After imposing sanctions on the import of Russian metal, Europe switched to purchases from Asian countries

In 2023, after the introduction of sanctions on the import of Russian metal, Europe switched to purchases from Asian countries. India became the largest supplier; Vietnam, Japan and Taiwan also actively increased supplies. The growth of export opportunities in Asian countries is frightening European metallurgists, while the European Commission is considering introducing new protective measures.

Asian countries have become beneficiaries of European sanctions on the Russian iron and steel industry, according to a report published in February by the association of European metallurgists Eurofer. At the end of 11 months of 2023, the main suppliers of finished steel products to the EU were India (3.3 million tons), South Korea (3.1 million tons), China (2.7 million tons), Vietnam (2.4 million tons) , Taiwan (2.3 million tons), Turkey (2.1 million tons) and Japan (1.7 million tons). The five largest suppliers accounted for 58% of total finished steel imports into the EU.

The highest growth rates of supplies to Europe are demonstrated by Vietnam (38%), Japan (32%), Taiwan (12%) and South Korea (6%). Imports of finished goods from Turkey and China fell by 51% and 13% respectively, while imports from India rose by 7%.

Before the sanctions, Russia was the largest player in the European market. According to the European metallurgical association Eurofer, supplies from Russia in 2021 amounted to 3.74 million tons of steel products, including 2.86 million tons of flat products. At that time, other major suppliers to Europe, besides the Russian Federation, were Turkey, India, Ukraine and South Korea.

Sanctions restrictions were introduced in several packages. The European Union announced its first sanctions on steel on March 15, 2022. The black list includes such types of products as shapes and profiles made of cast iron and unalloyed (carbon) steel, hot and cold rolled products, products made of reinforcement and wire, welded and seamless pipes. The eighth package of sanctions, introduced in October 2022, prohibited the supply of slabs and square billets, but with reservations: the import of square billets is prohibited from April 1, 2024, and slabs from October 1, 2024. Import quotas were introduced for the transition period.

In November 2023, Deputy Minister of Industry and Trade Viktor Evtukhov said in an interview with Interfax that since the beginning of last year, exports of rolled metal products have decreased to an average of 10%. “We have already replaced the main lost volumes at the expense of the domestic market. Therefore, based on the results of nine months, the total production volume grows by 4.4%. At the same time, many companies worked very quickly and last year were able to redirect the main volumes of exports to new directions or segments of the domestic market,” he noted.

The Federal Customs Service no longer discloses detailed export statistics, however, according to Russian Railways, rail transportation of ferrous metals for export in 2023 decreased by 7.3%, to 24.6 million tons.

Export shipments from Severstal enterprises fell especially sharply, by more than half.

Customs data does not show a sharp increase in Russian imports to those Asian countries that are increasing steel supplies to Europe. The increase in supplies to the EU is associated with high prices there and an increase in production in Asia: India increased production by 12%, to 140 million tons, South Korea – by 1.3%, to 67 million tons.

European metallurgists, noting the growth of export opportunities, are in favor of tightening trade policy. The European Commission launched a new investigation on February 9, examining the need to introduce protective measures for European steel producers. Eurofer, in turn, said that “the unprecedented expansion of China’s steelmaking capacity over the past two decades has led to deep imbalances in global steel markets.” The situation is complicated by the fact that new dynamics of excess steel capacity are also emerging on a regional scale, especially in Southeast Asia (ASEAN countries, India), the Middle East and North Africa, which, according to Eurofer, are redirecting their exports to the European Union.

Evgeniy Zainullin