The restrictions imposed by the European Union against the metallurgical industry in Russia are illegal and contrary to the principles of the World Trade Organization.

This was announced on Wednesday, April 20, by President Vladimir Putin during a meeting on the development of this sector of the economy.

According to him, unfriendly steps towards Russian metallurgists were taken "for the sake of momentary political interests."

As a result, the business ties between the EU and Moscow developed over the years were crossed out, and the opinion of the European entrepreneurs themselves was ignored.

“Obviously, such a rough, short-sighted policy will negatively affect the economies of European countries, lead to a sharp increase in the cost of metals in their markets, and we are already seeing this ... This means that inflation will go up, the well-being of European consumers and ordinary citizens will decrease.

This is the price of the decisions made,” the head of state believes.

Recall that since the end of February 2022, the European Union, the United States and a number of other states continue to impose ever new economic sanctions against Russia.

This is how the West reacts to Moscow's special operation to protect the Donbass republics from aggression from Ukraine.

In total, almost 9.7 thousand restrictive measures have already been introduced against Russia - more than against any other country.

This is stated in the materials of the global sanctions tracking database Castellum.AI.

Restrictions, in particular, affected the banking industry, the energy sector, aviation and trade.

Almost half of the country's gold and foreign exchange reserves (worth $300 billion) were also frozen, and many international companies announced their withdrawal from the Russian Federation.

Along with this, the European Union refused to purchase Russian steel and iron products.

“This is not only about a ban on the supply of finished products, but also about the acquisition of certain components for the production of rolled metal, steel sheets, fittings, and so on ... There is no reason to believe that the behavior of our partners will fundamentally change, and we must keep this in mind,” stated Vladimir Putin.

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As the President recalled, Russia remains one of the key players in the global metals market.

According to the head of state, the country is one of the five largest steel producers and occupies a leading position in the field of non-ferrous metallurgy.

Moreover, for some categories of metals, Russia today is the only producer and supplier.

Vladimir Chernov, an analyst at Freedom Finance Investment Company, drew attention to this in an interview with RT.

“Among ferrous metals, we export most of all steel, cast iron and ferroalloys, and some of them are supplied to the world market only by Russia.

Among non-ferrous metals, the Russian Federation is in first place in the export of palladium, since 45% of the entire global market is supplied from our country.

At the same time, we also have the largest proven reserves of palladium.

Russia also occupies a leading position in the export of aluminum, copper, nickel and platinum,” said Chernov.

In 2021, Moscow was the largest supplier of iron and steel to the countries of the European Union.

According to the UN, the entire EU purchased these products for a total of $55.4 billion, and the volume of imports from Russia amounted to about $8.8 billion. The main exporters also included Ukraine ($5.9 billion), Turkey ($5.3 billion) and India ($5 billion).

“Of course, the ban on the supply of Russian metals for the European Union is not as critical as, for example, the refusal to import our energy resources.

Some countries of the Union have their own metal production facilities.

However, they may face serious logistical problems and a long delay in deliveries from other countries, ”said Sergey Suverov, investment strategist at Arikapital Management Company, to RT.

A similar point of view was expressed by Oksana Lukicheva, commodity markets analyst at Otkritie Investments.

In her opinion, in the current conditions, metal products in the EU countries will continue to steadily rise in price.

“In Western countries, prices for the products of the metallurgical complex will grow.

Consumers will have to reconfigure supply chains, look for new suppliers, build new contractual relationships.

This process usually leads to an increase in costs, ”the RT interlocutor explained.

Taking into account the already increased prices for energy resources, the growth in the cost of metals will further accelerate inflation in Europe, experts say.

According to preliminary data from Eurostat, in March, the annual inflation rate in the eurozone has already updated its historical maximum and amounted to 7.5%.

The highest values ​​were achieved in Lithuania (15.6%), Estonia (14.8%), the Netherlands (11.9%) and Latvia (11.2%).

trade permutation

Against the backdrop of the prevailing circumstances, Vladimir Putin asked the government to assess the legality of European restrictions.

At the same time, the head of state instructed the Cabinet of Ministers to prepare an updated strategy for Russia's actions in the WTO by June 1.

“Taking into account new trends, it is necessary to make changes in the structure of production and supplies of Russian metallurgical products.

I know that business is already rebuilding logistics and production chains, finding new suppliers and buyers in order to keep enterprises operating and protect the interests of labor collectives,” the president said.

According to Sergei Suverov, for some Russian metallurgists, Europe accounted for up to 30% of all exports.

As a result, now companies need to quickly redirect their products to alternative markets, but this process may take some time, the expert said.

At the same time, as the specialist noted, the demand for metals within the country is also still limited.

“The pace of construction projects has slowed down, and some car factories are temporarily idle.

However, one cannot say that metallurgical companies will become unprofitable.

They have a long-term margin of safety that allows them to survive difficult times.

Yes, business profitability may fall, but it is hardly worth expecting catastrophic consequences for the industry,” Suverov explained.

Nevertheless, according to him, now the metallurgical sector needs help from the state.

At the same time, some support for companies can be provided by an increase in world prices for metals, says Yevgeny Mironyuk, an expert on the stock market at BCS World Investments.

“The cost of metals and steel that Russia exports to the EU could grow by tens of percent.

This will partially compensate for the losses of Russian enterprises,” the specialist concluded.