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The supply of refined copper and alloys from Russia to the EU countries in January – May 2023 decreased by five times compared to the same period last year to 32,200 tons. This is evidenced by the data of the European Statistical Agency Eurostat. The Netherlands, Italy, Greece, Germany, Spain, and Bulgaria imported Russian metal in the first five months of this year.

For 2022 The EU increased purchases of refined copper and alloys from Russia by 2% to 301,600 tons. The largest importers then were Germany, Greece, the Netherlands, Bulgaria and Italy. Also, Russian copper was imported by Spain, France, Finland, Latvia, Lithuania, Poland, and Slovakia.

According to the data of the Ministry of Industry and Trade specified in the strategy for the development of Russian metallurgy until 2030, Russia exported 463,000 tons of copper in 2021 (-40% by 2020) with the production of 989,000 tons (-5%) and the growth of domestic consumption doubled to 531,000 tons. Data on copper production and exports for 2022 have not been published.

The largest copper producers in Russia are Norilsk Nickel, Ural Mining and Metallurgical Company (UMMC), and Russian Copper Company (RMK). In the first quarter of 2023, Norilsk Nickel increased copper production by 19% to 108,854 tons, in 2022 the company produced 432,985 tons of this metal (+6% year-on-year). UMMC and RMK do not publish production results. Vedomosti sent requests to these companies.

The EU has not imposed sanctions on Russian copper. But the largest producer of copper products in Europe, the German company Aurubis, refused to extend contracts with Russian suppliers after they "recently expired." This was announced by Aurubis CEO Roland Harings in April 2023, specifying that the company had no problems with replacement.

In October 2022, Herings personally asked the London Metal Exchange (LME) to ban the storage of Russian copper in its warehouses. But according to the results of discussions with market participants, the exchange did not prohibit the storage of nickel, aluminum, and copper from Russia in warehouses that it certifies.

The exchange does not own warehouses but only certifies their operators and the warehouses themselves (500 warehouses in Europe, the USA, and Asia) for storing metals that are recognized as LME brands.

However, in early October 2022, the LME banned the storage of UMMC copper in warehouses. This was explained by the UK sanctions imposed in September 2022 against the founder of UMMC Iskander Makhmudov (until March 2022, together with Andrey Bokarev, who was the largest co-owner of the company).

Norilsk Nickel, faced with the refusals of traditional European customers, sells all the volumes of products they have not bought in the market of Southeast Asia and other countries, said Vladimir Potanin, president and largest shareholder of the company, at the end of March. Some Western buyers refuse existing contracts, others – from traditional volumes, he explained.

The share of Europe in Norilsk Nickel's revenue in 2022 decreased to 47% from 53% in 2021. The share of Asia increased to 31% from 27% a year earlier, the share of America remained at 15%, the Russian Federation and the CIS – 5%. But in February 2023, Mikhail Borovikov, director of the Department for Work with the investment community of Norilsk Nickel, warned of more serious changes in the sales structure this year, since in 2022 volumes contracted at the end of 2021 were mainly sold.

In 2022, Russian copper could be sold in the EU under long-term contracts, agrees Boris Krasnozhenov, head of the Securities Markets Analytics Department at Alfa Bank. At the same time, traders noted refusals to import copper from Russia as early as the end of 2022, he clarifies.

Refusals of individual consumers from metal from Russia could not appear immediately due to existing contracts, agrees Finama analyst Alexey Kalachev. In addition, there may be problems with logistics and calculations due to sanctions in other areas, he adds.

Finam and Alfa-Bank estimate that Russia's share in global copper production is about 4%. According to Krasnozhenov, supplies from Russia provided about 10% of copper consumption in the EU. More than 50% of copper is used in industrial production, about 30% more – in the construction sector and infrastructure, 10% each – in consumer goods and the transport sector, the expert recalls.

Germany, the Netherlands, and Italy are traditionally industrially developed countries, Krasnozhenov says, which explains their activity in acquiring Russian copper. According to him, the European market is experiencing a decline in industrial production and negative dynamics in the construction sector, which may lead to a reduction in copper consumption (-1.5% in 2022).

The situation with the supply of copper in the EU market, according to Krasnozhenov, may worsen in 2023, as stocks in LME warehouses reached the lowest level since 1997, and most of them are represented by Russian copper (more than 90% at the end of January 2023).

Russian exporters can redirect the metal to the markets of Asia and the Middle East, Krasnozhenov says. China and Asian countries consume more than 70% of copper in the world – these are the main markets for Russian exporters, he notes. But in January – May 2023, exports of Russian refined copper and alloys to China, according to the Main Customs Administration of the People's Republic of China, decreased by 28% compared to the same period last year to 96,897 tons.

According to Kalachev, the probability of direct bans on the supply of Russian copper to the EU from Russia is low due to its demand for energy transfer, renewable energy, and electric transport. He believes that consumers who have refused Russian copper will buy it from other suppliers, and our copper will go to other markets, including the domestic one, "since copper consumption in the defense industry could probably grow in Russia."

According to Krasnozhenov, in 2022, the consumption of copper products in Russia (wire rod, wire, and powders) increased by 27% to 393,000 tons. An increase in the use of wire rod was observed in the segment of cable and wire products, and an increase in copper consumption was observed in the construction segment, the analyst says. The further growth of domestic demand will be determined by the development of industrial production and the growth of investments in infrastructure and the construction complex, he believes.

Source: https://www.vedomosti.ru/business/articles/2023/07/20/986108-eksport-rossiiskoi-medi-v-es-sokratilsya