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Russia and Ukraine are major suppliers of steel, particularly of semi-finished products sold to steelmakers for rolling. Supply disruptions affect Europe and drive up world prices.
As part of the sanctions against Russia, the European Union banned the import of Russian steel in mid-March. Imports that aim to deprive Russia of 3.3 billion euros in income, according to the press release from the European Commission. But prices did not wait for this decision to climb. The ton of rolled steel coil has gone from 600 to 1,400 dollars, since the threats of military intervention, those of heavy plates from 650 to almost 2,000 dollars per ton.
Very bad news for the construction sector. But also to a lesser extent for the automotive sector. Due to deadlines, manufacturers are often willing to pay full price rather than pay late fees. This only maintains the tension in the market.
Europe too dependent on certain types of Russian steel
If prices have reached such records, it is because Ukraine and Russia export finished products, but also semi-finished products such as slabs and billets, blocks of unrolled steel, weighing several tons, which are sold to steelmakers. Together the two countries account for 65% of trade in this sector and mainly supply Belgium and Italy in Europe.
To make matters worse, Russia also produces solid cast iron and a transformed iron (DRI) Direct Reduced Iron, which are used to make recycled steels, in addition to scrap metal. Supply restrictions are therefore felt at all stages.
Increased import quotas for India and Turkey
But production capacities exist elsewhere and could be relaunched in Europe. ” If the conflict does not spread to other countries, the world could be without Russian exports within three to six months according to Marcel Genet, president of the mining and metals strategy consulting firm Laplace Conseil. According to the expert, however, prices will remain at a high level, Russia offering until then the double advantage of producing at low cost and of not being geographically distant.
While waiting for the production capacity of certain blast furnaces to increase, the European Union has allocated additional import quotas to other countries such as India and Turkey in order to compensate for the Russian and Ukrainian supply.