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Global Commodity Intelligence

Q2 2025 | APRIL - JUNE

Russian Invasion of Ukraine Impacts European Metal Prices

March 24, 2022

The Russian invasion of Ukraine and subsequent bombardment to the southeast city of Mariupol has impacted one of the largest steel mills in Europe. This action, in combination with the West’s broad sanctions imposed on Russia, has driven uncertainty in the market and elevated pricing of various steel products to record levels.

Figure 1 – Hot Rolled Coil price exceeded the 1400 EUR/Ton price level

Source: Bloomberg

Mariupol-based Azovstal Iron & Steelworks had an annual output of nearly 11 million tons of steel, which represents approximately 7% of EU steel consumption, or comparable size as the German Thyssen-Krupp conglomerate.

As the import of steel and its upstream raw materials (e.g., iron ore, coke) from Russia has been banned as of March 11, the EU-based steel mills are not in a position to cover the supply gap of Azovstal, resulting in short supply on the EU market as the inventories deplete in the coming weeks.

Figure 2 – Crude steel output of Europe and Middle East countries as of 2020 production data (red spots are the unavailable sources since the Russian invasion)

Source: www.worldsteel.org

Figure 3 – Top steel exporters – Russia & Ukraine combined are having global #2 ranking

Figure 4 – London Metal Exchange YTD Nickel price (USD/Ton)

Source: London Metal Exchange

Nickel is an alloy metal used for stainless steel production. It reached a record high price level on March 8 at the London Metal Exchange and is still under controlled daily prices to stabilize near to a pre-invasion level. As the Nickel demand is increasing and shifting towards Li-Ion battery manufacturing, we can experience very strong demand in the coming years driven by the electrification of vehicle drivetrains. Russia was the largest exporter of high-purity Nickel, however, the trade sanctions have caused massive disruptions on the global supply chain. Per a report by CNBC, price volatility is expected both in short term and long term. This will drive limited supply in the European region and increase the price of stainless steel to record levels.

Bloomberg reports approximately 40% of the EU-based steel mills are so-called "mini-mills" which have high energy usage to melt scrap steel into fresh steel in electric-arc furnaces. Currently, the EU is short of energy as the invasion drove up the price of natural gas (40% was imported from Russia). In mid-March, the wholesale price of electricity has reached the 500 EUR/MWh level, which is ten times higher pre-invasion.

The price hike forced many mini-mills from Spain to Germany to shut down or reduce output, running at full capacity only at night when electricity rates are cheaper.

Besides the production of steel products, transportation costs are also experiencing a strong increase due to the high cost of both crude oil and diesel fuel.

Key Takeaways

Crude steel prices will drive up sheet metal and machined metal component costs at strong double-digit rates.
Expect PO-based pricing due to the fluid market situation.
Increase standard lead times to 13+ weeks, collaborate closely with metal suppliers, and share long-term forecasts when available.
Upstream raw material shortages will continue to impact regional sources. Consider alternative sources for machined / non-bulky components (i.e., ASEAN region).
Global and Divisional Commodity Management teams will continue to pursue mitigation plans in parallel.

The Jabil Supply Chain team will continue to monitor the situation and share updates as events unfold. In the interim, please feel free to contact me (tamas_mahari@jabil.com), with any questions.

Tamas Muhari

Senior Supply Chain Manager