European steel plate market: One year on - effects from Russia’s war in Ukraine
One year since Russia invaded Ukraine on February 24, 2022, Fastmarkets’ roundup of the key challenges facing the European steel plate market arising from the consequent war
Ukraine used to be a major supplier of steel plate to the EU, with deliveries of such material from the nation accounting for nearly half of the total plate imports into the bloc.
Ukraine plate missing from market
In 2021, Ukraine delivered 864,637 tonnes of plate to the EU, which was 43% of the total 2.02 million tonnes of plate imports for that year.
This exceeded the volume from the Russian Federation, which supplied 280,941 tonnes of plate to EU countries in 2021.
But in 2022, exports from Ukraine to the bloc dropped to only 195,719 tonnes, according to statistics from regional steel industry association Eurofer.
Ukraine’s key plate-producing assets were Metinvest’s Mariupol-based plants Azovstal and Ilyich Iron & Steel. But as a result of Russia’s invasion, Metinvest has lost control of both of these.
Ilyich Iron & Steel had capacity for 1.6 million tonnes per year of plate, while Azovstal had capacity for more than 5 million tpy of steel slab and about 2 million tpy of plate.
The bomb shelters at the Azovstal steel plant became the last bastion of defense in Mariupol, helping the Ukrainian military to withstand many weeks of siege while they fought to protect the city from the Russian army.
According to the Ukrainian steelmakers’ union, Ukrmetallurgprom, the country produced only 6.26 million tonnes of crude steel in 2022, down by 70.7% in comparison with 2021. Rolled steel output totalled 5.35 million tonnes, which was 72% less than in 2021.
Deliveries from Russia, which used to be the second-biggest plate supplier to the EU, have also dropped, to only 43,983 tonnes in 2022. This was because the EU banned deliveries of finished steel from the nation from March 15, 2022, in response to its unprovoked aggression against Ukraine.
Increased deliveries from Asia cannot fill gap in supply
During the course of 2022, India and Indonesia both increased their plate deliveries to the EU.
Notably, Indonesia more than doubled its shipment volumes, with plate deliveries from the nation to the bloc amounting to 325,637 tonnes in 2022, compared with 127,157 tonnes in 2021.
India supplied 344,823 tonnes of plate to the EU in 2022, up from 255,266 tonnes in 2021.
Japan also doubled plate supply to the EU, to 137,192 tonnes in 2022 from 63,012 tonnes in 2021.
And Turkish mills shipped 52,470 tonnes of plate to the EU in 2022, sharply up from just 8,636 tonnes in 2021.
But total plate imports into the EU in 2022 went down year-on-year from 2021, to 1.74 million tonnes, from 2.02 million tonnes.
European plate prices to start recovering in 2023
Initial overstocking after Russia’s invasion of Ukraine, coupled with shrinking end-user demand, have pushed prices for steel plate downward from the historical peak reached in April 2022.
Fastmarkets’ price assessment for steel domestic plate, 8-40mm, exw Northern Europe, averaged €1,893.75 ($2,018.83) per tonne in April 2022, an all-time high since Fastmarkets’ assessment was launched in April 2008. The monthly average was up by €386.75 per tonne month-on-month from €1,507.00 in March 2022.
Overstocking and slow demand kept European plate prices on a downtrend from May 2022 until January 2023, when plate prices started to recover on restocking activity, better demand and reduced supply.
Fastmarkets’ most recent weekly price assessment for steel domestic plate, 8-40mm, exw Northern Europe, was €1,020-1,050 per tonne on February 22, up by €20-30 per tonne from €1,000-1,020 per tonne on February 15. The assessment was also up by €50-60 per tonne from €960-1,000 per tonne on February 1, and up by €20-30 per tonne year-on year from €1,000-1,020 per tonne.
The corresponding weekly price assessment for steel domestic plate, 8-40mm, exw Southern Europe, increased to €910-930 per tonne on Wednesday, up by €10-30 per tonne from €880-920 per tonne on February 15. The assessment was also up by €30-40 per tonne from €870-900 per tonne on February 1, but down by €50-70 per tonne year-on year from €960-1,000 per tonne.
Market sources expected that plate prices in the region would continue to rise on good demand and limited availability.
Indeed, the availability of steel plate in Europe has been reduced recently, with German mills traditionally more focused on long-term contracts for projects rather than spot sales, the import volumes from Ukraine missing from the market, as well as one integrated mill in Poland also out of the market, and a Czech-based re-roller running at reduced rates due to a lack of slab supply.
“We have Huta Czestochowa [in Poland] and Vitkovice Steel [in the Czech Republic] out of the [market] for now, and [the volume of] deliveries from Ukraine, which used to be an important player in the European plate market, dropped drastically after Russia’s invasion,” a trading source told Fastmarkets.
Reduced slab supply puts pressure on re-rollers
Another problem for the European steel market was missing slab supplies from Ukraine.
Ukraine supplied more than 2 million tonnes of slab to the EU in 2021, mainly from the Azovstal plant. Over the first 10 months of 2022, deliveries dried up to just 365,000 tonnes, according to the International Steel Statistics Bureau (ISSB).
Apart from selling slab in the spot market, Metinvest used to send around 100,000 tonnes per month of slab to its Italian mills, and around 20,000 tpm to its asset in the UK, a source inside the company said.
In Italy, Metinvest operates two rolling mills.
Ferriera Valsider has two rolling lines for the production of heavy plate and hot-rolled coil. The heavy plate mill has capacity for 400,000 tpy while the HRC mill has capacity for 600,000 tpy.
Trametal is equipped with a heavy plate mill with capacity for 600,000 tpy.
Russia and Ukraine used to be the largest slab suppliers to the EU. The overall total slab imports into the bloc amounted to 6.5 million tonnes in 2021, with deliveries from Russia and Ukraine accounting for 6.07 million tonnes of that (93%).
Russian mills shipped 3.9 million tonnes of slab to the bloc in 2021 and 3.03 million tonnes in January-October 2022, ISSB statistics showed. Russia-origin slab was effectively left out of the sanction packages imposed on Russia thanks to strong lobbying by European re-rollers.
But in October 2022, the European Council voted in favor of an eighth package of sanctions against Russia in response to its invasion of Ukraine.
Among other things, this package included a ban on Russian semi-finished steel imports, but with a two-year transition period, including quite generous quotas that were almost equivalent to the historical slab volumes imported from Russia into the EU.
Between October 7, 2022, and September 30, 2023, 3.75 million tonnes of semi-finished steel products under CN code 7207 12 10 (steel slab) would be allowed to enter the EU market without restrictions, with another 3.75 million tonnes allowed to enter the EU between October 1, 2023, and September 30, 2024.
European re-rollers have increased their bookings of slab from Asia, India and Brazil over the past year, but volumes of slab suitable for plate production were limited in the international market, sources said.
“Cheap slabs from international markets are thin and small, but plate mills prefer heavy and wide slabs, although these are costly. So re-rollers do not have enough slabs,” the trading source in Europe said.
In January-October 2022, India exported 185,000 tonnes of slab to the EU compared with just 96,000 tonnes in the whole of 2021.
During the first 10 months of 2022, China delivered 366,000 tonnes of slab to the bloc, versus just 2,000 tonnes in the whole year of 2021.
Brazilian suppliers have also increased slab deliveries to the EU, to 330,000 tonnes in the first 10 months of 2022 from 155,000 tonnes in 2021.