Yulia Proskurova: The combined impact of the new quotas and the CBAM could destroy Ukraine’s steel industry

The CBAM and the EU’s new safeguard quota system are hitting Ukraine’s steel industry from two sides at once. ArcelorMittal Kryvyi Rih—the country’s largest steel producer—has already lost 300,000 tons of European orders in the first quarter of 2026 alone. In the worst-case scenario, the total losses of Ukrainian exporters could exceed $1 billion per year. Yulia Proskurova, Regulatory Affairs Manager at ArcelorMittal Kryvyi Rih, discusses the EU’s intensified protectionist measures, their impact on the company, and opportunities for reorienting sales.

The CBAM impact on the company’s operations

The European Union fully launched CBAM on January 1 of this year, and this immediately had a negative impact on the entire industry. How painful was the loss of 300,000 tons of European export orders in the first quarter alone for the company?

– This is a very significant volume for our company. European customers, who will be required to pay additional CBAM fees of €50–75 per ton of Ukrainian products starting in 2026, immediately canceled their orders for steel products and pig iron.

This year, we planned to ship over 1.25 million tons of products to the European market—that’s nearly half of our planned production volume. The loss of these 300,000 tons in the first quarter has already led to the shutdown of the blooming mill, which has been producing steel billets since 1958.

Did the company have a “Plan B” in case Ukraine did not receive an exemption or deferral from the CBAM?

– The European Commission had previously announced that the CBAM would be fully implemented starting in 2026. Our company held intensive negotiations with the Ukrainian government, which, for its part, was tasked with conveying the industry’s consolidated position to Brussels: Ukrainian steel companies are unable to immediately transition to eco-friendly production and therefore need a deferral to accumulate funds for modernization. This is necessary for obvious reasons—due to shelling, blackouts, and high electricity prices.

Given the Ukrainian government’s somewhat reassuring rhetoric, our company still expected to receive this exemption, which did not materialize. Currently, we see that our sales are nowhere near the previously planned volumes. Compensating for the EU market is objectively very difficult due to its significant scale and geographical proximity, which ensured convenient logistics.

How did ArcelorMittal Kryvyi Rih react to the drop in European orders? How did you manage to compensate for the loss of European orders?

– Our company is trying to boost sales in the domestic market and in our traditional export markets—the Middle East and North Africa. Unfortunately, we have not been able to make up for the losses. It is difficult to give a specific percentage right now, but the overall result is negative.

In your estimation, to what extent is the domestic market capable of absorbing the surplus supply?

– The domestic market is very limited. It is not capable of fully absorbing the surplus supply, especially in the segment of large-volume steel products. In addition, the Ukrainian market is currently under pressure from dumped imports from China and Turkey. That is precisely why we have filed complaints with the Ministry of Economy regarding the need to initiate anti-dumping investigations. The Interdepartmental Commission on International Trade has already adopted the relevant decisions, so both of these investigations were recently officially launched.

In your opinion, is there any reason to expect some easing of the CBAM regime for Ukraine from the European Commission?

– As far as we know, negotiations are indeed ongoing and have recently intensified. We are very pleased that this issue is back on the agenda. This is, of course, a positive sign that the situation has at least moved past the impasse.

What is the status at ArcelorMittal Kryvyi Rih regarding the verification of 2025 emissions by a European verifier?

– The government is working to ensure that the mechanism for verifying Ukrainian emissions is recognized by the EU. This mechanism is expected to become operational in the coming months. We consider this an important step that will increase transparency, but it does not solve the key problem, namely the additional cost of CBAM for importers.

EU safeguard measures

Starting July 1, the EU is launching a new system of safeguard measures on steel imports. What impact is this system expected to have on ArcelorMittal Kryvyi Rih?

– In the worst-case scenario, which involves the application of general EU tariff quotas (we currently do not know what the final mechanism will look like), we will effectively lose access to the European market for rebar, and sales of wire rod will decline significantly. In particular, rebar exports could drop by approximately 40–100%, depending on how the new system is implemented. Wire rod shipments could decrease by roughly 25–60%. In this scenario, the total losses for Ukrainian steel exports could reach more than $1 billion, or about 63% of the total volume.

It is worth noting that, according to OECD estimates, production capacity in the steel industry has decreased by 80%. Therefore, Ukraine is certainly not a source of excess steel on the market, the fight against which remains a key objective of the new EU regulation.

Do you have any information on the progress and nature of the negotiations regarding quotas for Ukraine within the TRQ?

– Yes, the situation is far from rosy. We are not losing hope, as the final round of negotiations is still ahead. However, as of today, what the European Commission is proposing is a disaster for Ukraine.

How will EU trade restrictions affect the development of Ukraine’s steel industry?

– The European Commission has concluded that the CBAM will have a minimal impact on Ukraine’s economy—estimated at up to 0.01% of GDP—but these estimates are completely inaccurate.

The combined impact of CBAM and the new quotas creates a double negative effect for the Ukrainian steel industry. CBAM reduces export capacity due to additional costs, while the quotas further limit the physical volume of shipments to the EU market, and the out-of-quota tariff is 50%.

In the short term, this could lead to a decline in exports and a drop in Ukraine’s GDP of approximately 0.6–1%. By 2030, the cumulative negative effect could rise to 2.5–3% of GDP.

For our company, the immediate consequences are critical. The combination of export losses due to the CBAM and quota restrictions means a sharp reduction in rebar and wire rod shipments as early as the coming years (2026–2027) and a virtually complete loss of the EU market for long products in the medium term.

Therefore, both of these issues must be addressed at the highest level, both as separate tracks and by taking into account their cumulative impact on the industry, which has historically been the cornerstone of the Ukrainian economy.

Do you think the negative impact of the EU’s new safeguard measures could lead to further decisions to cut capacity and/or jobs?

– We are doing everything we can to preserve production and jobs. However, due to the impact of the CBAM, we have already been forced to close the blooming mill and the Foundry and Mechanical Plant.

Recently, Swedish Member of the European Parliament Karin Karlsson visited ArcelorMittal Kryvyi Rih and other Ukrainian steel companies. What conclusions can be drawn from this visit?

– Ms. Karlsson’s visit provided a clear demonstration of the real working conditions in Ukrainian industry and the importance of maintaining access to the European market. We are sincerely grateful to Ms. Karlsbro for her visit and her consistent support for Ukraine. After visiting the enterprises, she spoke at the plenary session during the debate on the new EU mechanism: she emphasized the extremely difficult conditions under which Ukrainian enterprises are operating amid Russian attacks and called on the EU to fulfill its promise to grant Ukraine special status.

Market conditions and the security situation

European prices rose in April and May. Did the company begin exporting wire rod and rebar to the EU after that?

– Currently, we are only fulfilling existing orders—completing individual contracts that were previously signed. However, at the same time, we are indeed trying to reclaim our position in the European market under these new regulatory conditions.

Regarding the situation in the EU cast iron segment. Have prices allowed for the resumption of cast iron exports?

– The situation remains extremely volatile. Rising prices in the European market create certain tactical opportunities, but these are significantly limited by the CBAM and general market uncertainty.

Are there prospects for square billet exports this year?

– The prospects depend entirely on the balance of global prices, domestic demand, and the strictness of regulatory restrictions. At present, our expectations remain fairly cautious. Everything will depend on market conditions: such exports are not out of the question, but only time will tell.

Recently, there has been a significant increase in rocket and drone attacks on frontline regions. What is the current security situation at the company?

– The company operates under constant risks and attacks; locomotives and transportation infrastructure are particularly vulnerable. We are implementing additional security measures, but the overall threat level remains very high, which directly impacts our operations.