By Alexander Miller, emerging markets consultant – Eurasia Business News, March 2, 2022

Severstal, the largest steelmaker in Russia, has completely stopped exporting steel products to the EU countries, reported the daily Kommersant.

Local sources confirmed that shipment of Severstal’s metal to European customers – both companies and traders – has been completely stopped :

“All the vehicles that were on the way at the time the sanctions list was announced were turned around where they were found – both at border checkpoints and at the warehouse gates of customers.”

Severstal declined to comment, noting that the company is “exploring various options” for reorienting European volumes to other export destinations, including Asia, South America, and the Middle East.

As a rule, supplies to the European region were carried out under “short” contracts, “there are not so many long contracts,” a source close to the company explained.

On February 28, a whole group of major Russian businessmen was blacklisted by the European Union. The majority owner of Severstal, the Russian oligarch Alexey Mordashov, is on this list. Mr. Mordashov could withdraw assets from sanctions by transferring control and management to other persons. A similar scenario happened with the aluminium producer Rusal, then controlled by the oligarch Oleg Deripaska, targeted by US sanctions in April 2018. In January 2019, the U.S. lifted sanctions after Deripaska reduced his stake in the company to less that 50% and his voting rights to less than 35%

In December 2021, about 47% of Severstal’s revenue came from sales to export markets (more than 30% to the European market). Annual deliveries of Severstal to Europe amount to about 2.5 million tons and about a third of the company’s total revenue. 

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Higher steel prices in Europe are expected.  Gas prices are also increasing. Resulting strong inflation in industry supplies will hit consumer prices, already growing. The annual inflation in the Euro area in January 2022 was 5.1%, never seen since 1992. Inflation in 2022 should worsen.

Read also : US President Joe Biden announced new sanctions against Russia

Read also : European states agreed to impose new sanctions on Russia

Read also : Russian central bank raised key rate to 20%

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