Updated with Metinvest suspension of facilities in Mariupol and AMKR ooeration restrictions in paragraph 4 and 5
Russian missile attacks throughout Ukraine overnight have led to the shutdown of steelmaking operations in the country, while the military has closed several ports and rail transportation has been suspended by the government.
Russia launched attacks across Ukraine from around 02:30 GMT today, including missile strikes on cities and infrastructure.
The port of Odessa is being evacuated after a missile attack killed 18 people in the city, while the port of Mariupol was also attacked and has ceased operations.
Steelmaker Metinvest has temporarily suspended production facilities at its Ilyich and Azovstal plants in Mariupol. The decision was made to ensure the safety of employees and to preserve equipment after the major port city was hit by missiles last night. Azovstal will suspend operations at its blast furnace, plate, rail and structural mills, as well as coke, recovery, desulphurisation, lime and slag-processing facilities. The Ilyich iron and steel works of Mariupol (MMKI) will suspend operations at its sinter plant, blast furnace, 1700 HSM and 3000 plate mill, and the cold rolling mill. The company will also halt operations at its coking coal mines and coke plants. Decisions on further operations will be made based on how the situation develops, said Metinvest.
Ukrainian steelmaker ArcelorMittal Kryvyi Rih (AMKR) also announced earlier today that its operations will be restricted following Russia's invasion of the country.
Ukraine produced 21.4mn t of crude steel in 2021.
European trade halted
Trade in Black Sea steel markets is frozen today, market participants said.
A significant share of European production depends on CIS pig iron, with several EU mills — including ArcelorMittal, Arvedi and Dunaferr — heard today to be stepping out of the market, as they evaluate raw materials supplies and the finished steel market. Meanwhile, import offers for flat products in Europe have disappeared today, as Indian and southeast Asian suppliers were uncertain what the state of the market would be in the coming days.
European buyers said that they are looking to close all ongoing flats negotiations as soon as possible, in anticipation of price increases. Traders with port stocks were receiving an increased amount of enquiries from buyers, but there was no interest in purchasing material from new production, owing to the uncertainty of prices, deliveries and freight.
In Egypt, buyers have booked flats cargoes from both Russia and Ukraine, and are concerned that these would no longer be delivered. Difficulties in payments and transactions to Russia are also anticipated. Only China was still offering HRC there, for April shipment. An Egyptian supplier has received a lot of demand from domestic and European buyers, but they are keeping off market, with expectations that their next offer would be $30-50/t higher.
Market participants said that everyone is now assessing their order book and drawing scenarios to mitigate impact, but this is increasingly difficult with the uncertainty of supplies and producers stopping quotations.
Raw material supplies disrupted
The Turkish market is expected to be impacted too. Turkish mills have pulled offers off market, with slab and other raw materials supply under threat.
Several buyers in Turkey also have pending orders from Metinvest, and will need to find alternatives. There were some reports that Turkey was also expected to stop Russian vessels from unloading at Turkish ports. Some market participants said that they expect imports to be disrupted, which would allow Turkish mills to raise prices.
Concerns over iron ore supplies from Ukraine's Ferrexpo and Russia's Metalloinvest have also driven up enquiries from European mills this week, seeking alternatives sources. With the European market largely supplied by term contracted volumes, spot supplies are currently limited to US and Indian pellets. US iron ore pellets would be a natural fit for European mills while their appetite for Indian pellets would likely be capped by the higher alumina content in the latter grade. Ferrexpo earlier today said it was still operating its mining and processing facilities in central Ukraine where it remains stable. But the absence of rail transportation will affect deliveries and exports.
