Pig iron

Ukrainian suppliers are ready to replace the products of Russian producers on the EU market in case of sanctions on pig iron and steel from the Russian Federation

Ukraine is ready to export up to 1.5 million tons of additional pig iron to the European Union market instead of Russian suppliers this year. This is stated in the White Paper on Sanctions and Russian Substitution published by the Ministry of Economy of Ukraine.

The Russian Federation is one of the world’s largest exporters of pig iron and iron ore, ranking second in the world in terms of pig iron exports and ninth in terms of iron ore shipments. Nevertheless, the EU has refrained from imposing sanctions on imports of these categories four times. At the same time, the imposition of restrictions on the import of Russian raw materials could both create additional opportunities for Ukrainian producers and bring even more instability to the Russian economy.

«In the short term, Ukraine has a significant potential to increase supplies of pig iron to the EU. As of September 2023, five blast furnaces with a total capacity of approximately 6-7 million tons are idle in Ukraine. The launch of these facilities depends on overcoming logistical constraints and ensuring a stable supply of electricity and water,» the message says.

Before the full-scale war against Ukraine, Zaporizhstal, ArcelorMittal Kryvyi Rih and Kametstal collectively exported about 2 million tons of pig iron.

«In fact, Ukraine has all the possibilities to completely replace Russian cast iron on the European market,» the document emphasizes.

In addition, the EU continues to import iron ore in the form of pellets from Russia, while Ukrainian producers can also replace Russian suppliers of similar products. According to the White Paper, Ukraine’s iron and steel sector can additionally export 7-8 million tons of pellets to the European market. In 2023, Ukraine is expected to export only 7-8 million tons. That is, by imposing a ban on Russian iron ore in the EU, Ukraine could actually double its pellet exports.

Thus, the imposition of European sanctions on Russian pig iron and iron ore will allow Russia to withdraw additional export revenue of $1 billion. This will further weaken the ruble exchange rate and deprive Russia of additional tax resources to continue the war.

Currently, tariffs on iron ore and pig iron are already in place in the United States and the United Kingdom.

The British government has set a 35% tariff, which has led to a decrease in imports of Russian pig iron and iron ore by $51.8 million in 2022 compared to 2021.

The United States also imposed a number of additional duties, and in 2023, it stopped importing pig iron from Russia altogether. Despite being one of the largest importers of pig iron in the world, the United States has successfully suspended trade with Russia.

As GMK Center reported earlier, a number of mass media reported that the European Union plans to implement restrictions on the import of pig iron and other goods from the Russian Federation through the 12th package of sanctions against the aggressor country. EU member states plan to discuss the proposals this week. It is not known when the sanctions will officially take effect, but it is predicted that this will happen in mid-December or by the end of the year at the latest.