War Means Surging Steel Prices and Unfinished Infrastructure

A failed tender to build a bridge in Rome highlights another consequence of Moscow’s war: soaring steel prices.

There were no takers earlier this month for the 146 million-euro ($163 million) contract for the Ponte dei Congressi as steel market turmoil left potential bidders wary of getting burnt. In the three weeks following Russia’s invasion of Ukraine, benchmark European steel prices surged 51% as shipments from those countries were taken out of the market.

That’s troubling for the continent’s recovery as steel remains an essential building block for the modern economy. Spiraling prices, on top of soaring power costs, leave European manufacturers and builders with a hard choice: absorb the pain, pass it on to their customers or curb output.

Europe relied on Russia and Ukraine for a fifth of its steel imports and the impact is made even worse by surging energy costs that have forced local steel mills to reduce production. However, other regions including the U.S. are also being hit by the loss of key products.

Read: Oil Drillers Say Scarce Steel Is One Reason for Flat U.S. Output

“It goes to the very core of the economic activity of major economies like Europe,” said Tom Price, head of commodities strategy at Liberum Capital. “The effect ripples back up the supply chain so that the whole of economic activity is hurt.”

The war in Ukraine, coming on top of previous supply-chain disruptions, is already leading to shortages of some grades of steel, according to Angelica Donati, head of business development at her family’s Rome-based construction firm Donati SpA. That includes corten, a naturally rusted steel used in construction.

“Corten steel, mostly produced in Ukraine, is completely unavailable at the moment,” Donati said. “This means that any site where corten is used -- it is a major component for viaducts in Italy, for example -- will inevitably have to stop production.“