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Stainless Espresso: Slump in Russian raw material deliveries
Stainless Espresso: Slump in Russian raw material deliveries

2 March 2022 – The slump in Russian raw material deliveries is likely to pose greater challenges for European machinery and plant manufacturers than the decline in Russian order volumes. Russian steel producers hit with EU sanctions. Steel prices rise. No more EU plate offers. Nickel and aluminium prices continue to rise significantly.

Slump in Russian raw material deliveries

According to the European Mechanical Engineering Industry Association, orders from Russia are currently affected by the sanctions, but on closer inspection they are rather small. With a sales volume of more than 800 billion euros per year, mechanical and equipment engineering in Europe is one of the most important sectors of the economy and an important buyer of raw materials and intermediate products.

Export-oriented companies at an advantage in 2022

Already since the beginning of 2022, Deutsche Bank had pointed out in its analyses that the order books in mechanical and plant engineering are bursting at the seams. And the World Bank also expects robust growth in export-oriented companies worldwide – for example in the energy, electronics, machinery and equipment sectors.

More cooperation needed between downstream and suppliers

The lack of Russian and Ukrainian raw material supplies is likely to have a greater impact on European machinery and equipment manufacturers than the decline of about one per cent in Russia’s total order volume. In procurement, machinery manufacturers should quickly work out solutions in cooperation with their suppliers in order to be able to fulfil orders and extend their lead further.

Russian steel producers hit with EU sanctions

Russian steel giant Severstal has suspended its sales to the European Union after the owner was hit with EU sanctions on 28 February 2022. Its majority shareholder in steelmaking and mining group Metalloinvest was also hit with sanctions.

EU steelmakers raise prices significantly

European steel producers are raising prices significantly due to the sanctions against Russia. In particular, the lack of raw material deliveries from Russia and Ukraine and the associated impact on prices are cited as reasons.

In the meantime, all major Ukrainian steel producers seem to have largely stopped production due to the current conflict and to protect their employees.

EU Plate manufacturers stop offers

There are reports from market circles that EU plate producers have currently stopped their offers.

Russian steel not to be expected in the foreseeable future

After some hesitation, the trade press and experts have come round to our opinion that Russian steel can no longer be expected in the short and medium, if not the long term.

Nickel and aluminium still on the rise

Nickel and aluminium continued to rise today due to the ongoing conflict between Russia and Ukraine. Nickel is currently up more than 5%. Aluminium is up more than 3.1% and is approaching the $3,600 per tonne mark. Aluminium and nickel futures had already closed on the SHFE with a plus of more than 2.5% in some cases.

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