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Key takeaway:
Stricter carbon rules for exports to Europe are set to reshape global steel trade and producers are preparing for change, with industry leaders in the Middle East and North Africa (MENA) region telling Fastmarkets that the EU’s Carbon Border Adjustment Mechanism (CBAM) will accelerate the shift toward higher standards, transparency and efficiency.
CBAM is an EU climate policy designed to reduce carbon leakage and ensure fair competition for European industries. It will enter its definitive phase on January 1, 2026, covering imports of carbon-intensive products such as steel, iron, aluminium, fertilizers, electricity and hydrogen.
While CBAM does not directly apply to MENA steel markets, its influence may be felt. Fastmarkets spoke to executives at leading regional steelmakers and market sources about what CBAM means for trade flows, competitiveness and the steel ecosystem in 2026.
Key tailwinds for the MENA region’s steel industry in the global green steel transition include the prevalence of electric-arc furnace (EAF) steel production, abundant gas reserves, strong potential for renewable energy, particularly solar, the push for green hydrogen development and a favorable geographical location.
At the same time, key headwinds are a lack of support from the demand side within and outside the region, difficulties with high-grade iron ore and scrap availability, and a lack of protection in the region from cheap imports.
The MENA steel industry is almost 100% EAF-based because it is comparatively recent, which means that the level of carbon emissions is by default lower than in most of the rest of the world.
In 2024, the Middle East region produced 54.8 million tonnes of crude steel, according to the World Steel Association, of which 95.4% was produced via EAF.
CBAM will not apply to MENA markets, but its introduction will influence global expectations on steel quality and transparency, according to Asam Hussain, chief operating officer at Persian Gulf Steel Industries (AGSI).
AGSI, based in the United Arab Emirates (UAE), produces net-zero steel using 100% recycled raw materials and a fully electric route, achieving one of the lowest verified emissions intensities globally.
“The most effective regional response will come through stronger enforcement of technical standards, certification and traceability, rather than carbon-based border measures,” Hussain told Fastmarkets about CBAM’s influence in the region on Thursday December 18.
One Saudi Arabia-based trader said that MENA’s adaptation to the new regulations will be necessary but noted that CBAM’s direct effect will be limited.
“CBAM is for goods [going] into Europe, not out of Europe,” the trader source said, adding that higher domestic prices in Europe are the most visible effect so far.
Vahid Fouladkar, chief executive officer of UAE-based Metal Park, views CBAM as reinforcing a shift already under way in MENA, with quality, compliance and traceability becoming more important than price alone.
“Over time, this makes it harder for low-quality or non-compliant steel to compete,” the CEO told Fastmarkets on Thursday December 18.
In November, Metal Park, one of the leading industrial hubs in the UAE, announced progress in its expansion plans, driven by rising steel demand in the country.
Fouladkar highlighted growing attention to certification and environmental disclosure, signaling that the region is moving toward higher standards without relying solely on border measures.
Import volumes into the MENA region are expected to remain significant in the near term because of global overcapacity in constructional steel, AGSI’s Hussain told Fastmarkets, adding that price-competitive imports will continue to challenge local producers, but success will depend more on meeting technical and regulatory requirements.
“There is increasing emphasis on strengthening quality controls, documentation and traceability as a first line of defense,” Hussain said, noting that long-term market discipline will be built with consistent standards and enforcement. “This points to a period of transition rather than a sharp shift in volumes.”
Fouladkar expects trade flows to rebalance rather than a simple rise or fall in imports. CBAM is likely to accelerate regional optimization, with more focus on efficiency, local processing and value-added activity.
“Imports that meet quality and compliance expectations will remain relevant, while others may gradually be displaced,” he said.
Across the Gulf Cooperation Council (GCC) region, discussions on trade resilience and competitiveness continue, but no unified framework has emerged, Fouladkar said, adding that “the emphasis so far has been on standards, compliance and smart regulation, rather than reactive trade measures.”
Any future safeguards are likely to be carefully adjusted to support sustainable industrial growth, Fouladkar told Fastmarkets.
Saeed Ghumran Al Remeithi, group CEO of EMSTEEL, the largest steel producer in the UAE, expects CBAM to boost demand for low-carbon steel and redirect trade flows toward suppliers committed to decarbonization.
On the other hand, “Steelmakers will defend their markets against unfair trade practices and against global steel producers that use the open market as an outlet for their own overcapacity,” Michael Rion, chief commercial officer at Emirates Steel, told Fastmarkets in an interview on November 18.
The UAE started an investigation into imports of heavy steel sections from China in October 2025 after a request by Emirates Steel’s parent group, EMSTEEL.
EMSTEEL is also considering whether it would make sense to apply for an investigation into wire rod imports. The company would not seek to stop such imports coming into the country, Rion said, but the UAE market wants valuable products.
According to Chinese customs statistics, China increased steel exports in the first half of 2025 by around 9% to 58.15 million tonnes.
China’s exports to MENA, particularly the UAE and Saudi Arabia, rose by 10.7% and 17.4% respectively.
EMSTEEL began its carbon-reduction journey in 2016 and has seen demand for verified low-carbon products accelerate while global regulations tighten, driven by CBAM and commitments from Europe’s automotive and construction sectors, Al Remeithi told Fastmarkets in November.
For producers such as the UAE’s AGSI, CBAM poses little immediate risk thanks to their low-carbon operations. But for others, it will act as a catalyst, according to Hussain.
“We expect increased focus on emissions measurement, data transparency and efficiency improvements, particularly among producers targeting European or similarly regulated markets,” he added.
Fouladkar expressed similar expectations, noting that CBAM is less about immediate tonnage impact and more about preparation.
