Russian steel products continue to face limited export opportunities in 2025

Russian exporters of steel products are expected to continue facing challenges in 2025, following on from limited selling options in 2024, with EU sanctions over the ongoing war in Ukraine set to result in a complete ban of Russian pig iron into the bloc from 2026.

European importers fully utilized their quotas for Russia-origin pig iron in 2024, reaching 1.14 million mt by September, according to the latest available data.

The next quota period started Jan. 1, with the allocation down almost 39% from 2024, permitting imports of 700,000 mt of pig iron. Market discussions indicate that some 200,000-300,000 mt of pig iron is already in European ports, primarily in Italy, and is expected to be able to start clearing customs from Jan. 1.

Opinions varied regarding the timeline for filling the quota. Some Russian mill sources said they expect the quota to be filled by the end of the first quarter, while most market participants said it would likely be filled gradually, depending on buyer demand. The new quota size is likely to have a significant effect on Black Sea pig iron prices, with some expectations of production cuts.

Changing export flows

India was the primary buyer of Russian pig iron in the fourth quarter, a market that was traditionally viewed as being unattractive by Russian exporters, due to the high freight costs and low domestic prices.

However, in the final weeks of the quarter, target prices from Indian buyers weakened and no deals were reported.

Turkey was the second-largest destination for Russia-origin merchant pig iron in the final quarter of 2024, with prices above Indian levels, though below European prices.

Market sources said that the Turkish market is saturated with cheap scrap, complicating export efforts to Turkey. In the past, there was a notable correlation between HMS 80:20 CFR Turkey and Black Sea pig iron FOB prices. However, market participants have indicated that, under the current market conditions, these prices are not significantly influencing one another.

Platts, part of S&P Global Commodity Insights, assessed Turkish imports of premium heavy melting scrap 1/2 (80:20) at $346/mt CFR Dec. 31, unchanged on the day.

Turkey imported approximately 1.12 million mt of pig iron during the January-October period of 2024, reflecting a year-on-year decline of 6.55%. Russia remained the largest exporter, supplying 693,236 mt during this period, down 11% on the year, according to the data provided by the Turkish Statistical Institute (TUIK).

Some flows from Russia have also been reported to the eastern region of Asia. However, the shift of large quantities from Europe to Asian markets remains unrealized, trading sources said.

Meanwhile, Ukrainian pig iron exporters are maintaining irregular shipments to the US market at relatively high prices compared with Russian prices for Europe, Turkey, or India.

Russia's domestic market situation remains challenging for pig iron producers. Consumer activity is declining, and construction projects are stagnating due to high interest rates, according to market participants.

Black Sea billet market under pressure

Last year was challenging for Russian billet exporters as their material continues to be heavily sanctioned.

The main export markets for Black Sea billet are Turkey, Egypt, India and China. However, the latest package of US sanctions against Russia's biggest bank, Gazprombank, has raised further uncertainties regarding payments.

Russian mills generally prefer to sell billet into the export market rather than domestically, as international demand and prices are better.

Platts assessed Russian billet prices largely stable throughout 2024 at $490-$500/mt FOB Novorossiysk. However this changed at the end of November, when the assessed level dropped to $443/mt following the implementation of the latest sanction package, with the ruble falling to its lowest level since March 2022. Russia's export duty came to an end on billet sales at around the same time.

The Platts Hot Rolled Coil CPT Moscow prices remained between Rb54,000-Rb57,000 ($529-$558) for most of last year, with a drop in prices around October to Rb50,100.

Platts HRC FOB Black Sea prices remained around $565/mt for much of the year, with prices starting to weaken around the end of July to a low of $480/mt Sept. 4. Prices subsequently recovered to $525/mt, but then fell back again to around $500/mt Dec. 18due to low seasonal demand.