BLOG
Damage to Ukrainian steel plant further aggravates supply concerns in Europe
What’s Buzzing:
One of Europe's biggest iron & steel works, Azovstal, has been badly damaged in the current Russia Ukraine conflict. Azovstal is situated in Mariupol, Ukraine.
Context:
Azovstal Steel is a part of the Metinvest group and has a steelmaking capacity of ~5.3 million tonne per annum (MTPA). The main products are plates, rails, structural, rolled plates and semi-finished materials. Majority of Azovstal’s steel exports are to Europe.
Our Perspective:
Russia and Ukraine are two of the major steel exporters globally. In CY21, both countries combined had steel exports of ~45 million tonnes (MT), accounting for ~10% of global steel trade. As the Azovstal plant has been badly damaged, European countries may have to source materials from other countries. Also, as most of the Russian finished steel exports are under EU sanction, hence, it is also out of the equation. Therefore, as a result of supply related fears, European steel prices have started moving northwards to record high level. Currently, the North European Steel Hot Rolled Coil (HRC) spot prices (ex-works) is quoting at ~1400 Euro per tonne against ~ 950-1000 Euro per tonne when the conflict started. The current scenario provides an opportunity to domestic steel players to step up their exports. Domestic steel players are likely to benefit from the uptick in prices, which will help them yield healthy realisations. JSW Steel and Tata Steel are the major Indian steel exporters, which are likely to benefit in the current scenario. Tata Steel’s European operations are also likely to be a beneficiary due to the uptick in European steel prices.
Disclaimer – I ICICI Securities Ltd. ( I-Sec). Registered office of I-Sec is at ICICI Securities Ltd. - ICICI Venture House, Appasaheb Marathe Marg, Prabhadevi, Mumbai - 400 025, India, Tel No : 022 - 6807 7100. I-Sec is acting as a distributor to solicit bond related products. All disputes with respect to the distribution activity, would not have access to Exchange investor redressal forum or Arbitration mechanism. The contents herein above shall not be considered as an invitation or persuasion to trade or invest. I-Sec and affiliates accept no liabilities for any loss or damage of any kind arising out of any actions taken in reliance thereon. Investments in securities market are subject to market risks, read all the related documents carefully before investing. The contents herein mentioned are solely for informational and educational purpose.
Related content
Blogs
Articles - Stocks
Advantages and Disadvantages of NPS
It is a long established fact that a reader will be distracted by the readable content of a page when looking at it...
Articles - Stocks
Advantages and Disadvantages of NPS
It is a long established fact that a reader will be distracted by the readable content of a page when looking at it...
Articles - Stocks
Advantages and Disadvantages of NPS
It is a long established fact that a reader will be distracted by the readable content of a page when looking at it...
Video
Video - Stocks
What is Book Value?
Book Value Explained – Find out what is book value in stocks in this video by ICICIdirect.com.
Video - Stocks
What is Book Value?
Book Value Explained – Find out what is book value in stocks in this video by ICICIdirect.com.
Video - Stocks
What is Book Value?
Book Value Explained – Find out what is book value in stocks in this video by ICICIdirect.com.