---
title: "Between Shelling and Quotas: Ukrainian Metallurgy Risks Losing Over 6% of GDP"
description: "Ukrainian metallurgy is losing volume due to the August strikes on the steelworks and new EU constraints: quotas and CBAM could halve production and cost the economy more than 6% of GDP. Autumn 2026 is the window for negotiations with Brussels."
date: 2026-09-08T09:44:00.000Z
lang: en
url: https://xab.info/en/posts/ukrainian-metallurgy-losses-eu-quotas-cbam-gdp
tags: [ukraine, metallurgy, eu-quotas, cbam, steel-production, economy, export, decarbonization]
publisher: "XAB.info"
---

# Between Shelling and Quotas: Ukrainian Metallurgy Risks Losing Over 6% of GDP

![Glowing hot metal on a rolling mill at a Ukrainian steel plant — an industry worth over 6% of the country's GDP](https://xab.info/media/2026/09/08/ukraina-metallurgiya-poteri-es-kvoty-cbam-vvp/ukraina-metallurgiya-poteri-es-kvoty-cbam-vvp-1.webp)

## 🎯 Key Points

- Over the 7 months of 2026, steel production in Ukraine fell by 5.6%, exports by 11.5%, and foreign currency revenue to $1.67 billion
- The August strikes on Zaporizhstal and ArcelorMittal Kryvyi Rih will require tens to hundreds of millions of dollars for recovery
- The new EU quotas from 1 July 2026 cut the available export volume by ~60% relative to 2025; steel production fell by more than 21%
- CBAM is estimated at 50–100 euros per tonne of steel, making part of the output uncompetitive in the EU
- If the constraints persist, metallurgy could shrink by half, with GDP losses exceeding 6%; decarbonization requires ~12 billion euros over 20–25 years
- The window for negotiations with the EU is open until 1 January 2027; increasing quotas and a special CBAM regime are under discussion

Ukraine's metallurgical industry is under double pressure: on the one hand, regular missile and drone strikes on key integrated steelworks; on the other, tightening conditions for access to the European market, which in recent years accounted for around 80% of metal product exports. According to Ukrmetallurgprom (UMP), over the seven months of 2026, steel production in the country fell by 5.6%, metal product exports dropped by 11.5%, and foreign currency revenue from them declined by 7.8%, amounting to $1.67 billion. These figures, cited by RBC-Ukraine with reference to a LIGA.net publication, reflect a growing systemic crisis in the industry that, according to estimates by the metallurgists themselves, could in the long term translate into a loss of more than 6% of Ukraine's GDP, taking into account the multiplier effect on related sectors.

### August Strikes and the Cost of Recovery

The key event of the summer of 2026 was the August attacks on two of the industry's largest enterprises — Zaporizhstal and ArcelorMittal Kryvyi Rih. According to estimates, restoring the damaged equipment and infrastructure could require tens to hundreds of millions of dollars. However, as emphasized in the industry, without concessions from the European Union on trade terms, resuming production at these plants would be economically unviable: even with full restoration of capacity, it could not be utilized due to limited access to sales markets. The GMK Center forecast, made even before the August strikes, projected steel production in 2026 to fall to 6.5 million tonnes; the actual year-end results, taking the damage into account, could turn out significantly lower.

### CBAM and New Quotas: A 'Double Squeeze' for Producers

From the start of 2026, the Carbon Border Adjustment Mechanism (CBAM) has begun to apply to Ukrainian products. For an industry in which around 90% of steel is produced via the blast-furnace route, this means a significant additional burden. Metinvest estimates potential CBAM payments at 50–100 euros per tonne of steel, which, according to the company, makes part of Ukrainian output uncompetitive in the European market. The second constraint is the new EU import quotas, which took effect on 1 July 2026: the volume available to Ukrainian producers turned out to be roughly 60% lower than the actual steel exports to Europe in 2025. After the quotas were introduced, steel production in Ukraine fell by more than 21%, and metal rolled products by around 30%. Metinvest notes that Ukrainian producers have ended up 'caught between two constraints': the quotas reduce the export potential for finished steel products, while CBAM undermines the competitiveness of alternative products, in particular pig iron.

### Decarbonization Without Financing

A separate strategic challenge remains the need for decarbonization. According to Metinvest's estimate, transitioning Ukrainian metallurgy to low-carbon production requires around 12 billion euros of investment over 20–25 years. This is a large-scale transformation — from blast furnaces to electric-arc production — which would allow average CO₂ emissions to be reduced from roughly 2.4 tonnes to 0.6 tonnes per tonne of steel. However, realizing such investments in wartime conditions, without war-risk insurance and long-term financing, is extremely difficult. UMP President Kalenkov previously estimated that the CBAM environmental levy alone would cost Ukraine 3% of GDP by 2030, while the cumulative effect of all constraints, taking the multiplier impact on suppliers and related sectors into account, could exceed 6% of GDP.

