Russian metallurgists have sharply increased sales of semi-finished products to China

Against the backdrop of Western sanctions, Russian companies in April 2022 supplied to CHINAabout 0.4 million tons of steel semi-finished products. This is five times more than in all of 2021.

Russian metallurgical companies in the second half of April 2022 exported to China about 400 thousand tons of steel semi-finished products for the production of flat products (slabs), the Fastmarkets pricing agency reported. This was confirmed to RBC by an international trader. According to him, the sellers were Severstal, Evraz and NLMK. Another trader noted that Severstal and Evraz were mainly involved in deliveries to this country.

0.4 million tons is almost five times more than in the whole of 2021, when RUSSIA sold 83.98 thousand tons of slab to China (data from the Federal Customs Service). The increase in deliveries occurred after Europe imposed a ban on the import of Russian steel products of higher added value, which is also produced from slab.

The press services of Severstal and Evraz declined to comment. RBC sent a request to NLMK.

At what prices did China buy semi-finished products

Russian steelmakers sold their semi-finished products to China at a significant discount to regional prices, Fastmarkets reported. According to the newspaper, the Russian slab was sold in this country in April at $670-700 per ton with delivery. The last deal in late April - early May was already made at $630 per ton, and new offers were at the level of $620 per ton. This information was confirmed to RBC by three international traders.

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At the same time, according to Fastmarkets, the main suppliers of slab to Southeast Asia - Indonesia and Malaysia - in late April - early May sold it at $840 and $825 per ton (with delivery), respectively.

Analysts have previously warned that against the backdrop of Western sanctions, Russian steelmakers will have to make discounts to increase sales to the Asia-Pacific region.

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Why sales to China have increased

Many traditional buyers of Russian slab in Asia, Europe, Turkey and the Americas are now refusing to buy it due to the risk of falling under already imposed or potential Western sanctions against Russia, Fastmarkets notes. This agency explains the discount when selling Russian products in China.

In mid-March, the European Union imposed a ban on the import of a wide range of steel products from Russia in response to the start of a special military operation in Ukraine. The list includes, among other things, uncoated hot-rolled and cold-rolled steel, long products, welded and seamless pipes. The steel slab, whose major supplier to Europe is NLMK, was not banned.

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Severstal was the largest Russian exporter of finished steel products to Europe. But even before the introduction of a ban on the import of steel products into the EU, she had to stop deliveries, because her main shareholder Alexei Mordashov was among the first under European sanctions.

The 25% discount compared to suppliers from Indonesia and Malaysia is explained by the fact that sales to Europe for many positions are now impossible, but Russian plants need to continue exporting their products, they need turnover and currency, one of the traders told RBC. In addition, according to him, there are problems with conducting transactions through banks for the purchase of Russian steel products that are not directly affected by sanctions, as well as with insurance and finding ships for transportation.

Earlier, Russian steelmakers said that due to Western sanctions, they would need to redirect 4 million tons of steel products to the east. According to the FCS, in 2021 Russia exported 30.54 million tons of steel products.