In the first quarter alone, Ukrainian steelmakers lost more than 1.1 million tons of export orders for steel products
The European Carbon Border Adjustment Mechanism (CBAM) has become one of the most pressing threats to Ukraine’s iron and steel sector. Despite warnings from members of parliament, industry associations, and think tanks, the Ukrainian government has failed to convince the European Commission that Ukraine needs a delay in the implementation of CBAM or an exemption from its provisions. This has had an extremely negative impact on exports of steel products as early as the first quarter of this year.
In a few years, the impact of the border tax could well put the industry on the brink of survival. This was discussed at the roundtable “The impact of CBAM on Ukraine’s economy and mining and steel sector 2026–2030,” organized by the GMK Center. The study can be downloaded via the link.
Losses for steelmakers today
The European Commission has not granted Ukraine any exemption from the CBAM, fearing it would set a precedent for other countries. In fact, the special circumstances Ukraine faces due to the war are not being adequately taken into account at this stage. According to Dmytro Kysilevsky, Deputy Chairman of the Verkhovna Rada Committee on Economic Development, the CBAM is already having a tangible impact on Ukrainian exports, yet no clear solution to this problem has been found.
During the roundtable, representatives of leading Ukrainian mining and steel companies spoke about the losses already incurred due to the implementation of the CBAM:
- Metinvest. The company lost orders for billets and long products totaling over 240,000 tons. Plans to export approximately 600,000 tons of pig iron to the EU were not realized—customers backed out due to risks associated with the CBAM. The flat-rolled steel segment, totaling about 2 million tons, is also at risk. Cooperation within the group will also suffer: the suspension of square billet supplies from Kametstal threatens jobs directly in the EU—at the Bulgarian plant Promet Steel.
- ArcelorMittal Kryvyi Rih. The company has effectively lost the European market. Upon learning of the additional CBAM fees of $60–90 per ton of product, customers canceled all orders for the first quarter of 2026—approximately 300,000 tons. It was precisely due to the impact of CBAM that the company was forced to cut production capacity—the foundry and mechanical plant, as well as the blooming shops—and eliminate 3,400 jobs there.
- Interpipe. Despite its green production profile and low carbon footprint, the company is suffering direct financial losses due to customers canceling contracts as a result of erroneous default values in the European Commission’s reference database.
- Ferrexpo. Thanks to years of investment in decarbonization, the company currently retains the potential for zero CBAM payments provided verified actual data is used. However, the application of default values could turn this into a significant financial burden as early as 2027 due to potential data verification issues in the second half of 2026.
- Centravis. The company is in constant dialogue with clients who have already calculated their own financial burden scenarios. However, due to the application of default values, the tax burden will at least double and undermine the company’s ability to export its products.
Technical challenges in implementing the CBAM
The industry has already encountered a range of technical, financial, and administrative challenges.
1. Overestimated default emission values (default values).
According to Andriy Ostapets, Director of Environmental and Industrial Safety at Interpipe, the European Commission (EC) has set an emissions figure of 2.6 tons of CO₂ per ton for Ukrainian seamless pipes in its reference document—incorrectly assuming blast furnace and converter production, whereas Interpipe uses an electric arc furnace production method with an actual carbon footprint of approximately 110 kg per ton of steel.
“Due to incorrect data in the European Commission’s reference guide, customers perceive Ukrainian products as ‘dirty’ and are turning away from contracts in favor of competitors,” he emphasized.
For comparison: similar products from Azerbaijan have a figure of 0.24 t CO₂ due to the recognition of the electric arc furnace method as the primary production method in the country. Ferrexpo faces a similar risk: for iron ore pellets, default figures threaten an additional cost of over $3 per ton.
2. Tie-up of working capital.
A representative of Interpipe noted that European importers are already requiring suppliers to actually set aside funds for future CBAM payments, “freezing” capital for up to a year and a half. The volatility in the cost of certificates ($67–90 per ton) further complicates planning. Luca Di Santo, Strategic Planning Manager at Centravis, confirmed that if default values are used instead of actual data, the tax burden will at least double.
3. Lack of accredited verifiers.
Yaroslava Blonska, Acting Director of Marketing at Ferrexpo, called this the number one issue: there are no accredited verifiers from Ukraine operating within the EU ETS system, and the list of verifiers for CBAM reporting must be approved by September 30, 2026. A methodology for calculating emissions per unit of specific product categories is still lacking for many types of products. Not all international verifiers are accredited for the full range of products, particularly iron ore pellets.
4. Administrative barriers.
The process of registering production facilities in the CBAM registry is excessively time-consuming. Reports submitted since 2023 are often ignored when compiling general reference lists.
Impact of CBAM on the industry
Andriy Tarasenko, Chief Analyst at GMK Center, presented research findings showing that the financial (tariff) burden will rise from 12% in 2026 to 26% in 2030. By 2030, exports of long products and square billets will cease entirely; exports of pig iron will decline by 75%, and flat products by 30%, which could lead to the shutdown of three blast furnaces at two major enterprises. Total losses in steel exports will reach $1.75 billion, and cumulative CBAM payments in 2026–2030 will amount to €1.2 billion, equivalent to two years’ worth of capital investments in the steel industry.
