Indonesia strengthened its position in the European Union’s steel import market during the first half of 2026, with shipments rising sharply despite declining overall import volumes. The expansion has increased attention on the emissions intensity of Indonesian production and the costs exporters may face under EU carbon and trade regulations.
According to EUROFER, Indonesian deliveries of finished steel to the EU climbed 70% year on year in the first six months of 2026, giving the country an 8.8% share of EU finished-steel imports. The increase contrasted with a 5% decline in total EU steel imports and falling shipments from several established suppliers.
The figures demonstrate Indonesia’s growing role in regional and international metals supply chains, but do not establish that the Carbon Border Adjustment Mechanism (CBAM) caused European buyers to switch to Indonesian steel.
Production technology determines emissions exposure
Indonesia’s industrial expansion combines large-scale production facilities, Asian investment, access to international shipping routes and a product mix capable of supplying European hot-rolled steel markets.
However, Indonesian steel producers do not share a uniform emissions profile. Mills using coal-intensive electricity or blast-furnace production routes may generate higher embedded emissions than facilities employing different technologies, greater scrap inputs or lower-carbon electricity.
The emissions associated with an imported product must therefore be established at the installation and product level. Country of origin alone does not determine the carbon intensity of a particular shipment.
CBAM certificate prices influence delivered steel costs
The EU’s CBAM entered its definitive phase in January 2026, making emissions calculations an increasingly important component of the economics of covered steel imports. Where verified actual emissions data are unavailable, applicable default values can result in higher calculated liabilities.
The third-quarter 2026 CBAM certificate reference price was €82.32 per tonne of CO₂ equivalent. This figure does not translate directly into a uniform charge on every tonne of imported steel.
The final obligation depends on the applicable emissions calculation, adjustments reflecting the relevant free-allocation benchmark and any qualifying carbon price already paid abroad. Importers must account for these elements when calculating the carbon-related cost of Indonesian steel.
Inventory movements and EU safeguards complicate trade forecasts
The growth in Indonesian shipments also reflects changes in purchasing and inventory patterns. Market analysis identified unusually large volumes of Indonesian hot-rolled coil shipped ahead of the January 2026 CBAM deadline, followed by a sharp reversal early in the year.
A separate EU steel trade regime introduced in July 2026 further constrains the scope for expanding deliveries. The measure establishes annual tariff-free import quotas of approximately 18.3 million tonnes and imposes a 50% duty on imports exceeding the applicable quotas.
These factors complicate projections based on first-half trade data. The 70% year-on-year increase does not, on its own, provide a reliable indication of Indonesia’s full-year export growth, given the influence of inventory movements and tighter quota access.
Importers assess different carbon-cost exposures
European distributors need to distinguish between steel that was customs-cleared before 2026, new covered imports assessed using applicable default emissions values, and new covered imports supported by verifiable actual emissions data.
These categories can carry different effective delivered costs even when the physical steel grade and supplier are identical. Documentation, customs status and the applicable emissions methodology are therefore important to purchasing and inventory decisions.
Investment decisions increasingly incorporate emissions monitoring
For investors financing Indonesian steel capacity, access to the European market involves considerations beyond production costs and port infrastructure. Projects seeking to supply EU customers increasingly need robust environmental monitoring, traceable precursor inputs and demonstrable reductions in process emissions.
The country’s gains have established Indonesia as a significant supplier of finished steel to the European Union. The durability of that position will depend on the interaction between quota utilisation, verifiable production emissions and the stability of supply contracts with European customers.
