The Czech Republic faces the risk of lacking Russian steel supply in 2024

The Czech Republic faces the risk of lacking Russian steel supply in 2024

Steel NewsDate: 15-12-2023 by: Ngoc Cam

According to Euroactiv, the Czech Republic recently requested the European Union to exempt Russia from import sanctions because the country couldn’t find alternative steel sources of supply. Prolonged shortages could cause severe damage to the manufacturing industries in the Czech Republic.

1. The Czech Republic's industry heavily affected by the lack of Russian steel supply

The EU imposed a ban on importing Russian iron and steel from March 2022 in response to the conflict between Russia and Ukraine. Accordingly, the European Commission (EC) directly targets Russian steel manufacturers by removing the protection mechanism for steel products imported into the region.

Currently, the Czech Republic mainly imports heavy steel plates from Russia's Novolipetsk metallurgical mill until the contract expires at the end of 2024. The total steel consumption in the Czech Republic is estimated at around 500,000 tons per year, distributed to important industries such as construction and automobile manufacturing.

Jozef Sikela, the Minister of the Czech Ministry of Industry and Trade, stated to the press “In the current situation of the construction industry, such as the construction of bridges, we cannot do without steel”. The Czech government has sent a request to the European council to exempt the ban on importing heavy sheet steel from Russia.

Despite efforts to find alternative solutions for steel supply apart from Russia, they haven't found suitable partners yet. Currently, there are only a few heavy steel plate manufacturers in the world. The government of this country also contacted a number of Chinese factories but was unsatisfied with their product quality and supply capacity.

According to the Czech Ministry of Commerce, the government is looking to ask the EU for an exemption from the ban on Russian steel import until 2028. Besides the Czech Republic, countries such as Italy and Belgium are also pushing the EU to lift restrictions on Russia's steel supply.

Recently, the EU has tightened restrictions on importing iron and steel products from Russia by requiring importers to prove that their raw materials don't originate from Russia.

Facing European sanctions, not only iron and steel but also products such as coal and crude oil are also significantly affected. This forces Russia to boost steel exports to other markets like Türkiye or other countries in Asia by competing on price with China.

2. Solution to import Vietnamese steel to replace supply from Russia

Currently, Vietnam is in the top 13 countries with the largest crude steel output globally, so it is fully capable of exporting large volumes with 100% Vietnamese input materials. In particular, Vietnam's largest steel corporations such as Hoa Phat, Formosa, Nam Kim,... can meet customers' steel standards and technical requirements.

According to statistics from the General Department of Customs, as of October 2023, Italy is Vietnam's largest steel import market with 1.35 million tons, an increase of 128%. In addition, the rate of steel exports to the EU market also grew positively over the same period in 2022. According to the European Steel Association (EUROFER), Vietnam accounted for 8.1% of the total amount of finished steel products imported into Europe by the end of August 2023. Another positive signal for Vietnam's steel industry is that the proportion of Europe importing finished steel products from Turkey, China and India decreased while imports from Vietnam increased by 15%.

The above data has proven that Vietnam is one of the heavy steel plate import markets that the Czech Republic can consider. In the context of the prolonged conflict between Russia and Ukraine and EU sanctions showing no signs of lifting, proactively finding new sources of supply to stabilize production is urgent. Vietnam has advantages in quality, price, trade defense measures, political relations,... helping Czech importers benefit better than other markets.

Above is the latest information about the steel import situation of the Czech Republic in particular and the EU in general. If you need to learn about the market, products and import of Vietnamese steel, please contact MRS Steel via Email for the most thoughtful support.