For the past month or so we have seen things in the news that we didn’t believe could happen in modern day Europe. The war is having an effect on the whole of the continent, including businesses. An especially strong effect has been seen in steel production with costs rising heavily.
The main reason for this has been a rapid escalation of energy prices which we all have noticed while filling our cars with fuel or charging from the grid. There are also difficulties with iron ore and coke deliveries to mills due to the war in Ukraine and to some extent the heavy rains experienced in the mining areas of Brazil and Australia. Tata Steel Naantali has no imports from Russia or Ukraine but the above reasons are also affecting the price of the steel we are selling to our customers. As if that was not enough, a long production stoppage at a large steel producer and the absence of Russian and Ukrainian steel on the European market are also weakening supply.
We all hope that the war will end quickly, but there is no certainty about the duration of the crisis. Russian attacks have also badly damaged Ukraine's infrastructure and sanctions against Russia are likely to remain in place long after the war is over. The reconstruction of Ukraine will not happen overnight.
Responding to demand and forecasting prices at this time is like driving in the fog. There is no clear visibility ahead. In these type of circumstances it is important to rely on trusted navigation equipment and proceed with a steady, calm speed and make necessary adjustments when required. In Naantali, we are assisted by a large parent company, whose global organisation enables us to source materials, such as steel blanks and raw materials, flexibly from a wide range of sources. As a result of this even in a crisis, we are able to produce steel as agreed.
Let’s hope that the fog lifts and clearer skies arrive soon. Especially for the people of Ukraine.