Russia’s Unyielding Hold
Two years after the Ukraine invasion, the West’s sanctions against Russia, intended as a fortress of economic isolation, exhibit vulnerabilities, especially in the realm of raw materials. Moscow’s influence persists, supplying an array of essential materials like pig iron, aluminum, ferroalloys, and copper that slip through the sanctions’ net.
Dependence on Russian Supplies
The Black Sea crisis and Ukraine’s diminished role have amplified Russia’s prominence in supplying metals and semi-finished products to foundries. Approximately 75% of these products are sourced from Russia, a reality begrudgingly accepted by many due to Russia’s competitive pricing.
Navigating the Sanctions
A noteworthy instance is Glencore’s import of 5,000 tons of copper foil in July, facilitated through Turkey for the Italian market. This transaction, although brushing close to the confines of the sanctions, stayed within legal limits as UMMC, the supplier, escaped sanctioning.
The Aluminum Narrative
Oleg Deripaska, owner of aluminum giant Rusal, points out the delicate dance with Russian suppliers, a dance characterized by necessity rather than choice. While sanctions are in place, supply chain dependencies compel a reluctant partnership. Russia’s role, especially for operators not on the blacklist, is not easily substituted, a sentiment shared by Orazio Zoccolan of Assomet.
A Gradual Shift?
There’s a discernible, albeit cautious, shift. Some entities in the West, conscious of potential over-reliance on Russian imports, have moderated their procurement, notably in aluminum. This subtle shift unveils the delicate equilibrium between political mandates and pragmatic supply chain imperatives.
The Triangulation Issue
Turkey emerges as a significant go-between, unbound by Western sanctions and facilitating the continued flow of zinc, copper, and aluminum from Russia. This role underscores the intricate and multi-dimensional dynamics of global trade amidst geopolitical tensions.
The interplay between sanctions and economic exigencies paints a complex picture of the metal trade. It’s a narrative marked by an uneasy truce between political posturing and the unyielding realities of global supply and demand, each move echoing in the corridors of international trade and diplomacy.