Miller on Raw Materials: Russian HBI cargo seized in Italy

The Italian authorities have seized a Russian cargo of hot-briquetted-iron (HBI) for violating European sanctions on Russian ferrous imports, according to media reports.

A Tuvalu-flagged vessel loaded with 33,000 metric tons of HBI was seized at an Italian port, an article in gCaptain.com said.

The vessel, Hizir Reis, is part of the Russian “shadow fleet.” It had failed to disclose a stop at a Russian port in the Black Sea, and is subject to restrictions by the EU, according to the article.

The EU has intensified enforcement regarding the restrictions on ferrous raw materials produced by the Russian Federation. Since the invasion of Ukraine, the EU sanctioned pig iron and HBI/direct-reduced iron (DRI). The trading bloc has imposed import quotas that have tapered off to zero starting in 2026.

The Italian authorities are conducting an investigation of all parties involved. This includes the customer in Italy.

Implications

SMU contacted a ferrous trader based in Italy. He said the cargo was destined to be shipped to a large Italian steelmaker. It is unclear whether this mill was a direct buyer or used a trading company.

What is becoming evident is the sanctions on Russian producers of ferrous products is now being felt to the point where they are risking arrest of their vessels.

Background

Prior to the 2022 Russian invasion, the US imported the majority its pig iron from Russia. Since then, Russian pig iron has been banned. This caused economic hardships on both sides. The Russian producers lost one of their best customers and the US had to source from other limited locations at higher costs.

Now Europe is facing a similar situation with the exhaustion of the quotas on pig iron and HBI. This is happening as the EU is transitioning to EAF technology to decarbonize. Not being able to source these raw materials from Russia, the leading producer in Europe, will make the transition that much harder.

Stephen Miller

Stephen Miller started his career in the scrap metal industry in 1978 at Luria Brothers in Cleveland. Over the last 40-plus years, he has worked in all capacities in the trading business. He has had positions in both domestic and international scrap trading. In addition to scrap, Miller was at the forefront of the pig iron trade and established a pig iron distribution company under the name of Ferrosource, Inc. Most recently, Miller has concentrated on the scrap export market and regularly does consulting for several companies in the industry.