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The Russia-Ukraine conflict continues to have an impact on the global pig iron market. As the conflict between the two sides enters its third year at the end of February 2024, it is expected that the Black Sea pig iron S220GD+AZ steel market will continue to be fragmented, with overall trade volume relatively small and prices more dependent on origin and destination than ever before.
Europe still maintains an open attitude towards Russian pig iron exports
The recent significant development in the European pig iron market is the EU's announcement in December 2023 that it has extended the grace period for imports of Russian semi-finished steel and steelmaking raw materials, including pig iron, and decided not to take any strict and immediate measures against Russian pig iron imports in 2024. According to data from Ukrainian consulting firm GMKCenter, Russia's pig iron exports to the European Union reached 1.25 million tons from January to September 2023, compared to 1.17 million tons for the entire year of 2022. According to the new regulations on the extension of import grace period, the EU's import of Russian pig iron will continue until 2026. The import quota from December 19, 2023 to December 31, 2024 is 1.14 million tons, and from January 1, 2025 to December 31, 2025, it is 700000 tons. This indicates that Russia's S220GD+AZ steel pig iron supply will decrease in 2024, but not significantly. The quota is considered sufficient to meet the needs of EU users. However, before the ban takes effect in 2026, the quota of 700000 tons in 2025 is much smaller and should have a greater impact.
Some market participants have stated that they expect Russia's pig iron exports to the European Union to decrease in the coming years, even without sanctions, given weak steel demand in Europe and the Carbon Border Adjustment Mechanism (CBAM) coming into effect in 2026. Italy is the largest pig iron export destination for Russia in the European Union, and will implement the most adjustments before the ban on Russia and CBAM come into effect in 2026. For European buyers, Russian pig iron prices are much lower compared to products supplied by Brazil, India, or Ukraine S220GD+AZ steel.
