JSW Steel Commentary on Impacts of Geopolitical Conflict on Steel Firms

In addition, the ongoing tensions in Eastern Europe have created shortage of key steelmaking raw materials.

SEATTLE (Scrap Monster): Leading steelmaker JSW Steel said that it is extremely difficult to assess the impacts of the ongoing geopolitical conflict on Indian steel companies.

 According to Seshagiri Rao, Chief Financial Officer, the supply side shock has resulted in logistics challenges. At the same time, the Covid-19 outbreaks, especially in China could lead to community demand shock. For instance, the spike in Covid-19 cases in Tangshan province of the country has impacted crude steel production. In addition, the ongoing tensions in Eastern Europe have created shortage of key steelmaking raw materials.

JSW Steel expressed the hope that Indian steel companies could likely benefit from reallocation of Russian steel import quota and shortage of semi-finished steel products such as pellets and pig iron.  The EU import quota limits on value-added steel could benefit Indian companies. The reallocation of Russian will see India getting incremental quota. The Indian steel demand is expected to be moderately strong, except from the automotive sector, Rao noted.

The steel prices in Europe have witnessed a surge by over 50% over the previous month, mainly due to escalating energy costs. However, the steel sector may probably benefit from falling raw material costs and freight rates. For example, coking coal prices have dropped from $670 per tonne to almost $540 per tonne.

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