European steel, aluminium, cement and fertiliser markets are facing diverging import costs as carbon liabilities, trade restrictions and energy expenses reshape purchasing decisions. The EU’s Carbon Border Adjustment Mechanism (CBAM), tighter steel safeguard quotas and elevated energy prices are changing the cost calculations for manufacturers sourcing materials from domestic and international suppliers.
The resulting price differences are increasingly visible between international commodity benchmarks and the final cost of materials delivered to European industrial customers. Importers, manufacturers and their financing banks must account for carbon exposure and customs duties alongside conventional commodity prices when assessing procurement costs.
European hot-rolled coil (HRC) prices illustrate the changing conditions. In early October 2026, Northwest European material was trading at approximately €731 per tonne ex-works, while Italian prices approached €734/t. Delivered offers in northern Europe ranged from €740/t to €760/t, supported by tighter inventories, production expenses and reduced flexibility in import sourcing.
Although demand remains subdued, particularly in construction and manufacturing, European steel producers have gained negotiating leverage as importers contend with additional costs and regulatory uncertainty.
Steel safeguards and CBAM increase import cost exposure
The EU introduced a new steel safeguard regime in July 2026, reducing tariff-free import quotas and increasing the duty on volumes exceeding those limits to 50%. Alongside CBAM, the regime creates two distinct sources of trade-related cost pressure for suppliers from Serbia, Türkiye, India and China.
The combined effect is particularly relevant to steel manufactured in carbon-intensive blast furnaces. Higher embedded emissions can increase an importer’s CBAM liability, while safeguard duties apply separately when shipments exceed the relevant quota limits.
The European Commission set the third-quarter 2026 CBAM certificate price at €82.32 per tonne of CO₂, up from €75.28/t in the previous quarter, representing an increase of approximately 9.4%.
This certificate price does not constitute a flat charge of €82 on every tonne of imported steel or other covered material. The actual liability depends on product-specific embedded emissions, applicable benchmarks, adjustments reflecting free allocations under the EU Emissions Trading System (EU ETS), and any qualifying carbon price already paid in the country of origin.
Production technology drives differences in steel liabilities
Indicative calculations based on EU default emissions values point to substantial differences between steel-producing countries. Certain Indian-origin hot-rolled steel products could face a modelled CBAM liability approaching €278/t, compared with approximately €179/t for comparable Chinese-origin material.
These figures represent default-based estimates rather than standard charges applicable to every product or production installation. Actual liabilities depend on the relevant emissions data and calculation rules.
For European buyers, the implications extend directly into procurement decisions. A supplier offering a lower headline steel price may no longer provide the most economical option once carbon liabilities, import duties, freight and compliance expenses are included in the delivered cost.
The distinction between production routes and verified emissions is therefore becoming increasingly important when manufacturers compare offers from European mills and overseas suppliers.
Aluminium premiums reflect regional supply and energy costs
Aluminium markets are experiencing a different combination of price pressures. The London Metal Exchange (LME) aluminium price stood at approximately €2,775/t on 7 October 2026, following conversion into euros. Meanwhile, European duty-paid physical premiums were close to €500/t in early October.
These premiums primarily reflect regional supply conditions, logistics and trade-related costs rather than CBAM alone. Depending on the applicable free-allocation adjustment, the immediate CBAM liability for some aluminium imports may be relatively modest, although the exposure varies according to production technology and actual embedded emissions.
For aluminium rolling mills, extrusion producers and downstream manufacturers, the combined expense of primary metal, electricity and more demanding traceability requirements is putting pressure on margins.
The ability to document production-related emissions is becoming an additional consideration for companies purchasing aluminium and supplying processed products to European customers.
Cement and fertilisers face additional carbon-related expenses
CBAM exposure also affects cement and fertiliser imports, where embedded emissions can represent a significant component of the final delivered cost.
Cement producers using carbon-intensive clinker face pressure to improve kiln efficiency and reduce emissions. The emissions intensity of production is an important factor in determining the carbon-related cost associated with covered imports.
In the fertiliser sector, illustrative calculations for Egyptian urea indicate a potential CBAM cost of approximately €43/t under the applicable default-value assumptions. This additional expense comes against a market backdrop already affected by volatile natural gas prices and international supply disruptions.
The impact across these sectors differs according to product characteristics, production methods and applicable emissions calculations, but the underlying cost assessment extends beyond the international commodity price.
Western Balkan exporters face tighter emissions requirements
For Serbia and the wider Western Balkans, the changing economics of European materials imports are particularly significant because industrial exporters depend heavily on access to EU customers. Their competitiveness is also influenced by electricity prices, production technologies and the cost of imported raw materials.
Serbian steel producer HBIS Serbia and aluminium exporter Impol Seval face increasing pressure to supply reliable installation-level emissions data and establish clear contractual arrangements with European customers.
For these companies, demonstrating embedded emissions and meeting verification requirements is becoming an increasingly important part of maintaining access to European supply chains. Buyers must be able to establish the relevant carbon-related costs when assessing offers from suppliers operating under different production and regulatory conditions.
The exposure also extends to Bosnia and Herzegovina. An assessment by the International Monetary Fund (IMF) identified CBAM-covered sectors accounting for approximately 11% of the country’s total exports. The activities highlighted include cement, aluminium, electricity and steel.
The concentration of export activity in these sectors makes changes to European carbon and trade requirements relevant to industrial producers across the region.
Banks assess carbon-adjusted costs and export competitiveness
Financial institutions providing industrial loans, working capital and financing for material purchases must consider how carbon-adjusted costs could affect borrowers’ margins and export volumes under European supply contracts.
Renewable electricity, improved energy efficiency and lower-emission production technologies may support longer-term competitiveness. However, the benefits under CBAM depend on the applicable emissions methodology and verification requirements.
For manufacturers, investments in lower-emission production need to be considered alongside the ability to measure, document and verify the resulting emissions performance. For lenders, these factors form part of assessing whether industrial borrowers can sustain their commercial position as European import costs change.
CBAM certificate purchases begin in February 2027
The first CBAM certificates covering imports made during 2026 will be available for purchase from February 2027. The first annual declaration and certificate surrender are due by 30 September 2027.
Meanwhile, the gradual phase-out of free allocation under the EU ETS through 2034 is expected to increase carbon-cost exposure over time.
These arrangements add a compliance timetable to the immediate commercial pressures affecting steel, aluminium, cement and fertiliser procurement. Importers and their suppliers must prepare the emissions information and supporting documentation needed for the applicable declarations.
Across the European materials market, the resulting cost differences increasingly depend on the origin of goods, the production technology used and the availability of independently verified emissions data. For Balkan exporters, demonstrating a lower and verifiable carbon footprint is becoming an important factor in competing for European customers. For EU manufacturers, the lowest ex-works quotation does not necessarily translate into the lowest cost once border charges, carbon liabilities and associated expenses are included.
