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Consequences of the Russia-Ukraine conflict for the steel sector


The challenges for the steel industry seem endless. After a promising start at the beginning of the year (as we had told you in this article) that had led to leave behind the problems related to the pandemic of 2020 and the consequent crises related to the shortage of material in 2021, also in 2022 an event of global importance has affected the steel market: the Russia-Ukraine war.

Consequences of the Russia-Ukraine conflict for the steel market

As Achille Fornasini (Partner & Chief Analyst at Siderweb) explained during the webinar “Inox: le conseguenze del conflitto sul settore italiano”, the conflict has exacerbated already tense situations due to the energy crisis. More specifically, Fornasini highlighted how, even in the event of a hoped-for peace agreement, it will take some time before the situation returns to being positive for the steel market.

In particular, the world of stainless steel has been most affected by the negative effects of the war. This is due to the fact that nickel – raw material that contributes significantly to the formation of the price of stainless steel – has reached a cost never seen so high in the last 5 years (reaching about 31 thousand dollars per ton). In addition, Russia is one of the largest exporters of stainless steel in Europe: here, in 2021, it exported about 92% of its total exports. It’s therefore clear that the Russia-Ukraine conflict, with the consequent position of hostility of the European Union towards Moscow’s position, has strongly negative repercussions on the European steel sector and, inevitably, on the Italian one.

Steel crisis, the main players

During the webinar, Fornasini analyzed in detail all the basic components of stainless steel showing how all of them have considerably increased their value on the market within a few weeks. Scrap increased by 51% in a few weeks, nickel by 127%, chromium, magnesium and silicon had an increase of between 35% and 40%. As Fornasini has well pointed out, these increases in the basic components of stainless steel, together with increases in the price of energy, have led to an inevitable growth in the cost of the finished product (equal to about 30%) and, therefore, to a decline in sales and turnover for companies.

The conclusion of Siderweb analyst Achille Fornasini is a hope that we at Prodotti Ebi join.
Here you can find his words “For the near future I hope for a peace agreement that can also trigger a gas turnaround, capable of leading to a generalized recovery.”