Russia's invasion of Ukraine has had a huge impact on the EU steel market and the European Commission should amend its steel safeguard to prevent a further supply squeeze.
The commission is currently conducting a review of the measures, which it started in December. Quotas for some products should be shifted to global, rather than country-by-country, to provide buyers access to sufficient imports.
Between them Russia and Ukraine accounted for almost 20pc of hot-rolled, cold-rolled and hot-dip galvanised strip imports into the EU last year, giving them a sizeable share that will be difficult to replace.
This is not accounting for large slab sales, which are the lifeblood for Metinvest-owned Ferriera Valsider and Trametal, and NLMK's La Louviere and DanSteel, as well as independent re-rollers such as Marcegaglia. Russian and Ukrainian mills sold well over 4mn t of slab into the EU last year and represent a huge percentage of semi-finished imports overall.
Plate prices and potentially production could be heavily impacted by tighter slab supply, and Russia and Ukraine between them are more than 50pc of the EU import market here.
On other products, the need for a change to quotas is also clear. Take rebar, for example. Russia, Ukraine and Belarus — whose steel is sanctioned — together represented over 45pc of the import market last year, and just under 44pc the preceding year. These sources are for now unavailable, and the energy price spike caused by Russia's invasion will undoubtedly impact domestic longs supply going forward: an Italian producer has already idled plants in response to higher energy costs, according to market participants.
The absence of Black Sea supply will also increase competition for material from other export markets, such as Turkey. A global quota would allow buyers greater access to material from other markets to compensate for the fall in Russian and Ukrainian tonnages.
Last week the commission said that the Black Sea market remains open and it is unlikely to make changes to its safeguard unless further sanctions are announced. The outcome of the current safeguard review is expected in April, with any new changes effective from 1 July.
