Russia will start exporting pig iron from its Arctic port of Murmansk for the first time in 30 years to reroute cargoes away from Ukrainian strikes in the Black Sea. A video on the port's Telegram channel showed pig iron being loaded, with a post stating work is in full swing at Murmansk port following changes to logistics in southern Russia that led to a sharp increase in cargo volumes. The port announced on October 14 it had started handling pig iron for the first time since 1996.
The shipment of 65,000 tonnes is likely headed for Turkey, where EU imports of Russian pig iron have been banned since January 1. Pig iron is critical for steel and cast iron industries. Russia and Ukraine are the world's largest exporters after Brazil.
More than 180 wagons carried metal from the Urals for the trial shipment. The journey is about 10 days longer and much more expensive than Black Sea routes. The vast increase in journey time has become a necessary challenge for Russian exporters whose business has been upended by relentless Black Sea strikes since summer.
Both Ukraine and Russia have targeted vessels in increasingly deadly strikes to disrupt critical trade routes. There have been almost 700 strikes in the Black Sea this year, according to maritime security company Ambrey. Ambrey analyst Tomas Alexa said the cadence of operations was unprecedented, although Russia is now responsible for the majority of strikes.
Russia has rerouted commodity exports through Baltic ports, but congestion has forced cargoes further afield. It speaks volumes to the pressures Russians are facing in the Black Sea, diverting to Murmansk and the Baltics. The last shipment of pig iron out of Russia's Black Sea port of Novorossiysk was on July 31.
Murmansk, close to northern Finland within the Arctic Circle, has traditionally been an export hub for oil but has diversified into metals and grains. For the pig iron cargoes, the port had to manufacture special buckets and fit handling equipment with electromagnets. Following the pilot operation, parties will consider moving to regular shipments.
Freight rates from Murmansk to Turkey are almost double Black Sea rates. Some Russian producers are paying $100/t more just to get material to buyers across rail and ship, said metals analyst Austin Barnes at Argus. The rerouting is creating major bottlenecks on Russia's railways operated by state-owned monopoly Russian Railways (RZD).
Source: Financial Times Markets · Summarized by HeadlinesBriefing