Alternative sources offset Russia/Ukraine raw materials disruption: Eramet

French miner Eramet forecasts global steel production to shrink this year because of the output limitations imposed by the government in China, as well as the continued components shortage.

Demand from the automotive industry is also seen slowing this year, while the consequences of the Russia-Ukraine war should remain limited, the firm says. Raw materials and semi-finished products supply from these countries is expected to be compensated by other geographical regions such as China and India. “However, the European embargo on Russian coal could significantly impact European steel production in H2,” Eramet forecasts in its first-quarter financial report monitored by Kallanish.

The company sees high sea freight and energy costs continuing this year. This and the shortage of manganese supply from Ukraine will keep global prices of manganese higher than in 2021, Eramet says. It confirms its manganese ore production target is at 7.5 million tonnes for 2022.

Global production of carbon steel in Q1 reached 463mt, down by 5.9% year-on-year and only slightly up compared to Q4 2021. This is due to falling Chinese output caused by the Chinese New Year, Winter Olympic and fresh Covid-19 lockdowns. While in the rest of the world, carbon steel production increased in Q1, it declined by 1.1% in Europe due to higher energy costs. In this context, global manganese ore consumption was down by 4.6% y-o-y in Q1.

Eramet posted strong revenue growth in Q1 of 80% to €1.2 billion ($1.26 billion).

Natalia Capra France