A significant share of European production depends on pig iron supplies from Ukraine and the CIS countries, and several steel companies in the European Union, including ArcelorMittal, Arvedi and Dunaferr, are exiting the market today as they assess possible problems with the supply of raw materials and demand in the finished steel market.
In addition, today there are no proposals for the import of flat products from suppliers from India and Southeast Asia, who were not sure about the developments in the European market in the coming days.
European buyers have said they are keen to close all ongoing negotiations as soon as possible in anticipation of higher prices. Traders with port stocks have received more and more requests from buyers, but there is no demand for steel orders due to the uncertainty of prices, deliveries and freight.
In Egypt, buyers who have ordered batches of metal products from both Russia and Ukraine are concerned that they will no longer be delivered. Difficulties with payments and transactions to Russia are also expected. Only China still offers rolled metal products in the Middle East and North Africa amid a sharp increase in demand from domestic and European buyers, but deliberately holds back negotiations, expecting their next offer to be higher by 30-50 dollars per ton.
Market participants have said that everyone is now evaluating their order book and drawing mitigation scenarios, but this is becoming more difficult due to supply uncertainty and manufacturers stopping quotes.
Interruptions in the supply of raw materials
The Turkish market is also expected to suffer. Turkish factories have withdrawn offers from the market, and the supply of slabs and other raw materials has been threatened.
Several buyers in Turkey also have delayed deliveries from Metinvest, which suspended production at its Ukrainian factories and they will need to find an alternative. There were reports that Turkey also had to stop the unloading of Russian ships in Turkish ports. Some market participants said they expect import disruptions, which will allow Turkish mills to raise prices.
Concerns over iron ore supplies from Ukraine's Ferrexpo and Russia's Metalloinvest also sparked requests this week from European mills looking for alternative sources.
Because the European market is mostly supplied by futures contracts, spot supplies are currently limited to pellets from the US and India. American iron ore pellets are ideal for European mills, while their appetite for Indian pellets is likely to be limited by the higher alumina content of the latest grade.
Earlier Thursday, Ferrexpo said it was still operating its mining and processing facilities in central Ukraine, where the situation remains stable. But the lack of rail transport will affect both domestic supplies and exports.