LONDON/BRUSSELS, 31 OCTOBER 2026 — European demand for lower-emission imported steel is expected to expand over the next decade, although tighter trade restrictions could limit the ability of foreign manufacturers to translate investments in cleaner production into higher export volumes.
Forecasts published by Fastmarkets on 30 October 2026 indicate that EU imports of hot-rolled coil (HRC) manufactured through electric arc furnace (EAF) production routes could increase 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 highlight the interaction between the Carbon Border Adjustment Mechanism (CBAM), tariff-rate quotas and the changing economics of steel production. For international suppliers, emissions performance is becoming an increasingly important competitive factor, but access to the European market also depends on customs restrictions, applicable duties and available import quotas.
Green steel segment projected to expand significantly
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 approximately 300,000 tonnes to 1.6 million tonnes by 2035.
This would represent an increase of more than five times the current reference volume used in the forecast.
The projected growth is associated with greater market interest in lower-emission manufacturing routes, particularly electric arc furnaces using recycled scrap and direct-reduced iron (DRI).
Compared with conventional coal-intensive blast-furnace production, these technologies can deliver lower emissions. Their actual carbon intensity nevertheless depends on several production variables, including the electricity mix, raw material inputs, fuel consumption and the characteristics of individual installations.
Electric arc furnace production does not automatically qualify as green steel. The emissions threshold used in the Fastmarkets forecast must also be distinguished from the regulatory requirements and methodologies applicable under CBAM.
The figures represent future market projections rather than measured changes in EU imports during 2026. They reflect assumptions concerning carbon prices, technological development, trade restrictions and future steel demand.
Revised EU trade protection limits import opportunities
A separate constraint comes from the EU’s revised steel trade protection arrangements, introduced on 1 July 2026, which replaced the previous safeguard framework with a new tariff-rate quota system.
Under the framework examined by Fastmarkets, imports exceeding the applicable quotas are subject to an additional 50% tariff.
This creates a separate commercial consideration for manufacturers investing in lower-emission production. Even where a foreign producer reduces embedded emissions and potentially lowers its CBAM exposure, its ability to increase deliveries to European customers may remain restricted by quota availability.
The opposite situation is also possible: a supplier with access to available quota volumes may continue exporting despite operating a more carbon-intensive production installation.
Consequently, the competitiveness of imported steel increasingly depends on the combined effect of emissions intensity, customs classification, quota eligibility, applicable tariffs, transportation costs and competing offers.
For international steelmakers, reducing production emissions is therefore only one component of securing access to the European market.
Blast-furnace production faces increasing carbon-cost exposure
Fastmarkets expects steel produced through more emissions-intensive blast-furnace routes to encounter growing competitive pressure as CBAM obligations develop.
The EU mechanism calculates carbon-border liabilities using embedded emissions, with adjustments reflecting the treatment of comparable EU production and qualifying carbon prices already paid in the country of origin.
The financial impact is being introduced progressively alongside the reduction of free allowances under the EU Emissions Trading System (EU ETS). Importers therefore do not currently face the full theoretical carbon cost associated with every tonne of embedded emissions.
For coal-intensive producers, future exposure will depend on installation-level emissions, the applicable regulatory calculation methodology and developments in European carbon prices.
Investments in electric arc furnaces, scrap processing, direct-reduced iron and lower-emission electricity supply could improve manufacturers’ emissions performance. However, the commercial return on these investments also depends on whether producers can secure sufficient access to export markets.
European steelmakers face investment and energy-cost pressures
The combination of CBAM and import quotas could strengthen the competitive position of European steel producers against certain foreign suppliers. Domestic manufacturers, however, must also manage substantial decarbonisation expenditure and energy costs.
Electric arc furnace operations require access to competitively priced electricity, while hydrogen-based ironmaking involves significant investment in production technology, energy supply and supporting infrastructure.
These requirements create financing challenges even for companies operating within a market where imported steel faces additional trade and carbon-related costs.
Downstream manufacturers also have 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 to the costs faced by European steel-consuming industries.
Serbia, Türkiye and Ukraine exposed to combined carbon and customs requirements
The revised European framework is particularly relevant to Serbia, Türkiye, Ukraine and other steel-producing economies supplying the EU market.
Serbian steelmakers and metal-processing companies need to account for the interaction 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.
The same considerations apply to international producers evaluating investments in cleaner manufacturing facilities primarily intended to supply European customers.
For industrial lenders, expected savings from lower CBAM exposure cannot be treated as equivalent to guaranteed growth in export revenue. Investment assessments must also establish whether the resulting production volumes can enter the intended market under the applicable trade restrictions.
Carbon intensity and market access shape steel investment calculations
The Fastmarkets projections point to a European import market in which lower-emission steel could account for a substantially larger share of external supply by 2035, while total imports remain subject to trade restrictions.
This combination has implications for investment in both European and international production capacity. It could support additional development of lower-emission manufacturing within the EU while limiting export opportunities for foreign producers seeking to serve European industrial customers.
The commercial outcome will depend on the interaction of CBAM costs, tariff-rate quotas, industrial investment, energy prices and demand across the steel value chain.
For traders and industrial buyers, the relevant assessment extends beyond the carbon component to the complete landed cost of imported steel. For manufacturers and financiers, investment calculations must incorporate emissions performance, customs access, production economics and the availability of commercially viable export volumes.
