Russian steelmaker MMK changes tack after tariffs
MMK, one of Russia’s largest steel producers, has postponed the launch of a lucrative project in Turkey due to uncertainty created by global trade wars, Andrey Eremin, the company’s director for economics, said in an interview. The project — the re-launch of hot-rolled steel production at its Turkish site — was expected to add between $90 million and $100 million to MMK’S core earnings, Eremin said, but a sudden surge in global trade barriers caught the company off guard, forcing it to delay. “We had completely restored equipment at the plant to working condition, had figured out all the contracts for supplying energy and raw materials,” Eremin said.
“Unfortunately, we made this decision before the US introduced tariffs against metallurgical companies. We did not know that this would happen.”
The MMK Metalurji complex, located near Iskanderun on Turkey’s Mediterranean coast and in Istanbul, was built by MMK between 2007 and 2010, at a cost of over $2 billion.
Hot-rolled steel production at the site was put on hold in 2012 amid a global slump in steel prices, but was due to restart this summer as the market recovered.
Now MMK has put the re-launch on hold, and plans to decide its fate in November, when the dust has settled on a wave of protectionist measures introduced by the United States and Europe in recent months.
US President Donald Trump imposed tariffs of 25 per cent on steel and 10 per cent on aluminium in March in a move mainly aimed at curbing imports from China.
Last week, the European Union introduced a quota and tariff policy in response, fearing the impact on its own producers of a surge of steel imports following Trump’s decision.
MMK is not affected directly by these measures as it does not export steel to the US and EU markets, but 30 per cent of production at its Turkish plant was intended for the European market and neighbouring countries.
Tariffs are not the only Trump policy to affect MMK’S strategy. The steelmaker has also stopped deliveries to Iran, Eremin said, against the backdrop of new sanctions Washington has promised to impose on Tehran. The US measures, announced soon after Trump pulled out of an international nuclear deal negotiated by his predecessor Barack Obama, are due to kick in next month and include a ban on the sale, supply and transfer to or from Iran of raw or semi-finished metals.