Late last week, the United States included Russian steel producer Mechel, the leading pipe producer in Russia TMK (together with all major subsidiaries) and the leading coal miner SUEK in the SDN list which includes individuals and companies subject to sanctions. Sanctions on the abovementioned companies have been imposed by the UK also.
These are new steps as almost all Russian steel companies (except for example NLMK) already face Western sanctions, though sanctions are rare for the raw material segment, as reported by market sources. A few traders said that, even though most of the coking coal from SUEK goes to the Asian markets, where the effect of Western sanctions is milder, this precedent may open the window for further restrictions. The main reason for the sanctions on SUEK is its leading role in logistics in Russia, using its own infrastructure not only to transport raw materials, but also to meet the needs of Russia’s Ministry of Defence.
As for the abovementioned steel producers, the impact from sanctions is expected to be small. Mechel sells 75-80 percent of all production in the local market, while TMK’s local market share is even bigger.