Gas crisis may push up steel prices
As the natural gas dispute between
Russia and
Ukraine entered into its third day, some news agencies began reporting that the shipments to
Russia's European customers are resuming.
Russian gas company Gazprom has also reassured that the gas supplies to
Europe would return to normal by tomorrow. Yet the conflict is not over and it may have a serious impact in the region.
Russia charges $50 for one thousand cubic meters natural gas to
Ukraine, while the price charged for the European countries is in $150-200 range. Now
Russia wants to quadruple the price for
Ukraine.
The cold winds between
Russia and
Ukraine have been obvious since “the orange revolution”, when Viktor Yuschenko, who supports closer relations with
Europe came to power.
Now, if Gazprom quadruples the price charged for
Ukraine, that would mean the collapse of Ukrainian economy and industry. Gazprom officials say that the mentioned price increase would also be effective for
Bulgaria,
Romania and
Hungary.
Meanwhile,
Ukraine has the opportunity to steal the natural gas, block the gas lines or ask for an higher crossing fee for the natural gas passing from
Ukraine and going to
Europe.
Looking at the issue from the steel industries side, we can say that
Ukraine's steel industry would be deeply affected from a potential increase in natural gas prices. As a result, Ukrainian steelmakers would definitely have to increase their prices for both domestic market and exports or shut down their plants.
Besides, Gazprom has began constructing North European Gas Pipeline, in order to transmit natural gas to
Germany, Great Britain, the
Netherlands,
France and
Denmark through Baltic Sea. Furtermore,
Ukraine also announced agreements with
Turkmenistan on natural gas supply. These projects will definitely increase the demand for
tubular products.