Institute news New EU Rules on the Steel Market Threaten Ukraine with a Loss of $0.5 Billion to $1.2 Billion in Export Revenue

Ukraine could lose from $0.5 billion to $1.2 billion in exports of ferrous metals and products made from them to European Union countries if it is not exempted from the new EU regulation on excess capacities. This is the key conclusion of the study “The Short-term Impact of EU Overcapacity Regulation on Ukraine’s Exports to the EU,” which the IER presented on May 7 during the public discussion “The EU is Changing Access Rules for Steel: What This Means for Ukraine“.

As early as June 30, the term of the 8-year global EU safeguard measures on steel expires, from which Ukraine — specifically from tariff quotas — was exempt from May 2022 to May 2028 due to the full-scale war. To replace them, the European Commission plans to introduce new instruments to protect its steel market from global excess capacities starting July 1. The implementation of these measures may prematurely cancel the preferential regime for Ukraine.

Potential EU measures provide for a reduction of the aggregate tariff quota by 47% to 18.3 million tons per year, an increase in the import duty outside the tariff quota from 25% to 50%, and the introduction of “melt & pour” requirements to improve product traceability.

In Ukraine, exports amounting to about 1% of GDP — $1.8 billion or 8% of our country’s total exports to the EU in 2025 — could fall under the new restrictions. The main categories include hot-rolled sheets (42%), bars (12%), and other seamless pipes (9%), which together make up nearly two-thirds of Ukrainian steel exports that will be subject to the new regulation on excess capacities.

The final rules for Ukraine have not yet been determined. The IER assessed the consequences of several of the most likely scenarios. According to Veronika Movchan, Academic Director of the IER, who presented the study, the optimal option for Ukraine would be if the regulation on excess capacities were not applied to Ukraine at all. If this is not possible, the second priority option for us is a temporary exemption of Ukraine from the new regulation, as was the case previously when the EU suspended its restrictions for us for three years, first in 2022 and then in 2025.

The third option is the introduction of individual tariff quotas for Ukraine. If data from our 2025 exports are used to calculate these quotas, exporters’ losses will be the smallest at $0.5 billion, although even this is a 26% year-on-year decline. If the years 2022–2024 are used for calculations, as is currently proposed by the draft EU decision, the losses of Ukrainian metallurgists will increase to $0.7 billion (-38%).

“If we take the baseline level, that is, the one currently provided for in the European Union’s regulation proposal where 2022–2024 statistics are used for calculations, we can expect a drop in Ukraine’s exports to the EU of nearly 700 million US dollars. This is 38% less than in 2025, or a reduction of total exports to the EU by 3% under this scenario alone. At the same time, in this scenario, we do not take into account the additional impact of CBAM or other factors,” noted Veronika Movchan.

The worst-case scenario is the inclusion of Ukraine in the general tariff quota: in this case, domestic exports to the EU will decrease by $1.2 billion (-63%).

“The new EU regulation creates significant risks for Ukrainian steel exporters — and this is against the backdrop of the already effective CBAM, the Carbon Border Adjustment Mechanism, which has been in effect since the beginning of the year. The scale of the consequences for the Ukrainian economy directly depends on the future decision of the European Commission regarding Ukrainian steel,” emphasized Veronika Movchan.

Currently, only Great Britain, while introducing similar measures to the EU starting July 1, 2026, has exempted Ukrainian metallurgists from these restrictions.

“The draft regulation stipulates that when the European Commission allocates tariff quota volumes, the interests of a candidate country facing an exceptional security situation must be taken into account. And there is a reference to Ukraine. But it is also stated that when determining the volumes of tariff quotas, the interests of the EU must be taken into account. Therefore, there is uncertainty as to whether Ukraine will be exempt from these restrictions,” said Oleksandr Zhovtukha, Head of the Department for Trade and Economic Cooperation with the EU of the International Trade Policy Department of the Secretariat of the Cabinet of Ministers.

Representatives of the metallurgical industry are noting large losses: some companies have already stopped exports to the EU because of the carbon tax, which began operating at the beginning of the year, even before the introduction of the new restrictions currently being discussed for July.

“In the first quarter of 2026, we already completely stopped exports to the EU, as the cost of CBAM for our products at 50–76 euros per ton makes our deliveries economically unprofitable,” said Yulia Proskurova, Regulatory Affairs Manager at ArcelorMittal Kryvyi Rih. New restrictions will intensify the negative impact: exports of rebar and wire rod will decrease by 24–36% even under individual tariff quotas. “Ukraine today is not an exporter of surplus, but a country fighting to preserve its industrial base. We are already operating with damaged infrastructure, limited logistics, and reduced capacities,” stated Yulia Proskurova.

Andriy Kril, Head of International Relations at Metinvest, also notes that Ukraine does not pose a threat to the EU steel market. “The OECD has recognized that available production capacities in Ukraine have decreased fourfold — to 8 million tons. With such a ‘ceiling’ of production, we cannot pose any threat to the EU, especially when they want to allow imports of 18 million tons under the new measures,” he explained.