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Domestic production is still not enough to support strategic projects

In 2024, Russia can import a record volume of stainless steel – 487,000-492,000 tons. This is the highest figure since 2019. Such a forecast is contained in the review of the Association of Consumers and Suppliers of special Steels and Alloys "Spetsstal", which was reviewed by Vedomosti.

The import of stainless steel to Russia in 2023 amounted to 486,000 tons. This is 31% more than in 2022 and 5% more than in pre–sanction 2021 (423,000 tons). More than half of the volumes came from China, the share of India was 20%, Indonesia – 6.5%, Turkey – 2%.

IMPORT OF STEEL to RUSSIA in 2019 – 2023 in thousand tons

Year	Volume of import in thousand tons
2019	380.3
2020	383.2
2021	463.0
2022	372.1
2023	486.0

Source: Association of consumers and suppliers of special steels and alloys (Spetsstal) 

As a representative of Spetsstal explained to Vedomosti, the volume of supplies this year will be affected by record metal reserves in traders' warehouses in 2023, a decrease in business activity of medium and small businesses and the completion of a number of large projects in the oil and gas industry. For example, in 2024, the second stage of the gas liquefaction project of the Arctic LNG-2 plant of Novatek should be launched.

Stainless steel is used in mechanical engineering, the production of household appliances, electrical equipment and consumer goods (pots, spoons, forks, knives, etc.), plumbing (faucets, sinks), for the production of equipment for the food industry, pipes for the oil and gas industry and petrochemicals, construction, and also goes to the needs of the military industry.

The main producers of stainless steel in Russia are the Krasny Oktyabr Metallurgical Plant, Zlatoust Metallurgical Plant, Izhstal and the Chelyabinsk Metallurgical Plant. The last two companies are part of Mechel, founded by Igor Zyuzin.

According to Rosstat, the production of stainless steel (in primary forms and semi-finished products) in Russia in 2023 increased by a quarter to 351,000 tons by 2022.

In December 2023, Norilsk Nickel acquired 50% of a Russian stainless steel company, which is going to build a plant in the Volgograd region for the production of flat rolled stainless steel. The capacity of the new production, which is planned to be launched in 2026, will amount to 500,000 tons of finished products per year.

Boris Krasnozhenov, Head of the Securities Markets Analytics Department at Alfa Bank, believes that the new company is able to fully cover the needs of the domestic market in stainless steel.

The key factors in the growth of stainless steel supplies to Russia are the intensification of the import substitution policy and the overall growth of the market, says Ilya Kolomeets, Director of Development at Metals & Mining Intelligence (MMI). According to him, the volume of shipments of flat stainless steel products by Russian metal factories to the domestic market in 2023 increased by 31% year-on-year and amounted to about 40,000 tons. Sergey Grishunin, Managing Director of the NRA, attributes the restoration of imports to an increase in the production of household appliances, as well as aggregates for the chemical and nuclear industries.

At the same time, stainless steel became cheaper on world markets last year. According to MMI, the price of a cold-rolled 304 AISI stainless steel roll decreased in 2023 by 22% compared to the previous year to $2,300/ton on the FOB basis ("with loading on board") in the ports of the People's Republic of China.

The price of a cold-rolled 304 stainless steel roll (benchmark) fell below $1800/ton on a FOB basis at the end of 2023, according to Alfa-Bank data. The main factor is the cheap nickel used in the production of stainless steel (Vedomosti wrote about this on February 9). Krasnozhenov also draws attention to the fact that China and Indonesia continue to increase the volume of stainless steel production, already occupying more than 70% of the global market. In just 9 months of 2023 (the latest available data) 42.6 million tons were produced in the world, according to data from the International Stainless Steel Association (World Stainless).

Kolomeets expects a 5-10% recovery in world prices no earlier than the second quarter of 2024, which will also affect the cost of these products within Russia. According to the NRA, domestic prices of cold–rolled 304 stainless steel coils decreased by 12% - from 206,000 rubles/ton in early 2023 to 173,000 rubles/ton in January 2024.

According to MMI, last year the consumption of stainless steel in the flat rolled segment in Russia amounted to 390,000 tons (+26% by 2022). This year, according to the agency's forecasts, consumption may increase by 5-7%, and production by 3-5%. The main drivers of growth are increased demand in mechanical engineering and fuel and energy complex. Demand will also be affected by increased public investment in strategic infrastructure projects, Kolomeets explained.

What types of steel are prohibited for export from Taiwan to Russia:

Source: Запрещён импорт нержавейки в Россию (rusmet.ru)  

On January 4, 2023, the Ministry of Economy of Taiwan announced that Taiwan was expanding its sanctions against Russia and Belarus. The government of Taiwan stressed that it seeks to prevent the two countries from using high-tech products made in Taiwan for military purposes, the Taipei Times reported.

Taiwan immediately imposed a ban on exports of 304 and 316 series stainless steel to Russia and its allies, the ministry said in a statement. RA Rusmet drew attention to the fact that these are austenitic steel grades with a high nickel content. The Bureau of Foreign Trade and the Taiwan Council for the Development of Foreign Trade, a government-sponsored trade group, contacted Taiwanese exporters who were affected by the new sanctions and expressed their willingness to help them minimize the impact of the new restrictions. The expanded sanctions also applied to mechanical engineering products, including numerical control machines (CNC), machining centers, CNC grinding machines, electric discharge machines and controllers, the ministry said.

Source: https://www.vedomosti.ru/business/articles/2024/02/16/1020594-import-nerzhaveyuschei-stali-v-rossiyu-mozhet-stat-rekordnim?utm_campaign=newspaper_16_2_2024&utm_medium=email&utm_source=vedomosti