Russia’s steel production is expected to decline by 6-8% y-o-y in CY22, while next year’s export volumes are expected to remain at the similar levels as CY22, as per the forecast by the Ministry of Industry and Trade of Russian Federation (MITRF).
Russia’s steel making strategy until CY30 has been submitted to the government and it is likely to be approved by CY23 or before the end of this year.
Russian steelmakers’ profitability from exports of iron and steel products was impacted majorly due to higher logistics costs and appreciating Russian currency (ruble). Due to the continuous supply of semi-finished steel products to Europe, NLMK was the only one to show positive export margins. Notably, China, Turkiye and European Union (EU) were among the key semi-finished steel and pig iron importers from Russia during H1CY22.
In addition, the largest steel majors have stopped publishing their financial results and it is still not known whether the results of CY22 will be published.
At the beginning of war (Russia’s invasion into Ukraine), it was projected that the country’s steel demand will fall by around 20% y-o-y in CY22. However, due to higher oil prices and measures to support construction activities, there has been a revision in the forecast later which said that demand may drop by 6% y-o-y this year. Furthermore, demand may further see a reduction of 10% y-o-y in CY23 as a result of stricter sanctions.
~GMK Center
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