### Negotiation Window and Possible Solutions

The industry believes that the autumn of 2026 should be used for a new round of negotiations with the EU: the current quota regime is in force until 1 January 2027, and the conditions for Ukrainian steel's access to the European market can still be revised. Among the possible solutions are increasing the quotas, at least, to the actual export volumes of previous years, as well as applying a special regime for Ukraine within the CBAM framework. There is also a compromise mechanism: allowing Ukrainian enterprises, during the war and for seven years after its end, to direct funds paid under CBAM toward purchasing European equipment and technologies for decarbonizing their own production. The Federation of Metallurgists of Ukraine previously called on the government to take urgent measures to preserve the industry, warning of the risk of plant shutdowns, massive job losses, reduced tax revenues, and weakened national defense capacity.

### Contradictory Data

An analysis of the available estimates reveals differences in the scale and time frames of the figures cited. First, the GMK Center forecast of steel production falling to 6.5 million tonnes in 2026 was formed before the August strikes on Zaporizhstal and ArcelorMittal Kryvyi Rih, so the actual year-end results could be considerably worse. Second, the 5.6% decline in steel production over the seven months of 2026 (year-on-year) and the more-than-21% reduction after the 1 July quota introduction refer to different periods and measurement methodologies: the former reflects the average value for the half-year, the latter — the dynamics immediately after the change in trade terms. Third, the 6% GDP loss estimate voiced by UMP President Kalenkov is a projection assuming the current constraints remain in place and is not confirmed by independent macroeconomic modeling; meanwhile, the separate CBAM estimate of 3% of GDP by 2030 (also Kalenkov's) refers to a narrower segment and a more distant time horizon. Finally, Metinvest's losses from the new quotas — around $1 billion in export revenue and over 17 billion hryvnia in budget receipts — are an estimate for a specific holding and do not necessarily extrapolate to the entire industry in the same proportion.

## 🔍 Fact-Check Verification

- [EU Constraints Hit Metallurgy: Ukraine Could Lose More Than 6% of GDP](https://www.rbc.ua/ukr/news/obmezhennya-es-b-yut-metalurgiyi-ukrayina-1788860501.html) - Подтверждает данные УМП по снижению производства и экспорта, оценки «Метинвеста» по CBAM (50–100 евро/т), квоты с 1 июля, снижение производства на 21% и металлопроката на 30%, а также прогноз потерь ВВП свыше 6% от Каленкова.
- [Losses to the Ukrainian Economy from EU Constraints Could Exceed 6% of GDP — Media](https://zn.ua/promyshliennost/poteri-ukrainskoj-ekonomiki-iz-za-ohranichenij-es-mohut-prevysit-6-vvp-smi.html) - Независимое подтверждение оценки потерь ВВП в размере более 6% в контексте ограничений ЕС на металлургический экспорт.
- [Without State Decisions, Ukrainian Metallurgy Could Cut Production by at Least ...](https://www.unian.net/economics/other/bez-gosudarstvennyh-resheniy-ukrainskaya-metallurgiya-mozhet-sokratit-proizvodstvo-kak-minimum-na-50-do-konca-goda-smi-13485768.html) - Подтверждает оценку возможного сокращения производства металлургии как минимум вдвое при сохранении действующих ограничений, что согласуется со словами Каленкова в основном тексте.
- [CBAM Environmental Levy Will Cost Ukraine 3% of GDP by 2030, Says Kalenkov](https://www.obozrevatel.com/ekonomika-glavnaya/eko-nalog-cbam-obojdyotsya-ukraine-v-3-vvp-k-2030-godu-kalenkov.htm) - Уточняет отдельную оценку Каленкова: CBAM как отдельный инструмент обойдётся в 3% ВВП к 2030 году. Это более узкий показатель по сравнению с совокупными 6%+ ВВП (все ограничения + мультипликатор), что отражено в разделе противоречивых данных.

## ❓ FAQ

### Q: What specific EU constraints apply to Ukrainian metallurgy from 2026?
**A:** From the start of 2026, the CBAM mechanism (carbon border levy) has been in effect, and from 1 July 2026, new import quotas on steel, whose available volume is roughly 60% lower than the actual 2025 exports. The current quota regime is set to last until 1 January 2027.

### Q: By how much has steel production in Ukraine fallen in 2026?
**A:** Over the seven months of 2026, steel production declined by 5.6% year-on-year. After the quotas were introduced on 1 July, the drop was more than 21% for steel and around 30% for metal rolled products. The GMK Center forecast (before the August strikes) was down to 6.5 million tonnes for the year.

### Q: What will happen if the EU constraints remain in place?
**A:** According to UMP President Kalenkov's estimate, Ukrainian metallurgy could shrink by at least half, and GDP losses, taking the multiplier effect on related sectors into account, could exceed 6%. Metinvest estimates the losses from the quotas alone at ~$1 billion in export revenue and over 17 billion hryvnia in budget receipts.

### Q: What solutions are being discussed to save the industry?
**A:** Discussions include increasing quotas to the actual export volumes of previous years, a special CBAM regime for Ukraine, as well as a compromise mechanism allowing funds paid under CBAM to be directed toward purchasing European equipment for decarbonization. The negotiation window is open until 1 January 2027.

### Q: How much does decarbonization of Ukrainian metallurgy cost?
**A:** According to Metinvest's estimate, the transition to low-carbon production (from blast furnaces to electric-arc) will require around 12 billion euros of investment over 20–25 years and will allow CO₂ emissions to be reduced from 2.4 to 0.6 tonnes per tonne of steel.