Russia’s invasion of Ukraine is casting a shadow over the global economic recovery that underpins steel demand. But there’s a significant offset for producers of a type of high-quality iron ore. 

That’s the view of Vale SA, one of the world’s biggest producers of the steel raw material. 

The Brazilian mining giant sees the geopolitical crisis boosting the premium that steelmakers pay for iron ore pellets—a feedstock for blast furnaces—as Ukraine and Russia together account for about 30% of the 120 million-ton global market. Ukrainian miner Ferrexpo Plc alone makes up 4% of pellet supply, according to Bloomberg Intelligence, and is suffering rail disruptions. 

“The big question is how long this tension will last,” Marcello Spinelli, Vale’s head of iron ore, told analysts on a call Friday. 

The price impact is expected to materialize in the second quarter, and Vale, a major pellet supplier, is already fielding calls from European customers concerned about the scarcity of supply, he said.

Vale is also one of the world’s biggest producers of nickel. The Russian invasion probably will also accelerate gains in prices of that metal, a market that was already characterized by low inventories, Vale Chief Executive Officer Eduardo Bartolomeo said. 

“There is a speculative impact so far since there was no sanction related to the metal,” he said.