After the Russian invasion of Ukraine, both the European Union and the United States have imposed numerous sanctions against certain Russian raw materials, products, individuals, companies and institutions. However, imports of aluminium and nickel from Russia have increased considerably.
A Reuters analysis published on the 7th of September shows that, between March and June, the European Union and the United States have increased imports of crude aluminium and nickel from the Russian Federation. European Union nickel imports increased by approximately 22% and those of the United States by 70%, compared to the same period of the previous year. During the first four months of the conflict, the European Union was the largest worldwide importer of Russian aluminium. In the March-June period, EU aluminium imports from Russia increased by 13% compared to the same period last year. On the other hand, the United States increased its aluminium imports from Russia by 21%. Russia is the world’s second largest producer of aluminium after China, and the third largest producer of nickel.
According to Eurostat, in 2021, 40% of the European Union’s nickel imports and 7% of its aluminium imports came from the Russian Federation. Russian nickel and aluminium are among the raw materials that were exempted from sanctions by the European Union and the United States after the beginning of the war. These raw materials are particularly important for the steel, automotive, aeronautical and defence industries. For the moment, the American industry and economy, and especially the European one, cannot bear the shock generated by the effects of sanctions on the import of aluminium and nickel from Russia. An example of these effects could be seen several years ago. In April 2018, the Trump Administration imposed sanctions on aluminium imports from Russia, which led to a significant increase in the price of this product. In just a few days, aluminium prices rose by 30%. Because of this, the American and the European industries were severely affected. For this reason, in January 2019, the Trump Administration had to lift the sanctions.
Regarding the European Union, its dependence on aluminium imports will continue to increase due to the decrease of domestic production.
The European Union has reduced its aluminium production capacity by 50%
Over the past year, due to high energy prices, Member States have had problems in processing certain raw materials, especially metals (aluminium, zinc and steel). Many aluminium, zinc and steel smelters in the European Union have closed or reduced their production capacity.
Aluminium smelters in Europe that have closed or have reduced production:
1. Montenegro – KAP – was closed in January 2022.
2. Slovakia – Slovalco – will be closed until the end of September 2022.
3. Slovenia – Talum – reduced production by 80%.
4. The Netherlands – DAMCO Aluminium Delfzijl – stopped production from October 2021.
5. Romania – Alro Slatina – reduced production by 60%.
6. France – Aluminium Dunkerque – cut production by 15% from January 2022.
7. Germany – TRIMET Aluminium Essen – cut production by 50% from March 2022.
8. Germany – TRIMET Hamburg – reduced production by 30% from October 2021.
9. Germany – TRIMET Voerde – reduced production by 30% from October 2021.
Zinc smelters in Europe that have closed or have reduced production:
1. Italy – Portovesme – production stopped in November 2021.
2. Bulgaria – KCM – was closed in August 2022.
3. Netherlands – Budel – production stopped in August 2022.
4. Belgium – Balen – production stopped from the 1st of September 2022.
5. France – Auby – operates at reduced capacity from March 2022.
Therefore, out of the nine smelters in the European Union, three have stopped and two had to reduce their production. Thus, the European Union lost half of its aluminium and zinc production capacity. This will strengthen the position of the Russian Federation, which is the second largest aluminium exporter after Canada.
The steel industry
In the last year, several steel mills in France, Croatia, Finland, the Netherlands, Spain, Bulgaria, Poland, the Czech Republic and Austria have had to reduce their steel production. At the same time, eight steel plants from Italy (2), Germany (2), France (1), the Czech Republic (1), Poland (1), and Slovakia (1) temporarily or permanently stopped steel production due to high energy costs. In 2021, Turkey ranked first (15%) in terms of EU steel imports, followed by Russia (12.3%), India (11.7%) and Ukraine (8.4%). The European Union banned imports of some steel products from Russia, and, due to the war, Ukraine lost 40% of its steel production capacity. Therefore, the EU will have to reorient itself towards India and Turkey.
In the coming period, the European Union’s aluminium and nickel imports will increase, as well as zinc and steel. Regarding the first two, unless the European Union finds another source, imports from the Russian Federation will continue to increase. In terms of steel imports, India and Turkey will strengthen their positions as the EU’s main suppliers.