year in January-July 2026.
July alone was substantially weaker than a year earlier.
At the same time, the trade picture is more nuanced.
The National Bank of Serbia said exports from fabricated metal products excluding machinery and equipment increased 20.8% in January-July and made one of the largest positive contributions to overall Serbian export growth.
The two indicators are not contradictory.
They show that Serbia’s metals economy cannot be viewed as a single market.
Primary and basic-metal production can weaken while downstream exporters continue performing strongly, drawing on existing inventories, imported materials, different product mixes or stronger foreign demand.
CBAM connects those two parts of the chain.
A processor that exports structures or fasteners can depend on emissions information originating with a precursor supplier.
That makes the carbon performance of Serbian and imported steel increasingly relevant to companies that historically viewed carbon accounting as somebody else’s problem.
The evidence file begins at the installation
For a steel producer seeking to provide actual emissions to an EU customer, the required data is no longer a general ESG estimate.
The calculation must be linked to a defined installation, production process and reporting period.
At a practical level, that means building a controlled evidence file around:
- installation identity and boundaries;
- production route;
- fuel consumption and process emissions;
- material and energy balances;
- production volumes;
- precursor quantities;
- embedded emissions of relevant precursors;
- allocation methodology;
- metering and laboratory records;
- monitoring plan;
- calculation files and data controls;
- product quantities and CN classification;
- EU customer and authorised declarant linkage;
and independent verification where actual values are used.
For integrated steel production, much of that information sits inside a single industrial system.
For downstream processing, the harder problem can be upstream.
A manufacturer cannot calculate accurate embedded emissions for a complex CBAM good if it does not know the emissions associated with the precursor material entering its plant.
CBAM therefore turns purchasing departments into part of the carbon-control system.
Precursor data is where many exporters will encounter the problem
This is one of the most important changes for Serbian manufacturers.
A steel structure producer may buy coil, plate, tube or another semi-finished steel input and transform it into a final exported product.
Historically, procurement data centred on grade, dimensions, chemical properties, certification, price and delivery.
CBAM adds another set of questions.
Which installation produced the precursor?
Which production route was used?
What were the specific embedded emissions?
Are those values based on actual verified data or default values?
What quantity was purchased?
How much was allocated to the final exported product?
Can the consumption be reconciled with stock movements, scrap, yield and production records?
Where a supplier cannot provide usable information, the EU importer may have to rely on default values.
That becomes increasingly consequential because the definitive-period default system is deliberately conservative.
For iron and steel and aluminium, applicable default values carry a 10% mark-up in 2026, rising to 20% in 2027 and 30% from 2028 onward under the current rules.
That creates a progressively stronger commercial incentive to develop verified actual emissions where those actual values are competitive.
The result is likely to be a hierarchy of suppliers.
At the top will be suppliers able to provide timely, verified installation-level information.
Below them will be suppliers able to provide partial data.
At the bottom will be suppliers whose customers must rely on increasingly conservative defaults.
For an EU buyer comparing otherwise similar Serbian suppliers, the difference can eventually become visible in the carbon cost of the imported product.
Green electricity helps, but it does not solve today’s steel CBAM calculation
The role of renewable electricity also needs careful treatment.
Steel producers worldwide are signing renewable PPAs and building on-site solar plants to reduce energy costs and carbon footprints.
These investments matter.
They can reduce corporate emissions, improve ESG performance, support future decarbonisation and potentially become increasingly important as CBAM develops.
But under the current definitive CBAM scope, iron and steel is subject to direct embedded emissions rather than indirect electricity emissions.
That means buying renewable electricity does not automatically remove the immediate CBAM liability associated with direct steelmaking emissions.
For a blast-furnace/basic-oxygen-furnace route, the central challenge remains the carbon intensity of the production process itself.
HBIS has also pursued renewable-energy initiatives at its Smederevo site, including planning for solar generation.
Those investments are strategically relevant, but they should not be presented as a simple one-for-one solution to current CBAM exposure.
The harder decarbonisation question concerns steelmaking technology, fuels, material inputs and production route.
A €75 carbon price turns data quality into money
The EU’s CBAM certificate price is linked to EU ETS auction prices.
The Commission published a Q1 2026 CBAM certificate price of €75.36 per tonne of CO₂ and €75.28 for Q2.
The actual cost attached to a tonne of Serbian steel cannot be calculated simply by multiplying a plant’s gross emissions by €75.
The final number depends on the relevant embedded emissions, the CBAM benchmark/free-allocation adjustment, any recognised carbon price already effectively paid and other regulatory parameters.
But the certificate price gives a useful sense of scale.
At around €75/tCO₂, even relatively small differences in verified embedded emissions can translate into meaningful differences in import economics across hundreds of thousands of tonnes.
That makes emissions data commercially material.
It is no longer merely information for a sustainability report.
Contracts will start carrying the carbon risk
The next stage will move into commercial contracts.
EU steel buyers have reason to demand more specific CBAM provisions from non-EU suppliers.
Those clauses can cover:
- data-delivery deadlines;
- verification rights;
- access to installation information;
- accuracy warranties;
- treatment of default values;
- precursor data;
- allocation methodology;
- liability where incorrect data increases the buyer’s CBAM cost;
- and cooperation with the accredited verifier.
For Serbian exporters, one of the biggest mistakes would be to treat those clauses as a routine legal appendix.
They determine who carries the financial risk if evidence fails.
A producer that promises actual values but later cannot substantiate them may leave the EU importer exposed to a more conservative calculation.
A buyer may therefore price that risk before the shipment leaves Serbia.
Verification is becoming part of market access
The European Commission published dedicated definitive-period steel guidance, Guidance 5d, on Aug. 14, followed by verification and accreditation guidance later that month.
The first annual CBAM declaration covering 2026 imports is due by Sept. 30, 2027.
Where actual emissions are used, those values must be verified.
For Serbia’s steel industry, that means 2026 production data already matters.
Companies that wait until 2027 to organise their 2026 evidence could discover that the required audit trail is incomplete.
Meters may not align with production boundaries.
Precursor documentation may be missing.
ERP records may not reconcile cleanly with the emissions calculation.
Suppliers may no longer be able to provide historical installation-level data.
Production batches and exported shipments may be difficult to allocate retrospectively.
The sensible commercial approach is therefore increasingly to build an audit-ready file during production, not after the reporting year ends.
The strategic question for Serbian steel
Serbia’s steel industry has several advantages.
It has established EU customers.
It sits geographically close to major Central European industrial markets.
Its steel and downstream products are embedded in existing supply chains.
EU import volumes from Serbia increased materially in 2025, demonstrating that demand for Serbian-origin steel remains substantial.
CBAM does not remove those advantages.
It changes the basis on which they are monetised.
The Serbian producer of the next decade will compete not only on cost per tonne but on verified emissions per tonne.
Downstream manufacturers will increasingly select precursor suppliers with carbon data as well as mechanical specifications.
Banks financing modernisation may begin treating emissions intensity and CBAM readiness as factors affecting export competitiveness and debt service.
EU buyers will increasingly know which suppliers can provide an audit-ready carbon file and which cannot.
The immediate risk is therefore not that Serbian steel suddenly disappears from European supply chains.
It is that suppliers that fail to control their emissions evidence gradually become more expensive, more difficult to contract with or less attractive than competitors that can demonstrate lower and better-verified embedded emissions.
Serbia spent decades building access to the European steel market around quality, price, logistics and trade agreements.
From 2026, that market increasingly has another entry document.
The next tonne of Serbian steel entering Europe will still need the right price and the right customs treatment.
Increasingly, it will also need the right carbon file.