其他服務業Business News

Steel production in Russia in October 2023 increased by 9.5% in annual terms, amounting to 6.3 million tons. This is evidenced by the statistics of the World Steel Association (WSA, Worldsteel). In January – October, production increased by 5.3% to 63.5 million tons.

The Russian ferrous metallurgy has been increasing monthly smelting figures in annual terms since May of this year, according to Worldsteel statistics. Since the summer, the indicator has consistently exceeded 6 million tons per month, being at the level of 6.2–6.4 million tons.

Based on the WSA data, in October the volume of production was only 3.8% less than in October of the pre–sanction 2021, and in August and September it exceeded the level of the same months of the year before last. The volume of production for 10 months of this year is only 1.9% less than in January – October 2021: then it amounted to 64.7 million tons.

In March last year, the EU banned the import of rolled steel, rebar, welded and seamless pipes from Russia as part of the fourth package of sanctions. According to the Ministry of Industry and Trade, this affected the export of 3.9 million tons of finished steel products, 200,000 tons of pipe products and 700,000 tons of steel billets – about $3.7 billion in value terms.

In 2022, the volume of steel production in Russia, according to the WSA, decreased by 7.1% and amounted to 71.5 million tons. In 2021, steel production in Russia reached a record level of 77 million tons. Before that, the figures were lower: in 2019-2020 – 71.6 million tons, in 2018 – 72 million tons. According to the Ministry of Industry and Trade, steel production in Russia in 2022 decreased to 71.5 million tons from 77.8 million tons in 2021 (-8% year-on-year).

In May 2023, Deputy Prime Minister of Industry and Trade Denis Manturov said that the Ministry of Industry and Trade expects an increase in steel output in Russia by 4-5% by the end of the year compared to the previous year to 74-75 million tons.

It follows from the WSA statistics that the current growth rate of steel production in Russia is higher than in other major producing countries, with the exception of India.

The total steel production in the world in October, according to the association, increased year-on-year by only 0.6% to 150 million tons, in 10 months – by 0.2% to 1.57 billion tons. China increased production in January – October by 1.4% to 874.7 million tons, India – by 12.1% to 116.3 million tons, South Korea – by 0.2% to 55.9 million tons. Other major steel producers reduced steel output: Japan – by 3% to 72.9 million tons, USA-by 0.8% to 67.4 million tonnes, Germany – by 4.1% to 30.1 million tonnes, Turkey-by 8.8% to 27.5 million tonnes.

The growth of production in India is taking place against the background of an increase in steel consumption due to the construction boom in this country, says Alexey Kalachev, an analyst at Finam. In Russia, the growth in demand for steel is supported by high rates of housing construction, the implementation of infrastructure projects, the restoration of machine-building enterprises and the growth of pipe production, he points out. According to Rosstat, pipe production in the Russian Federation in January – September (the latest published data) increased by 3% to 10.1 million tons.

Despite the positive dynamics of production, the level of 2021, according to experts, will be reached by the Russian ferrous metallurgy only in 2024.

Krasnozhenov notes that now the load of the largest steel producers in Russia is "close to 100%," but in November – December, a seasonal decline in production is possible. According to Alfa-Bank's forecast, steel smelting in Russia in 2023 will amount to 74-75 million tons. In 2024, it may grow by another 0.5–1.5%, reaching the level of 2021, Krasnozhenov says. He also draws attention to the fact that Worldsteel estimates "may be approximate" (the association periodically corrects statistics for previous periods. – "Vedomosti").

According to Ilya Kolomeits, Director of the Metals & Mining Intelligence (MMI) industry agency, no positive dynamics of smelting is expected in November – December due to planned repairs at some metallurgical enterprises. According to him, in 2023, the production of liquid steel in Russia will be approximately 74.4 million tons, which is 5% higher than last year's figure. "Reaching the level of 2021 is possible by the end of next year, taking into account positive forecasts for GDP growth and domestic demand for steel," the expert notes. Dmitry Baranov, a leading expert of the Finam Management Company, adds that in 2024 supply logistics may also improve, and Russian companies may find new buyers of products in Asian countries.

Krasnozhenov notes that in the first half of 2023, the EBITDA margin of large integrated metallurgical companies in Russia was 25-35%. In the second half of the year, the level of profitability may be comparable, the expert believes.

Kolomeets notes that the dynamics of steel prices in export directions and in the domestic market "are now diverging." Export quotations began to rise in October after an almost continuous decline since the spring of this year, he explains. But their growth is limited by importers' concerns about the volatility of the price increase for final products. In addition, from October 1, 2023, an export duty on Russian products began to operate, Kolomeets recalls.

In the domestic market in October, prices for flat rolled products and fittings, according to MMI, exceeded last year's indicators by 25 and 50%, respectively. In November – December, a sharp jump in prices is not expected, rather a downward correction in the range of 2-5% is possible, Kolomeets predicts.

According to MMI data on November 20, in the middle of the month, the price of hot rolled products was $540/t FOB ("with loading on the ship") the Black Sea. In Russia, 1 ton of hot-rolled roll cost 68,000 rubles on the basis of FCA ("loading on the seller's transport at the specified location") Central Federal region, 1 ton of fittings – 60 500 rubles. FCA Moscow.

Kolomeets notes that the dynamics of steel prices in export directions and in the domestic market "are now diverging." Export quotations began to rise in October after an almost continuous decline since the spring of this year, he explains. But their growth is limited by importers' concerns about the volatility of the price increase for final products. In addition, from October 1, 2023, an export duty on Russian products began to operate, Kolomeets recalls.

In the domestic market in October, prices for flat rolled products and fittings, according to MMI, exceeded last year's indicators by 25 and 50%, respectively. In November – December, a sharp jump in prices is not expected, rather a downward correction in the range of 2-5% is possible, Kolomeets predicts.

According to Krasnozhenov, there is a positive trend in prices for iron ore raw materials and coking coal in export markets. But the expert does not expect a significant increase in steel prices in 2024.

Source: https://www.vedomosti.ru/business/articles/2023/11/23/1007224-rossiiskie-stalevari-narastili-proizvodstvo?utm_campaign=newspaper_23_11_2023&utm_medium=email&utm_source=vedomosti