Russia reroutes pig iron exports through Murmansk as Black Sea strikes disrupt shipping

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Russia reroutes pig iron via Murmansk

Highlights

Russia began exporting pig iron via Murmansk for the first time since 1996, shipping a 65,000-tonne trial cargo after Black Sea disruptions.
Freight rates from Murmansk to Turkey nearly double Black Sea levels, raising costs by about $100 per tonne for Russian suppliers due to the longer Arctic route.
Steel loadings from Ukraine's Black Sea ports fell 65% year on year in Q3 as Russian strikes severely disrupted regional metals trade.

Murmansk shipment marks logistics shift

As reported by the Financial Times, Russia is starting pig iron exports from Murmansk after cargo flows in the south were hit by repeated strikes linked to the war in the Black Sea. A video published on the port's Telegram channel on Thursday shows pig iron being loaded, while the port says changing logistics in southern Russia have sharply increased volumes handled there.

The port said on October 14 that it had begun handling pig iron for the first time since 1996. More than 180 wagons brought the metal from the Urals for a trial shipment of 65,000 tonnes to the Mediterranean, and the vessel is likely to head to Turkey because the EU has banned imports of Russian pig iron since January 1 this year.

Pig iron is a key input for steel and cast iron production, and Russia and Ukraine rank behind Brazil among the world's largest exporters. To prepare the cargoes, Murmansk said it had to produce special buckets and fit handling equipment with electromagnets, with regular shipments to be considered after the pilot operation.

Higher costs and wider trade disruption

The Arctic route adds about 10 days compared with shipments from the Black Sea, making deliveries significantly more expensive for Russian suppliers. Austin Barnes, a metals analyst at Argus, said freight rates from Murmansk to Turkey are almost double Black Sea levels, and some producers are paying about $100 a tonne more across rail and sea transport to reach buyers.

The rerouting reflects mounting pressure on Russian commodity exports as both Ukraine and Russia target shipping in the Black Sea in increasingly deadly attacks. Maritime security company Ambrey says there have been almost 700 strikes in the Black Sea so far this year, and analyst Tomas Alexa describes the summer operating tempo by both sides as unprecedented, while maritime security experts say Russia is now responsible for most of the strikes.

Russia has already redirected much of its commodity trade through Baltic ports, but growing congestion there is pushing cargoes farther afield and adding strain to the rail network operated by state monopoly Russian Railways, or RZD. Murmansk, long used mainly for oil exports, is also diversifying into metals and grain, and Kpler data shows October was the port's fourth-strongest export month in the past two years, behind only the three summer months when Ukraine's campaign against Russian shipping was most intense.

The disruption also hits Ukraine's own metals trade. According to Signal data, steel loadings from Ukraine's Black Sea ports fall 65% year on year in the third quarter because of Russian strikes on vessels serving those routes.

Black Sea shipping attacks near Romania’s Danube approach have intensified, after two chemical tankers caught fire and rescuers searched for missing crew. Our earlier article noted that the escalation is raising risks for a key grain-export corridor and could further disrupt regional commodity flows as governments discuss measures to protect civilian vessels.

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