Russia is one of the biggest steel exportersAll over the world. The European Union has imposed a new blow on Russia’s economy by banning Russian steel imports. This will have a ripple effect across many industries.
It’s really just been an industry that’s been very active in the trade policy space forever, said Lydia Cox, who studies international trade and macroeconomics at Harvard.
According to her, the ban on Russian steel includes an increase in the amount of steel EU members are allowed to import from other countries.
So in a way, they’re trying to kind of just reallocate where they’re buying their steel from, but not necessarily reduce the amount of steel they’re importing, she said.
However, it could be difficult to source steel from other countries. Russia is a major player on the international market for steel with specific qualities that can be further refined. A lot of this steel is exported to the EU.
Malan Wu, Wood Mackenzie’s head of steel research, stated that countries that have imported steel from Russia will be competing for the lost steel.
The supply will be less, there will more people searching for it, and the logistics will be disrupted. Wu stated that a tighter supply equals a higher demand. This results in a higher price.
Rising steel prices are a result of countries imposing tariffs in order to protect their domestic steelmakers against being undercut by cheaper imported steel. This is a different situation.
If you really need the product, you can pay a little more to get it. It’s just [a] tax. But with a ban, if you suddenly can’t get it at all, then you could be stuck, said Chad Bown, a senior fellow at the Peterson Institute for International Economics.
The EU is losing leverage over Russia’s steel industry, which affects European countries. It is now disengaging from Russia. Steelmaking is responsible for between 7% to 10% of global greenhouse gas emissions.
According to some, the quickest way to decarbonize is to stop making steel the traditional way from iron ore which is the Russians’ main method.
That’s the dirty stuff. Daniel Cooper, who teaches mechanical Engineering at the University of Michigan, said that the dirtiest part of the industry is digging out the ground and making it into steel.
Officials from the EU had hoped to persuade Russia into cleaning up its act. Morgan Bazilian from the Colorado School of Mines’ Payne Institute for Public Policy said that Russia is taking a backseat.
Will we see the same attention and priority given to these sectors that are difficult to decarbonize, such as steel, right now? We will not. Bazilian stated that it has been removed from the priority list, at the very least for the short term.
Russian steel may not be necessary for industrialized countries. One analyst in the industry said that if they invested more in recycling, they could meet 80% of their needs by 2050.
