We spoke with Branko Zecevic, president of the Serbian Steel Association, about the current state of Serbia's steel industry, the impact of trade barriers, and developments in regional markets. According to Zecevic, the biggest risks are energy prices and the potential expiration of market protection measures.
How would you describe the current state of the Serbian steel industry, particularly in terms of production, consumption and capacity utilization? What are the main challenges facing the industry today?
The Serbian steel industry is going through difficult times. EU quota reductions and CBAM implementation have drastically cut Serbian exports to the EU. This is especially true for the flat steel producer for whom EU was the main export market. Long products are also affected since Serbia did not get any country-specific allocation for import into the EU. Flat products are running at about 50 percent of production capacity and long products at 70-75 percent utilization.
Which steel-consuming sectors are currently driving demand in Serbia, and where do you see the strongest potential for growth over the next few years?
There is a sizable infrastructure construction drive in Serbia and this helps to maintain consumption of long products at about 500,000 mt annually. It is difficult to foresee the consumption growing further from this level but there is a good chance that it will be maintained within the range of 450,000-550,000 mt. Consumption of flat products is also hovering around 500,000 mt and any increase or decrease will depend on the level of industrial activity both in Serbia and the EU.
Serbia introduced import quotas for certain steel products at the beginning of 2026. How has the balance between domestic production and imports changed since then, and how has the market adapted to the new system?
The Serbian market was fully exposed to unrestricted imports prior to 2026 and local producers lost the lion's share of the domestic market to imports. In long products, domestic producers' market share fell under 50 percent and for flat products to under 40 percent. Without government intervention, this trend was likely to continue and the risk to the domestic steel industry became clear and immediate. The introduction of CBAM diverted substantial quantities of steel that no longer could go into the EU towards open markets. Furthermore, the EU import quota reduction added more “homeless steel” to this pressure.
The introduction of import quotas in Serbia helped the domestic industry to survive and to regain some of the market share they had previously lost. For the first eight months of this year, the market share of domestic producers has increased to above 60 percent. Since local capacity outstrips local demand, there is still room for improvement as far as local producers are concerned.
With protectionist measures increasing across major steel markets, do you expect more foreign suppliers to redirect volumes toward non-EU Balkan markets? What could this mean for Serbia and the wider region?
Without market protection measures, it is clear that huge quantities of steel would be rushing to find buyers in our region. That would mean loss of local production as is apparent in Bosnia and Herzegovina where Zenica Steel Mill ceased production this April. I believe that any market without import protection will inevitably lose local production.
The EU remains a crucial market for Serbia's steel industry. How do you expect the EU's new steel quota regime and tighter trade measures to affect Serbian steel exports and the country's position in the European market?
As I already mentioned, these measures have had a sizable impact on Serbian flat steel production where the import quota had been reduced by more than 50 percent. Serbian producers must make sure to service their local market first and to try and find new export opportunities when possible.
CBAM has now entered its definitive phase. How prepared is the Serbian steel industry for the new requirements, and what are the biggest challenges producers are facing in terms of emissions reporting, verification and costs?
The situation regarding this question is very different in the flat and long steel segments. Our flat steel producer is a blast furnace-based steel mill with high CO2 emissions. On the other hand, our long steel producer is a modern EAF-based steel mill with very low emissions, well suited and very competitive as regards CBAM measures. However, the lack of import quotas for the EU market represents a real barrier to market entry. I do not think there are any particular problems regarding reporting and verification as such, but where are the benefits of that if you cannot export to the EU?
Looking beyond Serbia, how do you see the steel markets of the western Balkans developing? Could countries such as Serbia, North Macedonia, Albania and Montenegro become more important destinations for steel that faces increasing barriers in the EU and other major markets?
The Serbian steel market will stay protected for as long as there are import restrictions in the EU, the USA and other steel producing countries. As for the other countries you mentioned, I cannot tell what will happen. As far as I know, apart from Serbia, it is only North Macedonia that has active steel production. The other countries have already lost their steel production and their markets will be open for steel imports.
What investments does the Serbian steel industry need most in the coming years to remain competitive - additional production capacity, modernization, decarbonization, energy infrastructure or further development of downstream steel processing?
Mainly energy infrastructure based on renewable energy production. Flat steel production would need modernization and decarbonization. Additional production capacities are not required since the existing ones cover regional demand quite well.
Looking ahead to the next three to five years, what do you see as the biggest opportunity and the biggest risk for the Serbian steel industry?
The biggest opportunity is the continuation of projects in infrastructure and in the industrial development of the country. This will assure continuous demand for steel at current levels.
The biggest risks are energy prices and discontinuation of market protection.
