Due to Western sanctions, the export of ferrous metals through the ports of the Baltic has dipped, but the Far East has developed success. Our metals fell out of love with Latvia, but still love Belgium, Turkey and Mexico even more. And everything is fine with Lisin and Abramovich, and Mordashov complains. “Fontanka” figured out who, to whom and where now sells metals.
Let’s clarify right away: the noise that has risen due to Lithuanian authorities’ ban on rail transit ferrous metals to Kaliningrad, is more political than economic in nature. As of June 1, the share of the port of Kaliningrad in sea exports of Russian ferrous metal was less than 11% for all ports of the Baltic Sea and less than 3% for all ports in general.
Fontanka got access to closed statistics on the export of ferrous metals. Journalists now have to find workarounds and back doors due to the fact that the Federal Customs Service of the Russian Federation has classified all foreign trade statistics since February 2022. Now, in order to understand what is happening in the country’s economy, one has to look for closed bases and double-check them with data from the customs statistics of the main importing countries of Russian goods. They still have it in the public domain.
It should be noted that only those items of ferrous metals that are handled as general cargo were included in the statistics operated by Fontanka. Those that are reloaded in bulk (scrap metal, pellets, etc.) were not taken into account, although they account for approximately 20% of the total volume of exports of ferrous metals.
The traditional leader in the export of ferrous metals in the Baltic is the Big Port of St. Petersburg.
Its result for 5 months of last year is 2.5 million tons, the second result in Russia. Then only Novorossiysk loaded more on ships – 3.6 million tons. In general, these two ports, together with Tuapse, opened the country’s sea gates to metal exports. The coverage of the top three is 66% of all sales of Russian ferrous metals abroad with maritime logistics. The scale of other ports in this area is not comparable. For example, all the ports of the Far East loaded about 2.5 million tons of ferrous metals on ships over 5 months of last year – a little less than one St. Petersburg port. And such a giant as Ust-Luga handled less than 0.4 million tons over the same period.
This was the first 5 months of 2021.
By the beginning of this summer, the picture had changed. Russian maritime exports of ferrous metal decreased in general by almost 10% – 10.5 million tons in 5 months of 2022 against 11.6 million for the same period in the past.
It is important to understand where exactly these cargoes came from and where they went – only in this way we will see the impact of Western sanctions on them.
With regard to the Baltic, 3.5 million tons turned into 2.8 million, and this is minus 20%. Transshipment of ferrous metals in the ports of the Azov-Black Sea basin fell by 11% (from 5.6 to 5 million tons), mainly due to a drop in turnover in Tuapse and Taganrog (-12% and -71% respectively). Ukrainian ports played almost no role in the loading of ferrous metals from Russia.
In the ports of the Far East, ferrous metal transshipment, on the contrary, increased by 7% – from 2.5 to 2.7 million tons. The Baltic ports predictably suffered the most from the sanctions as they are geographically closest to European markets. And the Far East also predictably won – they are closer to the loyal East.
The main addresses to which ships departing from the Baltic ports were heading were Belgium, the USA, Denmark, Poland, Italy, the Czech Republic, Germany and Latvia. It is in this sequence, moreover, that Belgium has a significant lead – 1.2 million tons against 0.5 million for the United States, which is in second place. The rest consumed much less. Moreover, out of 25 recipient countries, the appetites of all but the seven leaders are hardly noticeable – several tens of thousands of tons each.
By the beginning of this summer, we see a completely different picture in the Baltic. Now the top seven has turned into the top six and looks like this: Belgium, USA, Denmark, Czech Republic, Latvia, the Netherlands. The rest are hardly noticeable against their background. Supplies of ferrous metals to Belgium and the Netherlands increased. The United States and Denmark remained in the lead, but in different ways – the first reduced supplies by 42%, the second kept them at the same level.
Let’s not forget the piquant moment, which is characteristic only for the sea export of ferrous metals through the ports of the Baltic. We are talking not only about Russian ports, because before the special operation in Ukraine, our metallurgists safely, albeit slightly, used the services of the ports of the EU countries. According to the results of 5 months of last year, these are Latvian Ventspils and Riga (0.2 and 0.1 million tons, respectively), a little Finnish Hamina and quite a bit Tallinn.
By the beginning of this summer, the same thing looks different. The Latvian ports have almost left the statistics, but the Estonian and Finnish ones even increased their turnover a little – however, as before, we are talking about several tens of thousands of tons. Against this background, it looks logical to increase the loading of ferrous metal in the port of Kaliningrad by 21% from 260 thousand tons in 5 months of last year to 313 thousand tons in the same period of this year.
