As the Russia-Ukraine war continues to unfold, metal producers are reporting major price spikes as the conflict causes a domino effect on UK steel prices and the construction supply chain
According to the London Metal Exchange, between February 23 and March 8, UK steel prices soared to great levels, including nickel costs, which increased by 97%, zinc by 16%, aluminium by 6.2%, and copper at 3.5%.
Furthermore, it has been reported by British Steel that the UK steel price has risen to £250 per tonne, and is predicted to further increase as the conflict continues and the demand rises.
This is due to certain economic sanctions against Russia by the EU which prohibits trading, and a prohibition on trade to certain Ukrainian regions, such as the non-government-controlled regions of Donetsk and Luhansk, as Ukraine’s steel production halts due to the war.
The London Metal Exchanged also announced its decision to cancel trading in all contracts in Nickel earlier this week (March 8), due to high and volatile pricing, and a dangerously low stock environment.
Russia dominates the global steel market as the world’s fourth-largest steel exporter
As the world’s fourth-largest steel exporter according to the International Trade Administration, Russia is accountable for supplying steel to more than 150 countries and territories. This means that trading sanctions will have a detrimental impact on the construction supply chain.
The construction industry currently accounts for more than 50% of the world’s steel demand and is used widely across the sector.
The top uses of steel in the construction industry
One of the most obvious uses of steel is across the housing and building sector. Most commonly, steel is used as a method of reinforcement in concrete structures.
As one of the strongest building materials, steel is popular due to its durability.
Steel is a required building material that is needed in transport construction and is used for bridges, rail tracks, and tunnels across transport projects.
A significant spike in UK steel prices could therefore seriously impact current and future proposed transport upgrades across the country.
Used in the production of fuel, power, and water utilities networks, steel is used for major infrastructure projects to transport water and gas through pipelines domestically.
Recent weeks’ rises in ferrous scrap, iron ore and coal prices has led to 20-25% higher ordinary #steel spot prices. Steel supply to EU is reduced but not alarmingly yet. Some import supply routes are closed. #Stahl #industrie #industry #inflation #Wirtschaft pic.twitter.com/Wq047X6Wxt
— Pekka Laukkanen (@20charts) March 10, 2022
Steel prices surging in Europe as a result of the hit to supply from Russia and Ukraine (per Kallanish Commodities). pic.twitter.com/pZ6INJ9lsU
— Nina 🐙 Byzantina (@NinaByzantina) March 7, 2022
*Figures accurate as of 8 March.