Steel production in Russia in the first half of the year decreased by 3%
Source：Vedomosti
From：Taiwan Trade Center, Moscow
Update Time：2024/08/31
Steel production in Russia in January – June 2024 amounted to 36.7 million tons, which is 3% less than in the same period of 2023. This follows from the preliminary data of the information and analytical company Chermet (Ferrous Metals) Corporation, which Vedomosti has. Thus, Russian metallurgists have been reducing production for the sixth month in a row.
The output of pig iron – the main raw material for steelmaking – decreased by 5% to 25.8 million tons during the reporting period, finished rolled products – by 2.5% to 32 million tons, pipes – by 2% to 6.3 million tons, iron ore – also by 2% to 53.7 million tons, follows from the data of Chermet.
In June 2024, steel production in Russia sank by almost 4% year-on-year, amounting to 6 million tons. Pig iron production decreased by 6% to 4.2 million tons, finished rolled products – by 2% to 5.3 million tons. Pipe production remained almost at the level of June 2023 – 1.1 million (-0.2%), as well as iron ore production (+0.3% to 9.1 million tons).
The decline in steel production may be due to two factors, says independent industrial expert Leonid Khazanov. Traders filled warehouses, making large purchases ahead of the construction season, he notes. In addition, export supplies continue to decline: the European market is, in fact, closed to Russian metal, the expert recalls.
In 2022, after the start of the European Union, the EU imposed restrictions on the supply of a whole list of metallurgical products from Russia, including steel and iron products. In addition, the European authorities obliged suppliers from third countries to prove that resources from Russia were not used in the production of metal and products made from it.
The performance of the first half of 2024 was also influenced by the high base of 2023. At that time, Russian metallurgists were recovering after the introduction of Western sanctions and, since May 2023, increased smelting in annual terms. Since the summer, the indicator has consistently exceeded 6 million tons per month. According to the World Steel Association (WSA), smelting in Russia in 2023 almost returned to a record level in 2021 and amounted to 75.8 million tons. This is 6% more than in 2022, when 71.5 million tons were produced.
According to the WSA, 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).
Vasily Danilov, an analyst at Veles Capital, says that the main reason for the decline in steel production is the slowdown in the construction sector under the influence of high interest rates. "We believe that by the end of 2024, steel production volumes will decrease by 3-5% to the level of 2023 and will amount to 72-74 million tons," he predicts.
The increase in the Central Bank's key rate weakened purchasing activity in construction, which led to a decrease in steel consumption in January – March 2024 to 10.9 million tons (-2% year-on-year), Severstal noted in its April review. The energy sector reduced steel consumption by 11%, due to a decrease in demand for large-diameter pipes. In total, the oil and gas industry accounted for 1.2 million tons of ferrous metallurgy products.
The key rate has been held at 16% since December 2023. At the same time, the Central Bank reported in July that a longer period of maintaining tight credit conditions would be required to return inflation to the 4% target than predicted in April. The next meeting of the regulator is scheduled for July 26.
WSA expects steel demand to grow both globally and in the Russian domestic market. In the April review of the association, it was reported that in 2024, global consumption will increase by 2% compared to the previous year and amount to 1.8 billion tons. According to WSA forecasts, the Russian domestic market will need 4% more steel – 46.4 million tons.
In March 2024, the Ministry of Industry and Trade expected that steel production in Russia would grow by about 1% this year compared to 2023.
Source: https://www.vedomosti.ru/business/articles/2024/07/11/1049274-viplavka-stali-v-pervom-polugodii-snizilas?utm_campaign=newspaper_11_7_2024&utm_medium=email&utm_source=vedomosti