UK steel sector urges government to stop imports of Russia-origin processed steel

UK steel sector entities are pressing for tighter sanctions against imports of Russia-origin steel that may have been processed in third countries, according to participants at the first UK Steel Forum in London Sept. 22.

The UK has sanctioned imports of both Russian finished steel and semis due to Russian’s invasion of Ukraine. There is a full ban on imports of Russian finished steel, while semis are subject to a 35% tariff.

The European Union has meanwhile applied a ban on imports of finished steel products from Russia, but does not currently sanction imports of Russian semis. However, EU authorities are now looking at measures to block slab imports from Russia following requests from steelmakers in the region, market sources told S&P Global Commodity Insights this week.

UK-based steel stockholder sources present at the UK Steel Forum — organized by groups including steelmakers’ association UK Steel, and International Steel Trade Association ISTA — said that Russian semis are entering countries including Germany, Belgium and France for processing and potential onwards shipment, including to the UK.

“What we are asking for is that the UK’s sanctions are implemented in a way that does not allow indirect imports from third countries to circumvent the existing sanctions by applying them to all steel that has been melted and poured in Russia,” said Chrysa Glystra, UK Steel’s trade & economics policy manager during the event.

Platts reported Sept. 22 that NLMK is the only slab exporter from Russia still active in the EU market despite global sanctions following Russia’s invasion of Ukraine in February. NLMK has focused on slab delivered to its own coil and plate rolling mills in Belgium, France, Denmark and Italy and some external sales to Central European buyers.

NLMK Belgium Holdings — which includes assets in Belgium, France and Italy — is a joint venture with NLMK Group and the Belgian state-owned SOGEPA holding 49% stake each while the remaining 2% are treasury shares.

Loopholes

“The unevenness of measures means that there are loopholes allowing circumvention of the UK’s sanctions and rendering them less effective,” UK Steel said in an information document published in August. “This is because the processing of any semi-finished product in a third country will always confer origin. This allows for Russian material to be re-rolled in the EU or Turkey and then this can be exported as EU or Turkish origin material into the UK circumventing both the ban and the 35% tariff.”

While the UK has not imported any slab from Russia in the last two years and has never imported any Russian billets and blooms, recent import statistics indicate that there could be as much as 500,000 mt/year of hot rolled coil imported into the UK from Russian slab rolled elsewhere, according to data published by UK Steel. In the case of cold rolled, galvanized and hollow sections, the UK could potentially be importing more than 1 million mt/year of material rolled elsewhere from Russian hot rolled coil, the steel association said.

“This is of major concern both as a matter of principle but also for the damaging consequences it has on the UK market,” the document stated. Some of this material may be entering the UK at prices below EU averages, and could even end up in public projects, it noted.

Platts assessed hot-rolled coil in Northwest Europe at Eur735/mt ($712.30/mt) ex-works Ruhr Sept. 23, unchanged on day, amid limited trading activity and high stocks at distributors, S&P Global data showed.

Steve Andrews, commercial manager of the UK-based International Steel Statistics Bureau, noted at the UK Steel Forum that “Russia’s semis exports are still going strong,” this year, following its exports of 15.86 million mt of semis in 2021, which accounted for nearly half the county’s total steel product exports volume of 32.54 million mt. Turkey was and continues to be the largest single buyer.

Turkey’s imports of slab from Russia more than doubled on year in January-May 2022, jumping to 922,000 mt from 354,000 mt, while imports of Russian slab to China surged to 553,000 mt from 126,000mt. Imports of Russian slab, billets and blooms to Taiwan meanwhile more than doubled in the period, to 221,000 mt from 92,000 mt, according to ISSB data.

Gabriele Coppo, partner with Brussels-based law firm Van Bael & Bellis, told the Forum he believed that further discussions on sanctions need to occur internationally. This could help avoid the circumvention of existing sanctions due to the processing and reexporting of Russian steel slabs by countries including India and China.

“Everything has changed in traditional supply chains,” Coppo said.

— Diana Kinch