Delivery addresses for Russian ferrous metal from the ports of the Azov and Black Seas for the first 5 months of last year are completely different. Turkey, Mexico, Italy are among the leaders here. The appetites of Turkey and Mexico are impressive: 1.9 and 1.4 million tons, respectively. With a decent margin at the tail of the list, Egypt, Israel and the UAE – the remaining 14 importing countries (which, by the way, includes the United States) are almost invisible.
By the beginning of this summer, the picture is changing. The top four remains the same, but with significant damage. Mexico reduces supplies by 16% (from 1.4 to 1.2 million tons), Italy by 18% (from 0.8 to 0.7 million tons), while Turkey increases imports of Russian ferrous metals by 5% (from 1.9 to 2 million tons).
The tail of the list of leaders of countries importing our ferrous metal from the ports of the Azov-Black Sea basin is seen differently. Egypt and Israel have significantly reduced supplies – by 49% and 31% respectively. The UAE has practically stopped them.
Importing countries of the Far Eastern ports, which are prosperous in terms of export of ferrous metals, show a slightly different trend. First of all, the consumption leaders have changed a lot there.
The first 5 months of last year were Taiwan, Indonesia, Thailand and the Republic of Korea. In terms of volume, it ignites (1.5 million). However, China considers Taiwan to be China, with this approach, deliveries from Far Eastern ports to China in the first 5 months of last year amounted to not 1.5, but 1.6 million tons.
By the beginning of the summer of 2022, the addressees of the ports of the Far East look different. Shipments to Taiwan remained the same, shipments to China, which is not Taiwan, increased by almost 0.5 million tons – by 685%. The top five turned into the top four – Indonesia and Thailand dropped out, they radically reduced imports of Russian ferrous metals, by 80% and 100%, respectively.
It remains to tell about the main characters of this business – the producers of ferrous metals, whose maritime exports we analyze.
The main customers of the Baltic Sea ports are Novolipetsk Iron and Steel Works (NLMK) by Vladimir Lisin and Severstal by Alexei Mordashov. The business configuration of the first includes LLC “Universal Transshipment Complex” in Ust-Luga, joint-stock companies “Sea Port of St. Petersburg” and “Container Terminal St. Petersburg” in St. Petersburg. Severstal controls CJSC Neva Metal in the port of St. Petersburg.
The sanctions have affected these companies in very different ways. NLMK for 5 months of this year increased sea exports of ferrous metals from 1.5 to 1.8 million tons – by 19%. Severstal, on the contrary, lost turnover from 1.3 million tons in the first 5 months of last year to 0.6 million tons in 5 months of this year – by 51%. The role of other manufacturers against the background of these two is almost invisible.
Experts attribute this to the fact that Severstal, after falling under sanctions, stopped shipments to Europe. During the SPIEF, Alexey Mordashov stated that because of this, his company reduced production by 25–30%, sending some of the employees on idle. NLMK, on the contrary, managed to sharply increase the volume of deliveries – to Belgium, where Vladimir Lisin’s company has several of its plants. Export volumes from Lipetsk to Mexico also remain at a high level.
In the ports of the Azov-Black Sea basin, ferrous metals are loaded by the same NMLK, it confidently retains absolute leadership – 2.2 million tons in 5 months of last year and 2.1 million tons in 5 months of this. The top five leaders of this period in 2021 include Alisher Usmanov’s Metalloinvest, MMK, Koks and Evraz, although all of them are significantly behind the success of Vladimir Lisin’s holding.
By this summer, the top six are basically the same, but in a different sequence: NMLK, Metalloinvest, Evraz, MMK and Koks. MMK dropped its positions by 77%, Koks by 45%. According to market participants, the changes are primarily related to sanctions against Viktor Rashnikov, the beneficiary of MMK. The reasons for the drop in cargo turnover of the Koks group are still unclear to market participants.
The metal king of the Far Eastern ports is Evraz by Roman Abramovich. For 5 months of last year, it handled 1.8 million tons of ferrous metals there – 72% of all metal exports from the ports of the Far East. Over the same period of this year, it increased its turnover by 3%, reaching 1.9 million tons. Formally, NLMK is in second place, but it is incorrect to talk about the two leaders – the gap is too large: NLMK has only 0.2 million tons by the beginning of this summer. Simply put, the positions of ferrous metal exporters in the Far East have not changed.
Lev Godovannik, for Fontanka.ru