FAQ: How does the situation in Ukraine affect metal production and supply?
The current situation in Ukraine and the sanctions imposed by both the US and the EU have raised many questions and uncertainties. We have collected the most frequently asked questions and our answers to them on this page. We will update this page as we receive new information from factories, manufacturers and our logistics partners.
If you do not find the answer to your question here, please do not hesitate to contact your Alumeco sales representative by phone or email.
How is the crisis affecting the supply capacity and delivery times from factories and suppliers?
Most suppliers are taking orders as usual. Some suppliers have indicated that they are not taking new orders for the time being due to uncertainty about pricing and production capacity. Delivery times for factory deliveries depend on the material and whether it is a standard or special size. So far, the delivery capacity of the factories, at least for materials already ordered, is good. Delivery times may be subject to delays depending on the influence of various production factors. Order books are full for the foreseeable future, so delays in production are easily reflected in the delivery time of future production.
Which materials and alloys originate in Russia and Belarus?
In the European market, a sizeable amount of raw material for aluminium for rolling, casting and extrusion was produced in Russia. It is expected that we will experience a shortage of these raw materials, which will also affect other European suppliers of plates, profiles etc.
Some Alumeco products in hard alloys, e.g. EN-AW 7075, EN-AW 2007 og EN-AW 6082, which are categorised as dual use products, were produced in Russia. We expect a short period with lower supply of these materials, especially bars, until we have made arrangements for alternative materials and suppliers ready. We expect this to happen by summer 2022.
Nickel is used as an alloying element in stainless steel, and Russia is the third largest nickel producer in the world after Indonesia and the Philippines. There will be a shortage of nickel, and we are seeing the impact on the nickel price already.
How are aluminium prices affected?
In general, energy will be more scarce and more expensive as the import of Russian gas is reduced. This will be reflected in higher production prices. The economic growth during the COVID-19 pandemic has already caused prices of raw materials and alloying elements to increase significantly, and this increase is expected to continue and will be reflected in the price per kilogram of materials. In 2021, some factories switched to split pricing, where the raw material price is indicated separately with a surcharge for alloying, conversion, etc.
How are stainless steel prices affected?
Regarding alloy surcharge prices, we will see an increase in April for alloys 1.4301 and 1.4404. A further increase is expected in May. Nickel is already in short supply and the price will continue to increase.
The nickel price soared in the beginning of March, causing London Metal Exchange to suspend the nickel trade for the first time in LME history. Trading has since reopened.
No significant increase in chromium prices is expected. The price of carbon steel scrap has risen, and this will also have an upward effect on the price of stainless.
How are offers and orders affected?
As situations change and pricing is constantly evolving, the validity of offers has been shortened. In practice, the validity time of offers is now one day. In productions such as sawmilling, the validity of offers is slightly longer. We advise our customers to anticipate, make contracts and order well in advance to ensure continuity of production. Existing orders will be delivered, except for materials conflicting with EU sanctions. We keep our customers informed of orders and changes to materials and delivery times. If the material ordered cannot be delivered, for example due to sanctions, we will contact you as soon as possible to find substitute materials. We accept orders as normal.
What actions has Alumeco taken in response to the US and EU sanctions?
We have suspended all purchases from Russia and Belarus since February 25th, 2022. Our extensive international supplier network ensures the availability of materials, and we are actively looking for substitute suppliers and materials.
We keep our customers informed of delivery times and changes on a case-by-case basis. Currently, the stock situation is good on average and incoming batches are well on track, so the availability of materials is good. There may be challenges with individual materials, and delivery times for factory deliveries are long. For larger order quantities, we recommend contracting and ordering well in advance.
How are logistics and transport impacted by the crisis?
The closure of Russian airspace poses challenges for air cargo, and routes for road transport through Ukraine have been changed. Road transport is also affected by the fact that around 100,000 Ukrainian truck drivers are now called up for military service in their home country, causing labor shortages in road transport. The rise in fuel prices will push up freight rates, which have already been on an upward trend due to the challenges posed by interest rates. We will closely monitor the information provided by our partners and inform our customers on an order-by-order basis about possible logistical delays.
Where can I get more information?
If you do not find the answers to your questions on this page, please contact your sales representative. We will update the answers and questions on this page as we receive the latest information. You can also always contact Alumeco by phone or email. We are here for you!