How does Russia’s invasion of Ukraine affect the steel industry

The Russian invasion will not only affect Ukraine’s trade flows, but global flows as well. This to the extent that sanctions are imposed against Russia.

In 2020, Ukraine imported goods worth 54 billion dollars. And it exported 49 billion dollars.

ArcelorMittal said on Thursday (03.03.2022) that it has taken the decision to stop its steel production operations in Kryvyi Rih, Ukraine. To ensure the safety and security of people and its assets.

The company stated that it evaluates the situation daily and that production had previously been reduced. The plant operating at a technical minimum (approximately one third of normal production levels).

The process of shutting down all furnaces began on Thursday, the company said, adding that the process of safely shutting down these assets, while maintaining the integrity of the assets, will take between seven and ten days. The company has over 20,000 employees in Ukraine.

„ArcelorMittal is deeply concerned about the situation in Ukraine and the threat to our employees and the entire Ukrainian population,” said a company representative.

The secondary impact of the closure of this factory and others in the country could contribute to the increase in steel prices. Analysts say, adding to the broader inflationary pressure fueled by Russia’s incursion.

Russia’s invasion of Ukraine has begun to affect several other mining companies with operations focused on Russia.

The Japanese company Nippon Steel is considering alternative sources from Brazil and Australia to purchase iron ore. To solve a possible deficit amid tensions between Russia and Ukraine, Bloomberg News reported.

Citing Nippon Steel’s executive vice president, Takahiro Moris, the news agency stated that the company currently imports 14% of its raw material iron ore pellets from Russia and Ukraine.

The Russian invasion also affects some mining companies

Russia’s invasion of Ukraine has begun to affect several other mining companies with operations in Russia, according to mining.com.

In 2020, Russia was the fourth largest steel producer in the world. With 73.4 million tons per year (mtpa), competing closely with Japan (third in size with 83.2 mt) and India (second with 99.6 mt). It was also the third largest aluminum producer. And the third largest producer of nickel in the world.

Motilal Oswal Financial Services believes that the sanctions against Russia will lead to an increase in prices for aluminum, nickel, steel, thermal coal and PCI coal. In addition, it will lead to increased costs due to alternative supply, delays in establishing new sources. Delays in payments and subsequent delays in shipping, among others.