The Ministry of Economy of Ukraine has prepared a document lobbying for the ban on pig iron and iron ore imports from Russia to the EU. These products were excluded in the previous packages of sanctions in Europe as they are key resources for the regional steel industry.
Pig iron imports from Russia to the EU reached 1.17 million mt in 2022, accounting for over 30 percent of total pig iron exports from the country. Italy is the major buyer in the EU with 964,000 mt imported from Russia in 2022, even though the volume dropped to 636,000 mt in 2023 it remains sizable. Moreover, there have been violations of the current regulations in Europe. In particular, pig iron from the occupied territories of Ukraine in Donbass is illegally sold to Italy using false certificates of origin and using a strategy of changing supply routes (at least three cargoes came to Italy from Russia with a stop in India), according to the document and the market information reported by SteelOrbis previously. “Strict checks of certificates of origin by the Italian authorities are crucial for stopping the illegal imports of Ukrainian pig iron,” the document states.
The major potential sources of pig iron for the EU instead of Russia are Ukraine and Brazil. The volume of exports of pig iron from Brazil in 2022 reached a historical maximum of 3.7 million mt and Brazil has the potential to increase shipments to 5 million mt per year. Ukraine can increase the export of pig irons to around 1.5 million mt per year (up from 1.3 million mt in 2022), while before the invasion by Russia three major suppliers from the country exported 2 million mt in total. “In fact, Ukraine has all chances to completely replace Russian pig iron in the European market,” according to the document. India is not assessed as a potential source due to its high own needs, its reduced exports recently, and even the emergence of its pig iron imports.
This document is “first of all for the European Commission and stakeholders in the EU for the preparation of sanction packages. In particular, these product groups have to be included in the 12th package of sanctions,” Sergiy Maydanevich from the Ukranian Ministry of Economy commented to SteelOrbis.
As for iron ore, Russia exported 2.81 million mt of iron ore to the EU in 2022, mainly pellets, out of a total of 12.6 million mt. The major exporters on pellets in the global market are Brazil, Russia, Canada, Ukraine, the US and the EU itself. Before the invasion, Ukraine was exporting 15 million mt of pellets per year, which dropped to 9 million mt in 2022 and may be even lower at around 7-8 million mt in 2023. Three major plants in Ukraine are working at reduced capacity utilization rates of 50 percent. If the current logistical issues and difficulties in energy and water supply are overcome, there is the potential to increase pellet exports by another 7-8 million mt.