“Those that adapt early will be better positioned to remain competitive in export markets, particularly Europe,” the executive told Fastmarkets.
With 2025 ending, attention turns to the year ahead. The MENA steel market is expected to shift from scale-driven growth to efficiency-led development, according to Metal Park’s chief executive.
“The focus is shifting from simply producing more steel to producing and processing steel more intelligently,” Fouladkar said.
Integration of industrial ecosystems will make processes smoother, improve transparency and help companies adapt faster to new regulations. Digitalization will play a key role in production, tracking and supply-chain coordination, especially with sustainability and emissions reporting becoming standard requirements rather than exceptions, the CEO told Fastmarkets.
“Overall, the trend is toward fewer inefficiencies, stronger regional collaboration and higher value-added activity, which positions the region well for long-term competitiveness in a more regulated global market,” Fouladkar noted.
Market participants expect rebar demand to grow steadily in 2026 on the UAE domestic market, reaching around 575,000-600,000 tonnes per month. Demand in December reached 525,000 tonnes, mainly driven by strong construction activity in the country, a trader source told Fastmarkets on Monday December 22.
Billet imports to the UAE could see a shift later in the year. While the first quarter of 2026 is expected to remain stable, volumes may rise in the second quarter as a result of more producers entering the market and imports becoming a cheaper alternative to buying from domestic mills, a second UAE-based trader source told Fastmarkets.
In Saudi Arabia, expectations for billet imports in 2026 remain uncertain amid volatile conditions.
“No one can answer this question with such market conditions,” a third trader source based in the country told Fastmarkets when asked about possible market trends in the coming year.
They added that while demand for billet is strong, buying has slowed because current prices are above buyers’ expectations.
Flat steel importers in the UAE and Saudi Arabia expect demand to remain strong in 2026 because of booming construction and infrastructure activity in both markets.
“Unless we experience an extraordinary situation like liquidity shortage or another pandemic, GCC countries will enjoy strong demand,” a chief executive in the UAE told Fastmarkets.
As the EU’s CBAM moves toward full implementation, Egypt has emerged as a key test case for the region.
In Egypt, billet imports are expected to remain constrained in the near term following the government’s decision to impose provisional safeguard duties of 16.2% for 200 days from mid-September.
While the measures are aimed at supporting domestic producers, re-rollers are likely to continue facing tight supply conditions.
“Implications [of safeguard duties] can be overcome by cooperation by big local suppliers to fill the import gap,” one Egyptian trader source told Fastmarkets.
But local supply limitations are expected to persist in 2026.
“Local producers cannot guarantee [a continuous and adequate domestic supply of billet],” an Egyptian market participant said. “It’s a question for the whole industry, but producers are committed to offering excess production for sale to domestic rerollers.”
Major Egyptian steel producers have indicated that safeguard duties should be extended beyond the initial 200-day period.
Egypt’s billet demand is estimated around 8 million tpy, with domestic producers supplying roughly half of this volume.
“Of this, domestic producers cover approximately 4 million [tpy], leaving a gap of 4 million [tpy] that is met through imports,” Islam Gioshy, CEO of Al Gioshy Steel told Fastmarkets.
Although the Egyptian government is prioritizing local billet production to reduce import reliance, new capacity is not expected to materially alter the supply balance in 2026.
“A realistic timeline is two to three years before the newly licensed billet plants [LINK] begin contributing meaningfully to local supply,” Gioshy said.https://dashboard.fastmarkets.com/a/5238471/eight-egyptian-firms-secure-steel-billet-licenses-in-pu…
Across the wider MENA region, CBAM is expected to add another layer of complexity to trade flows. The European Commission’s definitive anti-dumping duty of 11.7% on hot-rolled coil imports is forecast to weigh on export volumes.
“This [AD duty] results in reduced exports volume and the extent of which cannot be determined at this stage,” a market participant said.
Market participants added that fluctuations in import and export volumes will largely depend on the performance of local currencies against the US dollar.
Iran is expected to remain a major steel producer within the MENA region through 2026, supported by abundant raw material availability. The country currently ranks 10th globally, with crude steel output of 31.4 million tpy, according to World Steel Association data. Production is projected around 3.6 million tpm by 2026.
Iran is not a direct exporter of steel to Europe and is therefore not immediately exposed to CBAM. But broader international sanctions, including the reimposed EU snapback measures from late September, are expected to continue shaping and limiting Iran’s steel trade.
The EU reimposed sanctions on Iran on September 29, banning the sale, supply, brokering or financing of steel products.
Participants expect steel and mining prices to remain volatile, driven by exchange-rate fluctuations and rising cost pressures.
Attention is also on China’s proposed export license requirements, which are expected to come into effect from January 1, 2026, and could reduce the availability of lower-priced Chinese material and reshape competition across regional markets.
Domestically, Iranian steelmakers are expected to face persistent operational constraints. Members of the Iranian Steel Producers Association said energy-related challenges, including power cuts and water shortages, will require stronger infrastructure investment to support production growth.
The MENA region is expected to become one of the major sources of low-carbon-emission steel in 2026 and beyond. But local demand in the region is already strong and its allocated tonnages for export may be limited. The region is still mostly dependent on imports for HRC.
The continuing investments in the region are likely to meet local demand and then the major steelmakers in the region will target becoming mainly exporters.
Steel consumption is expected to grow rapidly in the region and reconstruction activities in countries such as Iraq and Syria will also support steel consumption.
“The MENA region is no longer reactive in [the] steel sector,” Raju Daswani, CEO of Fastmarkets, said in his opening speech to the 28th Middle East Iron and Steel Conference. “It leads the sector globally.”
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