Steel: Gas as a volatility multiplier rather than a fuel cost
In Serbia’s steel industry, gas sensitivity manifests less through average cost levels and more through volatility transmission. Gas is used directly for heating and indirectly via electricity consumption in rolling, casting, and finishing processes. While gas may represent a minority share of total energy input compared to electricity or coke, it increasingly determines marginal costs during stress periods.
A moderate increase in gas prices may have limited impact on unit costs, but sharp gas price spikes translate rapidly into electricity price increases across the region. Because Serbian steel production is exposed to regional power markets, gas volatility often results in sudden margin compression rather than gradual cost erosion.
Export competitiveness to the EU is therefore shaped by the steel producer’s ability to stabilise energy input costs. Plants relying purely on spot-indexed gas and electricity face earnings volatility that EU buyers increasingly perceive as supply-chain risk. Conversely, steel producers that integrate gas hedging, long-term electricity contracts, or self-generation gain a commercial advantage, even if their nominal energy costs are slightly higher.
Looking toward CBAM implementation, gas-driven electricity emissions increasingly matter. Even if natural gas itself is not fully covered, the carbon intensity of electricity inputs becomes a visible cost component in EU-facing contracts.
Chemicals: Gas as both feedstock and system risk
The chemicals sector represents the most direct exposure to gas pricing because natural gas functions simultaneously as energy input and feedstock. Fertilisers, resins, polymers, and industrial chemicals produced in Serbia often have gas costs embedded deeply in their cost base.
In normal market conditions, Serbian chemical producers can partially pass gas cost increases through to buyers. However, in volatile environments, this pass-through becomes constrained by EU competition and long-term contract pricing, causing margin volatility to spike sharply during gas stress events.
The critical vulnerability for Serbian chemical exporters is the dual exposure to gas and electricity prices. When gas prices rise, feedstock costs increase immediately, while electricity prices rise in parallel, compressing margins from both sides. Without hedging or flexibility mechanisms, chemical plants can experience sudden profitability collapses despite stable output volumes.
From a competitive standpoint, EU buyers increasingly favour suppliers that can demonstrate energy cost stability and emissions predictability. Gas volatility is therefore not just a cost issue but a commercial credibility issue.
Food processing: Low absolute exposure, high sensitivity to peaks
Food processing in Serbia is often considered relatively resilient to energy price volatility because gas represents a smaller share of total operating costs. This is true on average, but misleading during stress periods.
Food processors rely on gas for thermal processes such as cooking, drying, sterilisation, and pasteurisation. These processes are time-critical and difficult to interrupt. When gas or electricity prices spike, food producers often cannot reduce consumption without affecting output quality or safety.
As a result, food exporters experience asymmetric risk. Gas price declines provide limited upside, while price spikes translate directly into margin erosion. For exporters operating on thin margins and fixed-price EU contracts, even short-lived energy price spikes can materially impact profitability.
Food processors therefore benefit disproportionately from stability-oriented strategies such as fixed-price electricity procurement, seasonal gas hedging, or cogeneration systems that stabilise energy inputs, even if they do not minimise average costs.
Ceramics: Structural gas dependence and cost fragility
Ceramics manufacturing is one of the most gas-sensitive industrial activities in Serbia. Kiln firing requires continuous high-temperature heat, making gas costs a dominant component of operating expenses. Unlike steel or chemicals, ceramics producers have limited ability to substitute fuels or interrupt processes without significant losses.
This creates a structural vulnerability. When gas prices rise sharply, ceramics producers face immediate cost escalation with limited mitigation options. Electricity costs also rise in parallel, affecting drying, handling, and finishing stages.
For EU exports, this fragility translates into heightened commercial risk. Buyers increasingly scrutinise supply continuity and cost stability. Ceramics producers exposed entirely to spot gas prices face both margin risk and delivery risk during prolonged price spikes.
Elevated by clarion.energy
