LONDON/BRUSSELS, 31 OCTOBER 2026 — European demand for lower-emission imported steel is expected to increase over the next decade. Tighter trade restrictions could, however, constrain how far foreign manufacturers can convert cleaner production investments into higher export volumes.
Fastmarkets forecasts published on 30 October 2026 indicate that EU imports of hot-rolled coil (HRC) produced via electric arc furnace (EAF) routes could rise by more than 25% by 2035. The same forecasts expect overall steel imports to remain constrained under the EU’s revised trade protection framework.
The projections link the Carbon Border Adjustment Mechanism (CBAM), tariff-rate quotas and shifts in steel production economics. For international suppliers, emissions performance is becoming a more significant competitive factor, while market access also depends on customs restrictions, applicable duties and available import quotas.
Green steel volume projected to expand
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 about 300,000 tonnes to 1.6 million tonnes by 2035. This would be more than five times the current reference volume used in the forecast.
The forecast growth is tied to increased market interest in lower-emission manufacturing routes, particularly EAFs using recycled scrap and direct-reduced iron (DRI). Compared with coal-intensive blast-furnace production, these technologies can deliver lower emissions.
The carbon intensity of EAF-based output is not fixed and depends on factors including the electricity mix, raw material inputs, fuel consumption and installation characteristics. Fastmarkets also notes that EAF production does not automatically meet the green steel definition used in its forecast.
The emissions threshold applied in the Fastmarkets outlook must be distinguished from the regulatory requirements and methodologies used under CBAM. The figures are forward-looking market projections rather than measured changes in EU imports during 2026, based on assumptions covering carbon prices, technology development, trade restrictions and future steel demand.
EU tariff-rate quotas add limits beyond CBAM
A separate constraint comes from EU revised steel trade protection arrangements introduced on 1 July 2026. The new system replaced the previous safeguard framework with a tariff-rate quota structure.
Under the Fastmarkets scenario examined for this analysis, imports above applicable quotas face an additional 50% tariff. This adds a commercial consideration for producers investing in lower-emission production.
Fastmarkets says that even if a foreign producer reduces embedded emissions and potentially lowers its CBAM exposure, quota availability may still limit deliveries to European customers. Conversely, a supplier with access to available quota volumes may continue exporting even with a more carbon-intensive installation.
As a result, competitiveness for imported steel depends on combined factors including emissions intensity, customs classification, quota eligibility, applicable tariffs, transportation costs and competing offers. For international steelmakers, reducing production emissions is only one element of securing access to the European market.
Blast-furnace producers face rising carbon-cost exposure
Fastmarkets expects steel produced through more emissions-intensive blast-furnace routes to face increasing competitive pressure as CBAM obligations develop. The EU mechanism calculates carbon-border liabilities using embedded emissions and applies adjustments related to comparable EU production treatment and qualifying carbon prices paid in the country of origin.
The financial impact is introduced progressively alongside reductions in 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 regulatory calculation methodology applied and developments in European carbon prices. Fastmarkets also links potential improvements to investments in EAFs, scrap processing, direct-reduced iron and lower-emission electricity supply.
However, Fastmarkets notes that investment returns depend on whether producers can secure sufficient access to export markets. The same interaction affects how manufacturers evaluate whether emissions improvements translate into commercially viable sales volumes.
Energy costs and downstream procurement pressures
The combination of CBAM requirements and import quotas could strengthen the competitive position of European steel producers against some foreign suppliers. Domestic manufacturers still need to manage decarbonisation spending alongside energy costs.
EAF operations require access to competitively priced electricity. Hydrogen-based ironmaking involves significant investment in production technology, energy supply and supporting infrastructure.
Fastmarkets says these needs create financing challenges even where imported steel faces additional trade and carbon-related costs. Downstream manufacturers are also exposed to changes in steel availability and pricing across sectors such as automotive, machinery and construction.
Procurement expenses could rise 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 into costs faced by European steel-consuming industries.
Serbia, Türkiye and Ukraine linked to customs and quota conditions
The revised European framework is particularly relevant for Serbia, Türkiye, Ukraine and other steel-producing economies supplying the EU market. Serbian steelmakers and metal-processing companies must account for interactions between customs classifications, embedded production emissions, tariff-rate quota availability and product pricing.
Fastmarkets indicates that even producers with relatively low production emissions may face limitations expanding European sales if products fall within restricted quota categories. Similar considerations apply to international producers evaluating investments in cleaner manufacturing facilities intended primarily for supplying European customers.
For industrial lenders, expected savings from lower CBAM exposure cannot be treated as equivalent to guaranteed growth in export revenue. Investment assessments also need to determine whether resulting production volumes can enter intended markets under applicable trade restrictions.
Investment decisions depend on carbon intensity and market access
The Fastmarkets projections point to a European import market where lower-emission steel could account for a larger share of external supply by 2035 while total imports remain subject to trade restrictions. This affects investment decisions for both European capacity development and international production expansion.
The outlook suggests potential support for additional lower-emission manufacturing within the EU while limiting export opportunities for foreign producers serving European industrial customers. The commercial outcome depends on how CBAM costs, tariff-rate quotas, industrial investment levels, energy prices and demand interact across the steel value chain.
For traders and industrial buyers, assessments extend beyond carbon components to complete landed cost of imported steel. For manufacturers and financiers, investment calculations must incorporate emissions performance, customs access, production economics and availability of commercially viable export volumes.