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Several Ukrainian steel mills have temporarily shuttered production due to the ongoing war with Russia. Metinvest, which is Ukraine’s largest steelmaker, closed two plants (Ilyich and Azovstal) late last week due to safety concerns. These two plants represented 8.56 million mt, or 40% of Ukraine’s raw steel production in 2021. Likewise, ArcelorMittal has reduced production at one Ukrainian plant. Port closures have also strained supply chains. Yesterday Ukraine’s Maritime Administration stated that all ports will remain until the war ends. The country produced 21.4 million mt of raw steel in 2021, according to the International Iron and Steel Institute. In 2020, Ukraine was the world’s twelfth largest producer at 20.6 million mt, according to the USGS. About 80% of Ukraine’s steel production is exported, with shipments mainly going to Middle East, Turkey, the EU, Africa and the Americas, according to S&P Global Platts. Importers might begin to source steel from other production areas such as the US, which could drive CME HRC futures higher. Consumers who are concerned about input costs might consider purchasing HRC swaps or call options. Please note that doing so might incur losses if prices decrease. The CME HRC steel market is thinly traded, so please contact AEGIS for strategies. (3/1/2022) |
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AEGIS Insights |
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02/16/2022: AEGIS Factor Matrices: Most important variables affecting metals prices 02/15/2022: Section 232 Tariffs: Most relevant developments (AEGIS Reference) 11/30/2021: Will the Omicron COVID Variant Impact South African Metals Production or Exports? |
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| Important Headlines | ||
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2/28/2022: Ukraine’s Ports to Stay Closed Until Russian Invasion Ends – Maritime Administration 2/28/2022: Invasion sparks EU flat steel supply concerns 2/25/2022: Ukraine ports and steel plants shut down: Update 2/24/2022: Invasion halts Ukraine steel shipments; appetite wanes for Russian steel |
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| Important Disclosure: Indicative prices are provided for information purposes only, and do not represent a commitment from AEGIS Hedging Solutions LLC ("Aegis") to assist any client to transact at those prices, or at any price, in the future. Aegis makes no guarantee to the accuracy or completeness of such information. Aegis and/or its trading principals do not offer a trading program to clients, nor do they propose guiding or directing a commodity interest account for any client based on any such trading program.
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