The shock of 2022: war, sanctions and record profits

The exposure of the Lugano cluster

No Swiss trading hub was as exposed to Russia and Ukraine as Lugano. Its steel traders bought semi-finished and flat products from mills in both countries, several of the largest firms were the trading arms of Russian or Ukrainian producers, and coal, coke, pig iron and ferroalloys from the region were part of the trade. When Russia invaded Ukraine on 24 February 2022, the Ticino press reported that about a hundred trading firms with about 1,600 jobs were present in Lugano and that about thirty of them traded steel products, which Ukraine and Russia supplied in large quantities.¹ On 28 February 2022 the Federal Council decided to adopt the sanctions of the European Union against Russia. The Ordinance on Measures related to the Situation in Ukraine of 4 March 2022 (SR 946.231.176.72) then became the legal basis for the Swiss measures, including an import ban on iron and steel products.² The Federal Act on the Implementation of International Sanctions of 22 March 2002 (Embargo Act, EmbA) provides the statutory basis for such ordinances.³

The effects on Lugano traders came through several channels. First, the listing of owners of Russian steel groups froze the assets of the companies they controlled. Swissinfo reported that Alexey Mordashov, owner of Severstal, and Viktor Rashnikov, owner of MMK, were sanctioned in March 2022, and that the EU ban on imports of Russian iron and steel of 15 March 2022, adopted by Switzerland, removed the European market for all Russian mills.⁴ Second, banks stopped financing transactions with Russia and Ukraine, froze credit lines and raised collateral requirements, even for transactions not covered by sanctions.⁵ Third, the war closed Ukrainian ports and cut off factories, so that contracts with Ukrainian mills could not be performed. Fourth, prices exploded. Hot-rolled coil rose from about USD 600 to USD 1,400 a tonne and heavy plate from USD 650 to USD 2,000 a tonne, which created margin calls on hedges and disputes with buyers who had bought at lower prices.⁶

Casualties and survivors

In April 2022 the general secretary of the association warned that some firms risked closure, liquidation or bankruptcy because of the sanctions and of restrictive interpretations by financial institutions, and Swiss Italian television counted about twenty Ticino trading firms exposed to Russia or Ukraine.⁷ In June 2022 the association's president reported that of the 120 companies in the sector about twenty had worked with Moscow and Kyiv, that about a dozen of them were in difficulty and that two had gone into liquidation.⁸ The official figures confirm a moderate contraction. The number of trading enterprises in Ticino fell from 123 in 2019 to 114 in 2022 and 2023, and employment fell from 968 to 873.⁹ Part of this decline predates the war, while the figures do not show how many firms closed because of sanctions and how many for other reasons.

For traders without Russian exposure, 2022 was an exceptional year. Swiss Italian television reported in March 2023 that the year had been exceptionally positive for many Ticino commodity traders, as high prices and market uncertainty raised margins, and that the Lugano steel trader DP Trade had successfully replaced its Russian suppliers after the invasion.¹⁰ The mayor of Lugano said at the same time that the trading sector's tax revenue had reached the level of that of the banks.¹¹ The same war that threatened the survival of some firms thus produced record profits for others. The difference lay in the composition of suppliers and customers, in access to bank finance and in the speed with which traders could reorganize their supply chains towards India, Turkey, Asia and other sources.

Notes

1. Tio.ch, 25 February 2022 (above). ↩
2. SECO, "Massnahmen im Zusammenhang mit der Situation in der Ukraine" (above) (Federal Council decision of 28 February 2022 to adopt the EU sanctions; Ordinance of 4 March 2022, SR 946.231.176.72; "Einfuhrverbot von Eisen- und Stahlerzeugnissen"). ↩
3. Federal Act on the Implementation of International Sanctions of 22 March 2002 (Embargo Act, EmbA), SR 946.231, Art. 1 (compulsory measures to implement sanctions of the United Nations, the OSCE or Switzerland's most significant trading partners) and Art. 2 (enacted by the Federal Council in the form of ordinances), https://www.droit-bilingue.ch/en-de/9/94/946.231-1-4.html and https://www.droit-bilingue.ch/en-de/9/94/946.231-2-5.html. ↩
4. Franchini, Swissinfo, 1 April 2022 (above). ↩
5. Tio.ch, 25 February 2022 (above); Franchini, Swissinfo, 1 April 2022 (above). ↩
6. Franchini, Swissinfo, 1 April 2022 (above). ↩
7. RSI, "La guerra mette in crisi il trading", 6 April 2022 (above). ↩
8. RSI, 24 June 2022 (above). ↩
9. USTAT, 12 Denaro e banche (March 2026, above), T. 12.6. ↩
10. RSI, 11 March 2023 (above). ↩
11. RSI, 11 March 2023 (above). ↩

For general information only. This article does not constitute legal or tax advice, does not replace advice on an individual case and creates no lawyer-client relationship. It reflects the legal position as of August 2025.