Metallurgical companies are trying to make money on building structures

Metallurgical companies are trying to increase the use of metal structures in construction in the Russian Federation against the backdrop of declining export opportunities. Evraz expects revenues in this segment to double to RUB 8 billion this year, while Severstal is expanding its production capacity. Analysts see prospects for growth in demand for metal structures in industrial construction, but developers are skeptical about their prospects in housing construction.

Evraz plans to double its revenue from the metal construction segment in 2023 to RUB 8.5 billion, according to the Evraz Steel: Plans 2023 presentation. The scope of steel construction includes Evraz Steel Building, Evraz Steel Box and the engineering portal Evraz Steel Engineering. In 2022, Evraz Steel Building shipped 21.8 thousand tons of steel structures, including to Rosatom NPPs in Egypt. This year it is planned to supply 40,000 tons of steel structures, including for the needs of Norilsk Nickel and Gazprom. According to Evraz Vice President for Sales and Business Development Sergey Sintsov, by 2026 the capacity of the Russian beam market will be 1.3 million tons compared to 1 million tons in 2021. Evraz’s total production is 12.8 million tons.

Russian metallurgists are interested in increasing consumption in the domestic market, where historically only 40 million tons of steel were supplied per year out of 70 million tons of steel produced, while the rest was exported. Sanctions and expensive logistics have significantly worsened the export opportunities of Russian companies. According to Infoline-Analytics, in 2023 the demand for metal structures is growing and is approaching the level of 2021 (2.3 million tons) after falling to 2 million tons last year.

Severstal plans to increase both the production of metal structures and their scope, Dmitry Goroshkov, director for work with energy companies and infrastructure projects at Severstal, told Kommersant. The company has begun modernization at the Severstal Steel Solutions plant in Oryol to triple its capacity to 48,000 tons per year. Investments until 2025 will amount to 3 billion rubles. “The product range will be replenished with large-sized heavy metal structures for unique buildings and structures. At the same time, we are already increasing supplies to the largest oil and gas infrastructure projects,” the company said. The new vector is also associated with the introduction of a steel frame in the construction of multi-storey residential buildings.

Now steel structures are used in development to a limited extent, says Elena Mironova, Director of the Department of Estimated Pricing at Granel Group of Companies. Usually they are used in the construction of warehouses, industrial and small administrative facilities, sports complexes, large parking lots. “Insufficient fire resistance is one of the main reasons that does not allow a dynamic increase in the introduction of metal structures in high-rise construction. The application of special agents on the surface leads to a significant increase in the cost of work,” she notes. The introduction of metal structures can actively expand in industrial construction, in other segments the growth potential is limited, Ms. Mironova believes.

The use of metal structures allows to reduce construction time, says Grigory Vaulin, Chairman of the Board of Directors of Ferro-Stroy Group of Companies (acting as Evraz’s construction partner). “We do not see any barriers to an increase in steel construction. Sometimes we hear objections related to fire safety issues, but there are many proven fire protection options. If we are talking about an office or an apartment with a finish, then the same drywall is both a fire protection and a finishing element,” he notes. “The construction industry is used to certain technologies and methods of construction, but this does not mean that there will be no changes.”

Evraz has been promoting the use of steel structures in construction for quite some time now, says NRA’s Sergey Grishunin. Such objects are built faster, more environmentally friendly and in some cases cheaper than traditional reinforced concrete ones. “The only obstacle is outdated construction standards that do not take into account the current state of the metallurgical industry and the strength characteristics of modern facilities,” the expert notes. According to him, by 2030 the consumption of steel structures in the Russian Federation may reach 10 million tons.

Evgeny Zainullin, Daria Andrianova