The Ukraine Crisis: European Steelmakers Keep Buying Kremlin Materials

"Many European steelmakers have said they would avoid Russia-sourced raw materials after the country was sanctioned in late February, but import volumes of some Russian steelmaking ingredients into Europe are surging anyway.

Russian exporters boosted shipments of Russia-sourced ferrotitanium, a metallic alloy used to strengthen steel, by 30% in March from February, import and export documents show. The alloy is key to making finished steel that goes into cars, stainless steel and shipbuilding.

Traders brought in about 1,830 metric tons of ferrotitanium from Russia that month, according to the documents. That is up from an average of just over 1,300 tons being imported in each of the three months before the sanctions, and nearly double the roughly 970 tons shipped in January.

Traders say they and other buyers are capitalizing on the discount Russia-sourced products are fetching amid wide-ranging sanctions, while also moving to boost purchases ahead of possible sanctions on the ingredient itself.

"We saw panic buying initially," said Matteo Vidale, director of Switzerland-based trading firm Vimet AG, who has been trading Russian-origin ferrotitanium both before and after the outbreak of the war. "We didn't know if Russia was going to be disconnected." He said that as long as Western governments avoid imposing sanctions on the alloy, "most steel plants are buying."

The European Union has imposed sanctions on the import of Russian finished steel into the bloc, but it hasn't restricted the sale of other key metals and raw materials, including titanium, used extensively in the aerospace industry, and ferrotitanium. Airbus SE continues to buy large amounts of titanium and is pushing publicly against sanctions on the metal.

Many European steelmakers have vowed to cease purchases and operations with Russian producers because of the sanctions. Steel giant ArcelorMittal, for instance, said it had immediately stopped new orders of raw materials from Russia, although it said "there was naturally a period of transition in terms of switching to new suppliers." Even for non-sanctioned products, many buyers are asking for certificates of origin showing they are sourced from outside Russia, traders said.

Bargain hunters have stepped in, boosting volumes.

According to price-reporting firm Argus Media, May prices for European grades of ferro-titanium rose to $17.50 a kilogram, up from $7 in early January. Russian-origin grades have risen much more modestly, to $8.75 a kilogram from $6.65 over the period.” [1]

1.  The Ukraine Crisis: European Steelmakers Keep Buying Kremlin Materials
Khan, Yusuf. 
Wall Street Journal, Eastern edition; New York, N.Y. [New York, N.Y]. 29 June 2022: A.9.