The Russian-Ukrainian conflict is pending, but its impact on the commodity market has continued to ferment. From the perspective of the steel industry, Russia and Ukraine are important steel producers and exporters. Once the steel trade is blocked, it is unlikely that domestic demand will undertake such a large return of supply, which will eventually affect the production of domestic steel companies. The current situation in Russia and Ukraine is still complicated and changeable, but even if a truce and a peace agreement can be reached, the sanctions imposed by Europe and the United States on Russia will last for a long time, and the post-war reconstruction of Ukraine and the resumption of infrastructure operations will take time. The tight steel market in the Middle East and North Africa is difficult to ease in the short term, and it is necessary to find alternative imported steel. With the strengthening of overseas steel prices, the rise of steel export profits has become an attractive cake. India, which “has mines and steel in its hands,” has been eyeing this cake and is actively striving for a ruble-rupee settlement mechanism, buying Russian oil resources at low prices, and increasing exports of industrial products.
Russia is the world’s second largest steel exporter, with exports accounting for about 40%-50% of its total domestic steel production. Since 2018, Russia’s annual steel exports have remained at 30-35 million tons. In 2021, Russia will export 31 million tons of steel, the main export products are billets, hot-rolled coils, long products, etc.
Ukraine is also an important net exporter of steel. In 2020, Ukraine’s steel exports accounted for 70% of its total output, of which semi-finished steel exports accounted for as much as 50% of its total output. Ukrainian semi-finished steel products are mainly exported to EU countries, of which more than 80% are exported to Italy. Ukrainian plates are mainly exported to Turkey, accounting for 25%-35% of its total plate exports; rebars in finished steel products are mainly exported to Russia, accounting for more than 50%.
In 2021, Russia and Ukraine exported 16.8 million tons and 9 million tons of finished steel products respectively, of which HRC accounted for 50%. In 2021, Russia and Ukraine will account for 34% and 66% of crude steel production, respectively, in net exports of billets and finished steel products. The export volume of finished steel products from Russia and Ukraine together accounted for 7% of the global trade volume of finished steel products, and the export of steel billets accounted for more than 35% of the global steel billet trade volume.
After the escalation of the Russian-Ukrainian conflict, Russia encountered a series of sanctions, which hindered foreign trade. In Ukraine, due to military operations, the port and transportation were difficult. For safety reasons, the main steel mills and coking plants in the country were basically operating at the lowest efficiency, or directly operating. Some factories are closed. For example, Metinvest, an integrated steelmaker with a 40% share of the Ukrainian steel market, temporarily closed its two Mariupol plants, Ilyich and Azovstal, as well as Zaporo HRC and Zaporo Coke in early March.
Affected by the war and sanctions, the steel production and foreign trade of Russia and Ukraine have been blocked, and the supply has been vacuumed, which has caused a shortage in the European steel market. Export quotations for billets rose rapidly.
Since the end of February, overseas orders for China’s HRC and some cold-rolled coils have continued to increase. Most of the orders are shipped in April or May. Buyers include but are not limited to Vietnam, Turkey, Egypt, Greece and Italy. China’s steel exports will increase significantly in the month.
Post time: Mar-31-2022