Liberty Ostrava, a major Czech Republic-based steel producer, has announced surcharges of Eur125/mt ($136.71/mt) on flat-rolled products and Eur175/mt on long and tubular products, citing increases in production costs related to the war in Ukraine.
The surcharges were announced March 10 by the company, part of the Liberty Steel group, in a note to customers. The surcharge for long and tubular products include for threaded bars and mining support products.
Liberty Ostrava highlighted the risk that some raw materials suppliers might declare force majeure on shipments as a result of Russia’s invasion of Ukraine, along with higher energy costs.
“Besides the energy cost increase, we start to face force majeure situation with regard to raw materials and suppliers, which we are trying to avert,” Liberty Ostrava said.
The integrated mill is understood to regularly purchase iron ore supplies from Ukraine, and is using pulverized coal injection coal as well as coking coals and met coke.
Russia is the largest supplier of PCI to Europe, with limited spot PCI coal availability currently at Czech and Polish coal mines, according to market sources.
Miners Metinvest and Ferrexpo are continuing to rail iron ore products to markets in Eastern and Central Europe, and their central Ukraine-based mining and processing operations are continuing.
Ferrexpo was reported as having issued force majeure notices on some seaborne contracts Feb. 25 due to disruption of logistics operations following Russia’s invasion of Ukraine Feb. 24.
Some railed iron ore shipments to the border were said to be at lower than typical rates based on rail service availability.
Liberty said commercial invoices would be revised “with immediate effect for material in production or pending shipment.”
A northern-European service center source confirmed receipt of the surcharges but hadn’t heard of new April offers, despite expecting new levels this week.
“I guess they will wait until it’s clear how they can settle the pending orders,” said the source.
Offers for March delivery for hot-rolled material were reported in Central Europe last at Eur875-Eur890/mt ex-works, with no further details.
In the South, a distributor source confirmed similar discussion around surcharges with large clients, at comparable levels of Eur100-Eur120/mt on flat products.
“There have been conversations about surcharges, the idea is to make increasing costs more transparent to end-users,” said the source. “I wouldn’t be surprised to see more surcharges across the market.”
— Benjamin Steven, Hector Forster