Europe is moving toward banning imports of key Russian iron and steel products, raising the stakes for industries already under pressure from soaring energy prices following the invasion of Ukraine.
European Commission President Ursula von der Leyen on Friday announced plans to target Russian shipments, which have already been curtailed by the sanctions imposed on steel tycoons. She didn’t provide further details. Those hardest hit could include electric-arc furnaces that rely on Russian hot briquetted iron to produce high-quality steel products for automakers.
Steel prices in Europe have already surged back to record highs as the war choked off exports from both Ukraine and Russia. The latter accounted for about a fifth of shipments to the region. The latest round of restrictions will reinforce existing moves voluntarily to shun Russian steel as Europe’s biggest conflict since World War II threatens economic prosperity.
“It just formalizes what the market was already doing,” said Matthew Watkins, principle analyst at consultancy CRU Group. “It proves a lot more concretely that this is not just a short-term thing.”
Russian billionaires have already been targeted by sanctions, curbing some shipments. Severstal PJSC said it suspended sales to Europe after owner Alexey Mordashov was hit by penalties last month. Evraz Plc’s biggest shareholder Roman Abramovich, Metalloinvest Holding Co.’s Alisher Usmanov and Magnitogorsk Iron & Steel Works PJSC owner Victor Rashnikov have also been added to different sanctions lists.
Vladimir Lisin, the billionaire chairman of Russia’s biggest producer Novolipetsk Steel PJSC -- which has stakes in plants in Belgium, Italy, Denmark and France -- has so far not been sanctioned.
Russia is an important supplier of feedstocks like slabs, pig iron and billets, which European mills use to produce finished products. Should a ban be enforced, they will be hard pressed.
