After the Russian invasion of Ukraine in February 2022, many European steel makers implemented self-sanction policies designed to ban the use of Russian origin products including Ferro Titanium . Some rogue sellers side-stepped self-sanctions by importing the material and selling as “other” origins to satisfy the internal policies of buyers.
The period of 2022-2023 saw increased imports of Russian material into non-consuming EU nations such as Estonia and Latvia, as well Sweden despite no significant increased demand from the steel industry. Consequently, the industry witnessed significant offers to European steel makers of Estonian, Latvian, and Swedish production way beyond these countries abilities to produce.
We have, ourselves, received unsolicited offers of Russian material with an invoice stating that the origin is Estonian and there has been open conversations about Russian material being blended with European origin to make it European, in contravention to the Rules of Origin.
Such suspicious activity was soon called out within the industry and reported in the trade publications. In reaction, the imports to Latvia and Sweden were replaced by imports solely to Estonia where there is at least some genuine Ferro Titanium production.
In December 2023, the EU published its 12th amendment to the raft of Sanctions introduced against Russia since the 2022 invasion of Ukraine. The new amendment expanded existing sanctions to include a ban on imports into the EU of steel products originating from Russia, including CN codes beginning 7202, the section of goods covering Ferro Alloys including Ferro Titanium.
The move took some in the industry by surprise, but for producers of Ferro Titanium within UK and Europe the move was welcomed as the industry had struggled since March 2022 to compete with cheap Russian imports.
However, the impact of the sanctions in December 2023 did not bring the expected relief to domestic producers as the EU legislation left a 12-month window for importers of Russian material to import material that had been contracted before 19th December 2023.
Unfortunately, this left the door open for contract dates to be manipulated to allow a continuation of Russian imports into the EU. Rather than reducing Russian imports, the sanctions appeared to just change the way in which the material was introduced into the EU.
In the six months prior to the sanctions (July-December 2023), Russian imports into the EU were 4,495mtons, including 1,134mtons to Estonia and 1,214mtons to Latvia.
In the six-month period after the sanctions (January-June 2024), Russian imports into the EU were 4,070mtons, with 2,060mtons imported into Estonia but imports to Latvia stopped completely.
Interestingly, imports from Estonia into Latvia increased over the same period from 633mtons (July-December 2023) to 1,379mtons (January-June 2024), more than doubling the imports of Ferro Titanium into a country (Latvia) with no significant demand for, or consumption of Ferro Titanium. The same trends continued into August 2024. Why would imports into Latvia continue to increase other than as an attempt to cover up its true origin?
It should also be noted that prior to Russia’s invasion of Ukraine, Russian imports of Ferro Titanium into Estonia and Latvia was only 13-14% of 2024 levels.
The sanctions therefore had no meaningful impact on overall volumes of imports into the EU, but the routes used by those seemingly infringing the rules were changed to better disguise the materials true origin.
Clearly the EU sanctions have thus far failed to stem the tide in imports of Russian Ferro Titanium and, within the industry, some are ignoring the evidence that they are likely to be using material of suspect origin. If the paperwork appears to be in order, there does not appear to be much appetite to pursue whether the origin is genuine, especially as the price is likely to be cheaper than genuine UK/EU produced material.
Looking forwards to 2025, what happens next?
As of 20th December 2024, the sanctions prevent any further imports of Russian Ferro Alloys, including Ferro Titanium, regardless of contract dates. There are concerns that we will see a new development whereby Russian material is traded through intermediary countries outside of the EU, perhaps China, India, Turkey or Kazakhstan to be imported into Europe.
These kinds of dubious work arounds become significantly more egregious as of 20th December 2024 when the sanctions become more forceful and we will watch with interest to see how the importers, buyers and market react over the next few quarters.
We canvassed expert opinion around Europe as to how the sanctions will be interpreted by EU Customs and our partners in the Netherlands warehousing community are clear that they will no longer be allowed to clear Russian Ferro Alloys into the EU zone, nor can they receive and store new material in free circulation or in bonded warehouse.
There is a suggestion that “old” inventory, already EU customs cleared and located in warehouse prior to the deadline cannot move and will be treated by the Authorities as being under full sanctions.
Our repeated requests for clarification from customs brokers located in Estonia and Latvia have not yet elicited any response.
One thing that is clear is that European consumers could end up being caught short of material if they enter 2025 relying too much on materials imported by questionable routes, whether they are aware of the actual origins of the material or not.
Note that Westbrook Resources do not use any Russian feedstocks in our production and our Ferro Titanium is 100% UK origin.
Contact us for more information or to discuss your ongoing Ferro Titanium requirements.
Andy Sharp, November 2024
