Asian slabs enter the European market

Russia's NLMK is also looking for alternative suppliers for European assets

India and China are increasing slab exports to Europe. For 8 months of 2022, according to Eurostat, Indian exports of these products to the EU amounted to 114 thousand tons (95.6 thousand tons in 2021), China exported 329 thousand tons of semi-finished products (1.7 thousand tons in 2021). This is reported by Kommersant.

Large volumes of supplies from these countries began in July-August, Italy became the main importer.

Steel plants of the Ukrainian group Metinvest are located, in particular, in Italy. Metinvest Trametal and Ferriera Valsider SpA use imported slabs. Previously, it came from the Ukrainian assets of the group, but with the beginning of the full-scale invasion of the Russian Federation, the company was forced to look for an alternative. The CEO of Metinvest, Yuriy Ryzhenkov, told in interview for HB, that the Italian factories of the group receives slabs for the production of rolled products from European and Asian suppliers and from Latin America, semi-finished products come from Zaporizhzhia. Italy also has a steel plant of the Russian NLMK, but it works with scrap metal.

The Russians are also looking for supply options. Slabs from this country were eventually included in the EU’s eighth sanctions package, but with a certain exception. The full ban will take effect on September 30, 2024. Until then, these products can be imported in volumes not exceeding 2021 levels (3.7 million tons per year). Sanctions will mainly affect the NLMK group, which supplies slabs to its rolling mills in Europe (Belgium, France, Denmark, Italy). In 2021, NLMK imported 2.4 million tons to its European enterprises.

According to the International Steel Statistical Bureau, which Fastmarkets cites, in 2021, Russia delivered 3.8 million tons of slabs to Europe. Last year, NLMK supplied 1.17 million tons of slabs to NLMK Belgium Holdings (NBH), which includes steel producers in Belgium, Italy and France, as well as 1.96 million tons to NLMK Dansteel and the company’s assets in the United States (without a clear distribution of the total amount).

In the first half of 2022, the company exported 1.89 million tons of slabs to group’s companies outside the Russian Federation. The Russian group has been preparing for the ban on the import of steel semi-finished products since the spring, looking for alternative suppliers.

At the same time, the Russians consider the Asian market, such as the Far Eastern region, as an alternative for reorienting their export flows, including for slabs and square billet (its import to the EU is prohibited by the eighth package of sanctions from April 2024). These are the markets of China, Indonesia, Thailand, the Philippines and the Republic of Korea. As the Russian Institute of Ferrous Metallurgy notes, this product niche is growing. Asia is the leader in the export and import of steel semi-finished products, the largest exporter in the region is India.

“The eighth package of sanctions does not provide for an immediate ban on the import of slabs from Russia, so it does not currently create problems for Russian exports. It will continue until the ban takes effect in 2 years. Two years is a long time, during which the situation can change significantly. At the moment, it is impossible to predict who will become alternative suppliers of slabs to the EU – everything will depend on the further decisions of the European Commission and the course of military operations in Ukraine,” says Andriy Glushchenko, GMK Center analyst.

As GMK Center reported earlier, that shortly before the announcement of the eighth package of sanctions, European rerolling companies opposed against potential sanctions on Russian slabs. They noted that previously, 80% of steel semi-finished products imported to the EU were produced in the Russian Federation or Ukraine. Rerollers do not see an alternative to Russian products, arguing that European plants and producers from third countries cannot provide stable supplies. Several sanctioned plants in Iran and American producers supplying the US and Mexican markets are considering as available alternatives.

As GMK Center wrote before, as part of the eighth package of sanctions, the European Union expanded the previously introduced restrictions on steel products. The import of square blanks and slabs from Russia will continue until 2024 within the limits of fairly large import quotas.