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Steel prices increase against backdrop of Russia’s war in Ukraine

While the price of gold and oil have been on the rise since Russia invaded Ukraine, so too has steel, a commodity that is used in almost every facet of manufacturing.

Russia and Ukraine combined are the world’s second-largest steel exporters after China, with more than 40 million metric tons exported annually — the war between the two countries, which shows no sign of abating, is shocking the steel market and causing prices to rise.

European hot-rolled coil prices have exploded by nearly 40% over the past three weeks while the gains have been a bit more modest in the United States, growing by up to 8% since the invasion began in late February, according to Reuters.

Russia and Ukraine combined account for about a fifth of all steel imports flowing through the European Union. In addition to sanctions, prices are being affected by supply chain disruptions and other complications from the war.

“It’s certainly looking like prices will continue to rise in the short term. We're forecasting that prices will jump again by the end of this month and into April,” said analyst Kaye Ayub at consultancy MEPS International. “The supply side has been massively disrupted in Europe, and that will take quite a while to resolve.”

In Ukraine, which is the world’s 12th largest steel producer, the war has caused production to come to a grinding halt.

Officials in Ukraine recently revealed that the massive Azovstal steel plant, which is owned by Ukrainian steel and mining firm Metinvest and located in Mariupol, had been badly damaged by Russian shelling. Even after the war comes to a close (a time that remains unknown), the damage to steel facilities such as Azovstal will require much work to get back to operational standards.

“One of the biggest metallurgic plants in #Europe destroyed. The economic losses for #Ukraine are huge. The environment is devastated,” tweeted Ukrainian lawmaker Lesia Vasylenko.

Further compounding the problem with rising steel prices is the problem with rising energy prices.

Europe depends on Russia for approximately a quarter of its oil imports and 40% of its natural gas, according to Robert Orttung, a research professor at the Elliott School of International Affairs at George Washington University. He pointed out the worldwide economic implications of the increasing escalation between Russia and Western Europe.

“This war is tipping from just a Russian invasion of Ukraine into an extremely global conflict that is going to have dramatic consequences for the whole economy,” he told the Washington Examiner.

Recently, Russian leader Vladimir Putin demanded that companies in “unfriendly” European countries such as Germany pay for Russian natural gas using the ruble, which is adding further pressure to energy prices.

Futures for Brent crude, the global oil benchmark were at $120.10 a barrel Friday afternoon, while the U.S. benchmark, West Texas Intermediate, is at $114.40 after peaking at about $130 when Russia invaded Ukraine.

About 40% of the steel produced in Europe comes from so-called electric arc furnaces, which use large amounts of electricity to melt iron scrap into steel, according to the Washington Post. Some of the electric arc furnaces across Europe have had to shut down or reduce operations because of the higher power costs, thus further restricting supply.

Steel isn’t the only metal that the war has affected. The price of gold recently soared to its highest level since the height of the pandemic as investors flock to the safe-haven asset. The prices of silver, platinum, and palladium have also risen since the conflict began.

Non-precious metals such as aluminum and nickel have also increased. The price of aluminum has ballooned by 10% since the start of the war and nickel has exploded in value. The price increases of steel and other metals are also being hampered by problems with the world’s supply chains and by companies’ fears about how the conflict will play out.

“There are undoubtedly supply chain issues that are driving the price,” Claude Barfield, a senior fellow at the American Enterprise Institute, told the Washington Examiner, adding that there is likely a fair amount of defensive buying and stocking up of metals by companies given the uncertainty with the geopolitical situation.


The increased prices are contributing to the higher prices that are already being felt in much of the Western world as the COVID-19 pandemic draws to a close. U.S. consumer prices increased by 7.9% for the 12 months ending in February, the biggest increase since 1982.

“The war adds to inflationary pressures across the world, particularly in the United States and Europe,” Barfield said.