Russian steel trade feels pressure but carries on

Russian steelmaker sources tell Kallanish they are encountering some issues in conducting international trade, but it is premature to call it major disruption, yet. The situation is changing rapidly, however, they add.

On Monday, companies were still able to use regular financing mechanisms to book freight and reported regular traffic in buyers’ enquiries and orders, depending on availability. The list of banks companies are able to work with has narrowed after prohibitive sanctions were imposed on several Russian banks, including the state-owned VTB. However, some other banks and their European affiliates are all working well.

There are, however, buyers, who are attempting to renege on concluded contracts. Without sanctions on Russian goods coming into Europe thus far, these actions have no legal grounds and are likely to be processed via the usual resolution routes, such as courts.

Demand is also assessed as normal, although some EU countries’ enquiries have stopped completely, such as Germany and Austria, while Polish customers are inquiring more – likely due to Ukrainian supply being cut off. Some companies are also looking at redirecting their export volumes to Asia, possibly at lower prices, but away from the war stricken western Black and Azov Sea ports.

Some international buyers are asking for ddp-based sales, but it is too risky for the seller, and is thus far being declined. Sources nevertheless note some mills will have little choice if the situation does not ease and they still want to trade. This will increase costs and risks for producers most significantly, they add.

Logistics are functioning relatively well, albeit there were several instances of having to re-charter vessels, as captains declined to ship Russian goods. There is also a shortage of trucks with drivers, both incoming and outgoing, as drivers in Russia and Europe are refusing to carry goods to either destination, afraid of being attacked.

There are some issues with railway freight going through the Baltic States, as sellers need to receive railway plans from authorities by the last day of the month, and some had still not been received on 28 February.

Overall, companies are producing at regular capacity and continue to load cargoes in all destinations, including semi-finished materials to their western and US re-rolling mills. All sources note they are following the situation hour by hour, as it continues to change rapidly.

Katya Ourakova UK