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Statement from Richard Swart, Chair, Advanced Manufacturing Forum

The AMF supports the continuity of Ukrainian sovereignty and condemns the actions of Russia. We stand in solidarity with the people of Ukraine and welcome Ukrainian nationals so tragically displaced by the Russian invasion looking for opportunities in the North East which may exist within our member companies.

Members are advised to urgently review contracts, price and supply chain strategies as sanctions begin to bite.

We invite interested parties to email us CV’s/backgrounds via our website so we can circulate to members.

We have had so many challenges in recent years due to Brexit, Covid, supply shortages, price increases on all not least energy and fuel, labour and skills shortage, inflation and interest rate rises. The war and associated sanctions are beginning to have a significant impact on many businesses, greatly exacerbating current pressures.

Whilst this is a tough time for businesses, we believe the economic fallout is a price worth paying to ensure Russia is stopped in what is the greatest threat to world peace since WWII and for maximum solidarity to be shown with the Ukrainian people. We also do not believe Putin represents the vast majority of peace-loving Russians.

The sanctions on Russia will almost certainly cause major distortions in all sectors. Global steel production is an area that will be significantly affected by the current conflict as it is linked to products and supplies from Russia and Ukraine.

Supply and pricing of steel will be impacted. Finished products are stuck in Ukrainian ports. Serverstal, one of the largest steel producers in Russia can no longer deliver. It is likely large quantities stuck in European ports cannot be delivered to service centres. These will cause supply shortfalls. Service centres may also have paid for the steel in advance, causing further headaches.

NMLK is a major supplier of galvanized sheet in Europe, and it is owned by one of the richest Russian oligarchs. NMLK has a plant in Strasbourg where sheet metal is galvanised. It is unclear whether this will still be possible in the near future.

It is probably correct to say that all steel in Europe contains some part from Russian production. Gas is usually used for galvanising sheet metal. Gas has and will continue to increase in price. Coke, iron ore and scrap metal for the steel industry also come in part from the crisis regions. This will no longer be possible.

Due to the current situation, a major steel mill has already increased the base price for steel by € 180. Others are likely to will follow.

There is no denying the bleakness of the current situation. The main focus of course has to be the ending of this conflict and for peace to return to the region. That will take time and in the meantime the challenges to manufacturers are enormous.

However, there are steps we can take now to help mitigate and for this urgent reviews of business models are encouraged now. AMF will be there to help where possible.

 

Comment from Peter Shiels, Operations Director, Phoenix Steel, Jarrow

“The biggest impact we see on business will be prices rises across the board caused by Russia and Ukraine leaving the market.

At the moment it is early days with lots of speculation and discussion between stockholders / traders / mills.

Forward booking of materials is so important but there is huge uncertainty right now which again is not helpful.

When a crisis hits, the first thing to happen is the mills “go silent” they do not make any offers on prices to buyers and remove all info from their sales screens as they plan what to do next. It is at this point now as everyone holds their breath for the next move. So forward planning / continuity of supply is a worry.

Lots of rumours of to increases in the pipeline, possibly in the hundreds of £’s per tonne.

We do not buy a huge amount of Russian material so do not feel we will be hugely impacted personally, but as the two countries supply vast amounts into Europe the impact will be felt by everyone.

Trying to source outside of Europe has its problems with the “delay” in delivery caused by logistics of getting material from India or the Far East.”

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