Memo from Moscow
Steel News from Russia and Ukraine
CIS steel crisis continues, May 2009
The CIS steel crisis continues. Apparent finished steel consumption in Russia is now 40% down on 12 months ago. Imports especially have also collapsed - these are currently at just half of their level of one year ago.
000s tonnes |
1Q 2008 |
1Q 2009 |
2009/2008 |
Russian steel deliveries |
16 , 009 |
11 , 330 |
71% |
Export |
7 , 553 |
6 , 172 |
82% |
Import |
1 , 032 |
563 |
55% |
Apparent steel consumption |
9 , 487 |
5 , 721 |
60% |
These changes have also been evident downstream. Steel pipe demand for example has also collapsed in Russia.
000s tonnes |
1Q 2008 |
1Q 2009 |
2009/2008 |
Russian deliveries |
1,984 | 1,358 | 68% |
Export |
301 | 290 | 96% |
Import |
263 | 143 | 54% |
Apparent consumption |
1,946 | 1,210 | 62% |
Russian stainless steel demand shows a similar trend. [Stainless steel production of course is very under-developed in the CIS]. The value of Russian stainless steel imports into Russia fell in Q1 2009 to ~$86m, down 37% on a year ago. Since March 2007 duties have applied on Russian stainless steel imports from the EU. The other supply side change that Russia has witnessed recently has thus been a reorientation of stainless imports from the EU to suppliers in Asia. March 2009 however saw new antidumping investigations against China ( Taiwan ), South Korea, Brazil and the Republic of South Africa. It is too early to say what the impact of these investigations on stainless steel imports will be.
Whilst galvanized and painted sheet from China, Turkey, Kazakhstan, Taiwan and the EU are also successfully sold to Russia, Russian steel manufacturers in March 2009 instigated new antidumping investigations for these products also. It seems that this segment of steel trade with Russia will close imminently (or at least fall very sharply), with imposition of a 25% import duty. By special Government resolution, all purchases of coated steel sheet are to involve supply from Severstal, NLMK and ММК.
The January 2009 'Memo from Moscow' observed that the peak of the Russian crisis had still to be seen. Early April 2009 indeed saw some significant and further industry deterioration. Thus, Estar Group's Zlatoust Steel Works (with a labour force of some 6,000 workers) stopped operation some weeks ago. Although limiited production restarted in recent days, this activity is reportedly at just ~10% of full capacity and the plant is returning a monthly loss of ~20 million roubles.
Elsewhere in Estar Group, ownership changes are under discussion involving the Far East producer plant 'Amurmetal'. Here, a share exchange involving Evraz is currently under deliberation. Amurmetal's debts supposedly mushroomed last year, and attempts at debt restructuring culminated with a major debt default just last February - so it remains to be seen whether some form of financial rescue will take place.
The 'Memo from Moscow' team continues to see a steel industry outlook that will remain negative in Russia for some time still - before prices, volumes and profitability are restored.
Ukraine is a similar story. Q1 2009 steel consumption of finished steel products is ~54% down on a year ago. Reports indicate steel demand in sectors such as pipemaking is 45% down, in machine-building some 68% down and in construction some 73% down on this period 12 months ago. Here too, it may still be some time before the green shoots of recovery are seen.
| 01-Apr-09 | Russian steel crisis - raw materials |
| 01-Mar-09 | Ukraine steelmaking raw materials |
| 01-Feb-09 | 2008 year end review |
| 01-Jan-09 | Impact of the credit crisis |
| 01-Dec-08 | Consolidation |
| 01-Nov-08 | Investment activity |
| 01-Oct-08 | Stainless steel sector in Russia |
| 01-Sep-08 | 2007 Russian steel industry review |
Memo from Moscow is a free regular steel industry news report provided for visitors to www.steelonthenet.com with the
compliments of Metals Consulting International Limited.
Researched by MCI's specialist steel team and published monthly, the report brings site visitors regular reports on topics such as Russian steel consumption, production, modernisation and investment,
international trade, steelmaking in Ukraine, CIS steel prices, iron ore and metallurgical coal supply etc.
If there is a specialist steel-related topic in Russia or Ukraine that you wish our CIS team to brief you on, please e-mail us at MCI@steelonthenet.com or follow this link for further information about MCI.
