Cooperation Quota: Why the European Steel Market Is Being Closed to Ukrainian Steelmakers
30 June 16:08
ANALYSIS FROM 
Starting July 1, the EU is reducing duty-free quotas on steel imports and raising tariffs on shipments exceeding the quotas to 50%. Ukrainian steelmakers are already feeling the impact of this decision and will continue to do so. Just how critical the impact of these quotas could be on companies in the industry, and why the European Commission has still not taken a step toward Ukraine to ease the quota regime—was investigated by
Karin Karlsbro, vice chair of the European Parliament’s Committee on International Trade and the lead negotiator on the introduction of the new quotas, urged her colleagues more than a month ago not to punish Ukraine with EU restrictive measures, as long as the Ukrainian steel industry remains under direct attack by Russia.
“Ukraine is not a source of global excess capacity. We must treat it as a future EU member and strategic partner, and the EU must now fulfill its promise that Ukraine will receive special status under the new regulation.”
But Ukraine has not yet received such status. On June 24, the Official Journal of the EU published a regulation on new safeguard measures regarding steel imports, which effectively confirmed that the new restrictions will take effect on July 1. And once again, there is no answer to the “Ukrainian question.” Nor is there an answer to other issues, for that matter. Andriy Tarasenko, chief analyst at the GMK Center, continues:
“On June 24, a decision was published that regulates the issue of quotas and stipulates that these import quotas will take effect on July 1 in any case. But this document did not include a breakdown of quotas by country. This is nonsense, and it’s not normal. In other words, no one understands where imports can come from or what volumes are allowed. And the risks are quite high, because a 50% duty must be paid for every metric ton exceeding the quota. Buyers in the EU don’t understand, for example, how much they can import from Turkey or Ukraine. Therefore, it makes more sense for them to refrain from importing anything at all,” the expert notes.
At the same time, he says, no one knows how long this uncertainty will last. Meanwhile, Ukrainian steelmakers are counting their losses.
The Quota Challenge
$1.2 billion—that is exactly how much in export revenue the Ukrainian steel industry could lose if Ukraine is allocated a duty-free bilateral quota of 713,000 metric tons. This is the figure that had been circulating in the media until recently. Considering that Ukraine supplied 2.65 million metric tons of steel products to the EU in 2025, the duty-free export volume would be as much as 70 percent lower.
Ukrainian steelmakers are already feeling the impact of the new quotas, as they have been negotiating with their counterparties over the past few months and trying to plan their shipments. But how can they negotiate when the distribution of quotas among countries is not even known for certain?
As Oleksandr Kalenkov, president of the Metallurgprom Association of Enterprises, notes, the tightening of EU tariff quotas affects absolutely all companies in the industry.
“This includes large companies such as ArcelorMittal Kryvyi Rih and Metinvest, as well as smaller companies—such as ‘Dniprospetsstal,’ which produces specialty steels, or ‘Unistil,’ which manufactures high-quality, high-value-added specialty pipes for the machine-building industry. I don’t think they’ll be able to pivot to other markets. In other words, both large and small companies are suffering. And if this decision isn’t revised, it will lead to problems,” says the expert.
According to him, what complicates the situation the most is that the Ukrainian steel industry is currently highly dependent on the European Union.
“While we traditionally exported up to a third of our production to the European Union, starting in 2022—not out of choice, but out of necessity—the EU’s share has grown, and now about 80% of our exports go to the EU. And now this market for us—it’s not that it’s closing, but it’s shrinking very significantly,” the official notes.
And this is not the only blow Ukrainian steelmakers are currently facing. In addition to restrictive quotas that are closing off the European market to companies, this year they have also felt the impact of a restrictive barrier in the form of a carbon tax and the requirement to pay CBAM fees, which is affecting the competitiveness of Ukrainian products. Here is what he said in May in a comment to the publication "Komersant Ukrainian" , Oleg Krykavsky, Director of Government Relations at ArcelorMittal Kryvyi Rih, explained the impact of these decisions, in particular, on his company’s production prospects:
“In 2025, thanks to the decision adopted in June 2025 regarding three years of barrier-free trade with the EU, we were able to increase our exports to the European Union and ship 850,000 metric tons of steel products there. For this year, we had planned to increase exports by essentially 50 percent—to 1,250,000 metric tons. “But, primarily due to the SWAM, the new quotas expected to take effect on July 1, and rising electricity prices, it appears we will have to abandon these plans,” the expert said.
A Strange Partnership
There may be some explanation for why the European Commission has still not made a concession to Ukraine regarding restrictive quotas on steel products, but it is difficult to understand. Oleksandr Kalenkov, president of the “Metallurgprom” Association of Enterprises, finds this situation puzzling:
“It’s strange that the European Union supports us with financial injections—including into the budget—while at the same time implementing measures that are killing our industry and making the ‘hole’ in the budget much bigger. Because it’s clear: if you let our industry operate, it will have a multiplier effect and generate much more—both budget revenue and foreign exchange earnings, as well as jobs and everything else.”
Oleksandr Kalenkov attributes the lack of concessions on the quota issue to the European Commission’s bureaucracy and complex decision-making process. According to him, the European Commission is unable to make a political decision that Ukraine deserves special conditions—such a decision must be made at the highest level by heads of state.
However, some issues can still be resolved at the level of European Commission officials. And not only because the quota volumes for individual countries remain unclear. There are other topics for negotiation as well. Andriy Tarasenko, chief analyst at the GMK Center, draws attention to this.
“We should use every opportunity to continue this dialogue. For example, the article of the General Agreement on Tariffs and Trade, which the EU cites when introducing quota measures, provides for the possibility of compensation: if the EU restricts, for example, imports of one product, it must provide compensation in the form of concessions regarding another product. In light of this, it is worth continuing the dialogue. Although the issue of quotas is the most important,” the expert emphasizes.
He also points out that Ukraine is among a group of key partner countries that have free trade agreements with the EU and with which individual negotiations should be conducted. And this presents an opportunity to secure, if not strategic, special, or specific terms regarding quotas, then at least individual terms of cooperation with the EU.
