The sanctions have been coordinated with international partners – notably the United States.
Along with other measures, the package includes a ban on imports of finished steel products from Russia.
“An EU import ban on those steel products currently under EU safeguard measures, [amounts] to approximately €3.3 billion ($3.61 billion) in lost export revenues for Russia. Increased import quotas will be distributed to other third countries to compensate,” the EC said.
Safeguard measures in the EU have been in place since 2018, in the form of tariff-rate quotas – both country specific and global. But safeguard measures only applied to finished goods and did not include either semi-finished products or raw materials, which represent a significant portion of Russia’s exports to the region.
In January-November 2021, Russia exported 2.96 million tonnes of steel slab, 424,177 tonnes of steel billet, 5.54 million tonnes of iron ore and 536,792 tonnes of pig iron to the EU, according to data from the International Steel Statistics Bureau (ISSB).
EU buyers can continue to import semi-finished products, as well as pig iron and hot-briquetted iron, from Russian producers that do not have “sanctioned owners,” an international trader said, adding that the “banks generally do not want to finance Russian cargoes.”
European re-rollers already struggling to maintain production rates due to missing slab from Ukraine and Russia, will now have to look for alternative supplies. According to European market participants, the dependence on raw materials from Russia would lead to stoppages if there were further sanctions on raw materials.
Among the finished steel products subject to safeguard measures, Russian mills have been particularly active in exporting of hot-rolled coil (mainly from Severstal), wire rod, seamless tube, heavy steel plate and merchant bar.
For instance, Russian mills exported a total of 1.99 million tonnes of HRC to the EU in 2021, according to data from the European steel association Eurofer.
And the country’s total finished steel exports to the EU was 3.73 million tonnes last year, Eurofer said.
European steel importers have been discussing the possible changes that could be made to the safeguard measures due to sanctions against Russia and the missing volumes from Ukraine since the start of Russia’s invasion of Ukraine.
Importers said the redistribution of global quotas will not be sufficient to fill the gap, because there are not enough suppliers outside the traditional exporters, with country-specific quotas.
“Other countries could supply more, but they will not be able to provide sufficient volumes to match the volumes imported from Russia and Ukraine,” an Italian flat steel distributor said.
The EC started a review of existing safeguard measures imposed on 26 steel product categories on December 17 last year. The review was scheduled to be concluded no later than June 30, 2022 – the end of the safeguard year.
On March 15, the United Kingdom’s government also imposed sanctions on key Russia-origin products imported to the UK, with iron and steel among them. The UK has put “an additional tariff increase of 35 percentage points, over and above any existing tariff rate under the terms of the move,” the British government said.
The exact list of products that will face additional tariffs was unclear at the time of publication.