Steel sector in 2026: CBAM, EU quotas, and the green steel transition

PREPARED BY: ERKAN ÇAKAN

Although US-initiated safeguard measures and China's supply surplus have pressured global iron and steel trade, the Turkish iron and steel sector achieved approximately $16.5 billion in exports in 2025. Through two difficult years, the sector managed to maintain its competitiveness.

However, 2026 will be a year of struggle for both the global steel sector and the Turkish steel industry. Rising protectionist barriers, the EU's new quota policies, and China's low-priced products indicate that negative effects will intensify further in 2026, both in the domestic market and in export markets. The new quota system that the European Union will implement to protect its own market could result in losses of up to 60 percent in steel exports to the European market. Accordingly, the sector is turning toward alternative markets and regions where its competitiveness is high. Meanwhile, the Carbon Border Adjustment Mechanism (CBAM), which the EU will fully implement from 2026, will be one of the most important agenda items for the Turkish steel sector.

The increasing global protectionism and pressure from low-priced imports rank among the most significant problems facing the Turkish iron and steel sector. Additionally, high domestic inflation, exchange rate pressures, and difficulties in accessing finance have limited the sector's growth potential. The sharp increases in exports to Türkiye from China, Russia, India, and certain Far Eastern countries — which have been unable to breach the protectionist barriers of the US, the EU, and many other countries — have caused damage to domestic production.

Weaknesses in economic activity in global markets will be challenging in 2026

In particular, China's redirecting of its excess capacity to world markets at very low prices has been extremely challenging for the global market over the past two years. Sector representatives note that they will continue to see this effect in both the domestic market and export markets in 2026. "Despite these adverse conditions, our sector's export-to-import coverage ratio in 2025 increased slightly compared to 2024. The multifaceted problems in the steel sector with the EU — our largest export market — and weaknesses in economic activity across global markets will be challenging in 2026. Nevertheless, we foresee that 2026 will be a marginally better year for our sector compared to the previous year."

Unfair competition with China in many export markets

The customs tariffs imposed by the US on China have prompted China to more aggressively push into other export markets the products it cannot sell to the US. This is today weakening both the domestic market and indirectly harming our exports. Domestic iron and steel producers have been seriously struggling for the past 2 years due to these developments. Unfair competition with China is being experienced in many countries where Türkiye exports. This situation is expected to continue in 2026.

The EU holds a 41.6% share as Türkiye's largest steel export market

The EU market constitutes Türkiye's largest export market. Türkiye is the EU's largest supplier with a 21% share of EU steel imports; the EU holds a 41.6% share as Türkiye's largest market for steel exports. The EU's current safeguard measure will expire on 30 June 2026. Under the new import regime, duty-free import quotas will be reduced by 47%, while a deterrent 50% customs duty will be applied to above-quota imports. These changes will challenge Turkish steelmakers in terms of EU exports. When the price pressure created by Chinese producers is added, 2026 will not be an easy year for steel exporters.

CBAM will be the most important agenda item of 2026

Sector representatives draw attention to the fact that the Carbon Border Adjustment Mechanism (CBAM), which the EU will fully implement from 2026, is the most important agenda item for the Turkish steel sector. Assessments highlight that plants with carbon-intensive production will face cost pressures, while companies investing in low-carbon production will gain a competitive advantage. Sector representatives note that this process means not merely a trade regulation but also a reshaping of the production model. While Türkiye's electric arc furnace-based production structure is noted as providing an advantage, the view that energy efficiency investments have become "a necessity rather than a preference" is prominent. According to sector representatives, digitalisation, AI-supported production planning, and waste reduction applications will play a determining role in cost management from 2026.

Focus on market diversification strategy in exports

While the EU continues to be an important market for Türkiye's steel exports, market diversification emerges as a strategic priority for 2026. The Middle East, North Africa, the Americas, and Asian markets have the potential to offset the contraction in Europe. Sector actors state that Türkiye can position itself more strongly in these markets thanks to its logistics advantages and flexible production capability.

Technological transformation with green steel

Another shared theme in 2026 forecasts is green steel. Sector representatives note that low-carbon production has now become not only an environmental but also a commercial competitive factor. In this context, green energy use, scrap efficiency, hydrogen-based production, and carbon footprint measurement are coming to the fore.