Indonesia increased its shipments of finished steel to the European Union in the first half of 2026, even as overall EU steel imports declined. EUROFER reported that deliveries rose 70% year on year in the first six months of 2026. Indonesia’s share of EU finished-steel imports reached 8.8%. The same period saw total EU steel imports fall by 5%, alongside weaker shipments from several established suppliers.
The reported figures point to a larger role for Indonesia in regional and international metals supply chains. They do not show that the Carbon Border Adjustment Mechanism (CBAM) directly led European buyers to switch to Indonesian steel. Attention has instead shifted to how emissions intensity can affect the cost profile of covered steel entering the EU market. That includes both carbon-related charges and trade regime constraints.
Emissions intensity depends on production routes and product level data
Indonesia’s industrial expansion includes large-scale production facilities, investment from Asia, access to international shipping routes, and a product mix that can supply European hot-rolled steel markets. Producers are not described as having a single emissions profile across facilities. Mills using coal-intensive electricity or blast-furnace routes may produce higher embedded emissions than plants using different technologies, higher scrap inputs, or lower-carbon electricity.
For CBAM purposes, the emissions associated with an imported product need to be established at the installation and product level. The country of origin alone does not determine the carbon intensity of a particular shipment. This approach affects how importers assess carbon exposure for specific consignments rather than relying on supplier location. It also links emissions reporting requirements to the underlying production configuration.
CBAM pricing mechanics affect delivered costs for covered steel
The EU’s CBAM entered its definitive phase in January 2026, increasing the role of emissions calculations in covered steel import economics. Where verified actual emissions data are not available, applicable default values can increase calculated liabilities. The reference price for CBAM certificates in the third quarter of 2026 was €82.32 per tonne of CO₂ equivalent. That reference price does not create a uniform charge per tonne of imported steel.
Final obligations depend on the emissions calculation used for each import. Importers also account for adjustments tied to the relevant free-allocation benchmark and any qualifying carbon price already paid abroad. These elements determine the carbon-related cost attributed to Indonesian steel shipments assessed under CBAM rules. Documentation and methodology therefore influence the effective cost outcome for specific transactions.
Inventory shifts and July 2026 safeguards shape trade outlooks
Changes in purchasing and inventory patterns contributed to the growth in Indonesian shipments reported for early 2026. 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. These movements can affect how first-half delivery trends translate into later export performance.
A separate EU steel trade regime introduced in July 2026 further limits delivery expansion. It sets annual tariff-free import quotas of approximately 18.3 million tonnes. Imports above the applicable quotas face a 50% duty. Together with inventory effects, these safeguards complicate projections based on first-half trade data.
Customs status and evidence type influence effective costs
European distributors are required to distinguish between steel customs-cleared before 2026 and new covered imports assessed under CBAM rules. The latter can be evaluated using applicable default emissions values or supported by verifiable actual emissions data. These categories can result in different effective delivered costs even when physical grade and supplier are identical.
As a result, documentation requirements, customs status, and the emissions methodology used for assessment become relevant to purchasing and inventory decisions. Importers need to align transaction records with the category that applies under EU rules for each shipment. This affects how costs are calculated across different batches entering during and after CBAM’s definitive phase.
EU market access increasingly requires emissions monitoring for projects
For investors financing Indonesian steel capacity intended for EU customers, market access involves more than production costs and port infrastructure. Projects seeking to supply EU buyers increasingly require robust environmental monitoring, traceable precursor inputs, and demonstrable reductions in process emissions. These requirements relate to how installations can provide evidence relevant to emissions reporting expectations.
Indonesia’s increased deliveries have positioned it as a significant supplier of finished steel to the European Union during 2026’s first half. The durability of that position is linked to interactions between quota utilisation, verifiable production emissions, and stability of supply contracts with European customers. Those factors determine how future shipments may fit within EU carbon accounting and trade constraints.