The evolution of the steel market for 2022 and 2023 remains uncertain

„The evolution of the steel market for 2022 and 2023 remains subject to a high level of uncertainty, which will probably continue to undermine demand in the sectors that use steel… Given the current context, against the background of a worsening energy crisis and shortage of raw materials. We cannot rule out a new recession or a stagflation scenario,” said Axel Eggert, general director of the European Steel Association (EUROFER).

In 2021, a positive trend of steel demand and apparent steel consumption was observed. At the same time, throughout 2021 imports from third countries increased significantly (+32%). After two consecutive decreases (-17.1% in 2020 and -10.9% in 2019), reflecting the improvement in steel demand. However, rising energy prices continue to disrupt global supply chains. And the „earthquake” caused by the war in Ukraine will strongly influence the prospects for 2022. Which may lead to the third decrease in steel consumption (-1.9%) in the last four years.

The heightened uncertainty will last at least until the end of 2022, subject to the developments surrounding the invasion of Ukraine by Russia. Which for now remain unpredictable – and its consequences on global supply chains.

The evolution of the steel market

The Russian invasion initially disrupted deliveries and forced customers to look for other sources of supplies.

Yuriy Ryzhenkov, the executive director of Metinvest, said that the company usually exports about 50% of its products to the EU and the UK. „It is a significant problem, especially for countries like Italy and Great Britain. Many of their shipments of semi-finished products came from Ukraine.”

Metinvest is an international group of mining and metallurgical companies. The group includes mining and metallurgical enterprises from Ukraine, Europe and the United States, as well as a worldwide commercial network.

The company is working with the government of Ukraine to open new export routes to Europe. „Yeah, it’s hard,” he admitted. While some routes are easier to plan, others require investments in new charging terminals. The company, added Yuriy Ryzhenkov, managed to deliver some materials to its unit in Bulgaria. And to customers from Romania and Hungary. It recently completed the first transport since the war began – of iron ore, destined for Algeria – through the Romanian port of Constanta.

The Marcegaglia company is looking for other options for the procurement of sheet metal

Marcegaglia from Italy, one of the largest steel processing companies in Europe and a long-term client of Metinvest. They are among those who had to look for alternative sources of supply. The company imports on average between 60-70% of its tin from Ukraine. And under the given conditions to continue production at all its factories. He found alternative sources in Asia, Japan and Australia.

If the initial concerns about the supply have diminished, because companies like Metinvest and Ferrexpo have managed to keep some exports in flow. And customers have found alternative supplies, concerns about the increase in prices for raw materials and energy have intensified.