Russian steelmaker NLMK, the largest steel and pig iron producer in Russia, has been forced to stop the production of iron ore concentrate at its Stoilensky Mining and Processing Plant (Stoilensky GOK) due to an accident which occurred on September 7. According to the official information, the conveyor gallery of iron ore concentrate which shifts iron ore for further processing at Stoilensky GOK collapsed. While the company is evaluating the terms of production re-launch, market insiders at once have started discussing and assuming the possible effects on basic pig iron (BPI) and semi-finished steel supply and, in particular, on prices in the short term. Some of them have concerns that the stoppage of iron ore mining might lead to delays in pig iron and slab shipments, as the company is fully supplied by the iron ore mined at Stoilensky GOK. However, according to the representative of the company, all commitments on booked pig iron and steel orders will be fulfilled; no delays in shipments are anticipated. The restart of iron ore production is expected within a couple of weeks. It is implied that the company will purchase iron ore concentrate from third parties, e.g., Russia-based Metalloinvest or Severstal, if required.
“Surely, the global suppliers [especially who have material in positions] will attempt to increase prices... However, the sentiment in China has changed as of now. The buyers are resisting a lot. The market needs to stabilize”, an international trader dealing with the pig iron said, commenting on the situation. “As global suppliers have already started speculating on the pig iron shortage due to some production issues at NLMK’s GOK, the market has become livelier. Although demand exists, prices don't match,” another trader said. “NLMK is a big player in the global steel market. They are not likely to disrupt deliveries as a result of such a “minor” accident. Moreover, there are too many opportunities to purchase iron ore from third parties, e.g., from Metalloinvest,” an international trader commented.