The first factor is bearish for prices, as China’s steel output may drop on lockdowns in some producing areas, such as Tangshan, and the possible hit to economic growth.
The second could be both bearish and bullish, relying on how the conflict between Russia and Ukraine plays out.
Both are significant steel exporters, with Russia shipping almost 28 million tonnes in recent years, to rank just behind Japan. Nevertheless, some distance behind number one China, which exported 52.63 million tonnes of steel products in 2021.
Ukraine exports approximately 15 million tonnes of steel a year, rating it eighth, and it is also the world’s fifth-biggest shipper of iron ore. Nevertheless, its volumes are slim compared to Australia and Brazil’s top exporters.
Ukraine exported 21.26 million tonnes of iron ore in 2021, as stated by Refinitiv research, or approximately 2.5% of the 884 million tonnes that Australia shipped.
Since Russia attacked neighboring Ukraine on Feb. 24, international buyers have pulled back from its steel purchases. Nevertheless, it is possible to take several months before the full effect of the self-sanctioning becomes apparent.
Ukrainian exports affected by the war
Ukrainian shipments are also affected by the immediacy of fighting to some essential ports, representing ship owners, insurers, and traders who will be unwilling to lift cargoes.
This would seem bullish for iron ore and steel prices, given the likely tightening of supply, particularly in Europe, which bought most of the collections from Russia and Ukraine.
But it may also result in more Russian steel being redirected to Asia, as exporters seek new markets for products no longer being purchased by Europeans.
This may roil Asia’s steel markets, mainly if Russian products are shown steep discounts to those from the region’s more usual suppliers, China, India, Japan, and South Korea.
