Steel shortage Ukraine war causes global steel shortage

The war in Ukraine has consequences for Russia, but the country still produces a lot of steel for the global market. This could be an opportunity for China and India.

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Ukraine and Russia are responsible for about ten percent of the international steel trade, steel expert Jayanta Roy from the Indian rating agency ICRA told the dpa (Deutsche Presse-Agentur). Russia, Ukraine and Belarus cover about 40 percent of steel consumption in the EU (about 150 million tonnes annually). However, the war in Ukraine and the sanctions imposed on Russia are now causing a shortage in the global steel supply and prices are naturally soaring.

Yesterday, the EU also agreed with the USA and other allies on additional punitive measures against Russia. The new EU sanctions package now also includes a ban on the import of essential goods in the iron and steel sector from the Russian Federation. So both Eastern European countries could now be out of the picture for the West in terms of steel supplies.

China and India could compensate for steel shortage

Steel expert Roy now assumes that the world's two largest steel producers, China and India, could fill the gap in steel supply. So far, about a third of India's steel exports have been going to Europe already. The German Steel Trade Association (BDS), however, expressed scepticism about steel deliveries from the Far East. The reason is that existing freight rates worldwide have increased several times over, which makes deliveries from distant regions rather unprofitable, according to BDS board member Oliver Ellermann.

Steel prices in Germany have almost doubled

In Germany, too, steel prices have skyrocketed as a result, Ellermann notes. For example, the price of steel mesh for the construction industry has risen by 72 percent compared to autumn of 2021. Reinforcing steel is 46 percent more expensive. In any case, due to the pandemic, prices have been at a historically high level for the last two years. The reasons for this were above all the increased energy costs, fixed price fronts for the raw materials ore, coking coal and scrap as well as increased freight costs until the start of the war in Ukraine. BDS expects prices to continue to rise in the coming weeks and months.

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