The Ministry of Industry and Trade predicted rapid growth in non-ferrous metallurgy in 2025-2030
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The output of non-ferrous metals in Russia by 2030 may not only recover to the pre-crisis level, but also significantly exceed the figures for 2021. Such a forecast is described in the draft strategy for the development of metallurgy until 2030 prepared by the Ministry of Industry and Trade, which Vedomosti has reviewed.
As Vedomosti reported on August 8, in the current version of the draft strategy for the development of the industry, two scenarios are proposed – a basic one and a conservative (more pessimistic) one. According to the baseline scenario, aluminum production in Russia by 2030 may amount to 5.3 million tons (+35% by 2021), copper – 1.1 million tons (+19%), zinc – 410,000 tons (an increase in 2.1 times), nickel – 280,000 tons (+45%).
It follows from the document that growth will be achieved mainly due to an increase in aluminum exports by 38% to 3.9 million tons, copper – by 50% to 930,000 tons, nickel – by a third to 260,000 tons, zinc – more than 150 times up to 155,000 tons (versus 1,000 tons in 2021). Experts of the Ministry of Industry and Trade are waiting for a drop in the supply of non-ferrous metals abroad in the period 2022-2023. due to anti-Russian sanctions, then they will gradually recover.
The conservative scenario also assumes an increase in production figures compared to 2021 for aluminum, nickel and zinc, but more modest. In it, aluminum production in the country by 2030 will increase by 14% to 4.3 million tons, nickel – by 19% to 240,000 tons, zinc – by 7% to 210,000 tons. At the same time, copper production may immediately decrease by 36 % to 750,000 tons. Under the conservative scenario, aluminum exports will increase by 31% to 3.4 million tons, copper – by 12% to 530,000 tons, nickel – by 22% to 222,000 tons, zinc – 25 times to 25 000 tons
The draft explains that the global aluminum market is now “in the zone of turbulence” due to the risk of another outbreak of coronavirus and possible restrictions due to the pandemic. At the same time, demand in the global copper market “will be determined by the availability of raw materials”, in the nickel market – by the needs of manufacturers of electric vehicles and batteries for them.
The forecast also notes that the capacities in the non-ferrous metallurgy of the Russian Federation are “excessive for the most part of metals” (with the exception of zinc. – Vedomosti). “Therefore, the key direction of development [до 2030 г.] there remains the export of products, which leads to the need to use the entire range of state support measures in this area,” the document says.
The Ministry of Industry and Trade did not respond to a request from Vedomosti.
The non-ferrous metallurgy sector of Russia, unlike ferrous metal producers, was practically not affected by anti-Russian sanctions after the start of the NWO in Ukraine on February 24. Nevertheless, most major manufacturers began to experience difficulties with the supply of raw materials. In particular, the largest Russian aluminum producer UC Rusal encountered difficulties in the supply of alumina due to the shutdown of the Nikolaev alumina plant in Ukraine, as well as due to Australia’s refusal to export raw materials to Russia.
In the first half of 2022, the global copper market first reacted to CBO by increasing prices to $10,730/t in March (+8% versus February). Then prices fell sharply (by 28% to $7,000/t) amid fears of a shortage due to a slowdown in business activity in China and an outbreak of coronavirus infection (Vedomosti wrote about this on August 3). World prices for aluminum and nickel in March of the current year after the start of the CCD also renewed their historical highs, reaching a ceiling of $3,984 per 1 ton (+20% compared to February 23) and $42,990 per 1 ton (+72%), respectively, the price of zinc in March rose by almost 15% to $ 4248, follows from the data of the London Metal Exchange (LME).
In the second quarter of 2022, non-ferrous metal prices in the world fell by 24% and reached the level of March 2021. This was the first quarterly decline in the index since the beginning of the coronavirus pandemic and the strongest since 2008, when the fall reached 30-40%. Current quotations for copper are at $7987/t, aluminum is $2445/t on the LME, nickel is $21685/t and zinc is $3445/t.
Finam analyst Aleksey Kalachev generally agrees that the growth in non-ferrous metal production in Russia can be achieved not through growth in domestic consumption, but through exports.
Global decarbonization processes can provide a multiple increase in demand for non-ferrous metals, he explains. The expert adds that although there is no formal ban on the supply of Russian non-ferrous metals to the EU and the US, “difficulties remain with transportation, cargo insurance, and payment for goods.” “This leads to a shift in the geography of deliveries towards China and the countries of Southeast Asia, which are more loyal to Russia,” he adds.
A stock market expert agrees with this.BCS The world of investments” Dmitry Puchkarev. He says that plans to increase exports of non-ferrous metal products to the east may be hampered by difficulties with logistics. Puchkarev also adds that a strong ruble is putting pressure on exports this year. “But this is a local problem, which in the next year or two may become irrelevant when imports are restored,” he said.
Sergei Grishunin, Managing Director of the NRA Rating Service, is skeptical about the prospects for growth in exports of Russian non-ferrous metals in the coming years. He explains that the forecasts of the Ministry of Industry and Trade are based on the continued increase in demand in world markets. “For example, demand in the aluminum market is mainly formed by China, which in the future may reduce or completely abandon purchases of Russian metal against the backdrop of its own excess production,” he explains.
Grishunin considers the conservative scenario included in the draft strategy to be the most realistic. The interlocutor of Vedomosti in one of the Russian companies in the industry agrees with this. He explains that the recession expected in 2022-2023 is unlikely to be reversed by 2030 due to the slow recovery of domestic demand and exports.
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