According to Mauro Longobardo, CEO of ArcelorMittal Kryvyi Rih, without exceptions or deferrals, Ukrainian producers’ access to the EU market will be permanently blocked within five years. However, according to Serhiy Skorbun, Head of External Projects Coordination at Metinvest’s CEO Office, the critical moment may come earlier than the projected 2029.
Ruslan Illichov, CEO of the Federation of Employers of Ukraine, highlighted an even greater threat—the expansion of the list of goods subject to the CBAM (by approximately 180 additional items).
“According to our estimates, high-value-added exports worth over €3 billion are at risk. Not only the steel sector will be affected, but also the machine-building industry, the transportation sector, and manufacturers of steel products and steel cables. Already, some ‘second-tier’ enterprises have lost between a third and half of their export volume,” he said.
The impact of CBAM on the Ukrainian economy
A study by the GMK Center highlights a striking discrepancy in estimates: the European Commission forecasts a decline in Ukraine’s GDP due to CBAM of only –0.01%, while the actual figure could reach –2.1% by 2030 solely due to a reduction in exports of steel products.
“The Ukrainian economy will not be able to offset losses of up to $2 billion in annual exports, $0.9 billion in capital investments, and $1.6 billion in tax revenues through other sectors due to the lack of business models of such scale,” emphasized Andriy Tarasenko.
The situation is exacerbated by the Ukrainian economy’s dependence on international financial support amid massive defense spending. Any suspension or delay of this aid would trigger an economic collapse, hyperinflation, and a sharp devaluation.
For his part, Serhiy Skorbun pointed to the multiplier effect: if the steel industry reduces the volume of rail freight, this will result in lost revenue for Ukrzaliznytsia, which will exacerbate the carrier’s already critical situation. The impact on other sectors of the economy will be similar.
Solutions тeeded
Representatives of companies and industry associations attending the roundtable offered their own proposals for addressing the negative impact of the CBAM on the iron and steel sector. Among them are the following:
- To urge the European Commission to exempt Ukraine from the CBAM by recognizing force majeure.
The most widely held view is that CBAM financial obligations should not apply to Ukraine for the entire duration of martial law and for several years thereafter. According to Oleksandr Kalenkov, president of the Ukrmetallurgprom Association, it was precisely the lack of effective communication with the EU that was the main reason Ukraine did not receive any exemptions.
“Due to the full-scale invasion, Ukraine is not ready for an immediate transition to ‘green’ standards and needs a few years’ deferral. We urge the European Commission to postpone the application of CBAM to Ukrainian exporters for at least three years. This will allow manufacturers, exhausted by the war, to accumulate resources for modernization,” emphasized Mauro Longobardo.
2. Review of default emission values and support for reporting.
It is necessary to ensure that inflated figures are revised based on actual data, while simultaneously developing the reporting infrastructure to demonstrate progress in decarbonization.
3. Accreditation of verifiers.
The roundtable participants are convinced of the need to expedite the accreditation procedures for national authorities, obtain clear guidelines from the EU on the application process, and introduce temporary mechanisms for recognizing data verified by Ukrainian companies. For her part, Yaroslavna Blonska recommends that potential verifiers submit applications to several EU countries simultaneously.
4. Access to financing.
Many speakers emphasized that simply postponing the implementation of the CBAM for Ukraine does not solve the problem—what is needed is access to European decarbonization funds and a realistic modernization timeline that aligns with the country’s actual capabilities during the war and in the immediate post-war period.
5. Establishment of a Ukrainian CBAM mechanism.
According to Viktoria Karpets, manager of the EBA’s Industrial Ecology Committee, it is necessary to develop domestic carbon regulation tools that are fully aligned with European standards, as well as to ensure a transition period that will allow companies to adapt without losing their market positions.
To achieve a relaxation of the CBAM for Ukraine, roundtable participants agreed on the need for a two-pronged advocacy approach: the CBAM issue must be raised to the political level, and at the same time, technical work must be conducted with the European Commission’s directorates—DG TAXUD (Directorate-General for Taxation and Customs Union) and DG TRADE (Directorate-General for Trade)—to correct errors in the assessment of CBAM’s impact on Ukraine. The roundtable participants also consider it necessary to establish a coordination platform under the Ministry of Economy with the participation of all stakeholders, including all sectors of the Ukrainian economy affected by CBAM.
For her part, MP Olena Kryvoruchkina proposed organizing a joint meeting of the Verkhovna Rada’s Committee on Environmental Policy and the Committee on Economic Development, with the involvement of the Ministry of Economy.
“I plan to join forces with my colleague Dmytro Kysilevsky to advance this initiative,” she noted.
The common thread running through all the remarks is that the issue has gone beyond technical calculations and requires a solution at the highest level.
“The issue of environmental duties must be included in the overall package of strategic topics for dialogue with the EU (along with military support and the European integration process). We need to ensure that European officials pay closer attention to the specifics of the Ukrainian case,” concluded Dmytro Kysilevsky.
