Ukraine’s production of pig iron and rolled products will suffer great losses from the Carbon Border Adjustment Mechanism (CBAM) in Europe from 2026, according to the recent study by Ukraine-based GMK Center.
According to the study, almost 93% of Ukrainian exports subject to CBAM regulation are in the metallurgy sector.
“In Ukraine, 89% of steel is produced by the open-hearth or oxygen converter method, which means a fairly high average carbon intensity — 2.3 tonnes of CO2 per tonne of steel. This indicator applies to both billets and rolled products like rebar, wire rod and other types of rolled products,” it adds.
GMK Center suggests that Ukraine may lose all of its exports of billets and rolled products as a result of the implementation of CBAM. The reason is that Ukrainian billets and rolled products will not be competitive with goods produced by the electric steelmaking process in the EU, where the average carbon intensity of the electric steelmaking process is 0.3-0.4t of CO2 per tonne of steel, it claims.
“Iron sales may also come to a standstill as CBAM iron supply payments could reach $160 per tonne in 2030 and this would mean that the iron segment could be largely replaced by imported HBI, which is booming in the Middle East and North Africa,” the study notes. “Every year, Ukrainian companies export 55,000-60,000 tonnes of steel products to the EU and not all have initial production of pig iron or steel. Since metal products are subject to CBAM regulation, they must also provide data to EU importers for CBAM reports.”
Collecting such data can be difficult, especially if the company does not directly produce iron or steel and CBAM may become a new technical barrier to trade and increase administrative costs for small, medium exporters and importers, the study concludes.
Difficulties in providing data will negatively affect the prices of exported products, it adds. In addition, it is emphasised that CBAM will be distributed worldwide, so access to export markets for Ukrainian goods is under threat.
In the first year of full implementation of CBAM, in 2026, Ukraine will lose $202 million in exports and in 2030 this indicator will increase to $1.44 billion per year, GMK Center calculates.
Earlier, Ukrainian steel association Ukrmetallurgprom urged the Ukrainian government to start negotiations with the EU regarding the postponement of CBAM for Ukraine, taking the war as a force majeure circumstance (see Kallanish passim).
Svetoslav Abrossimov Bulgaria