The World Steel Association has improved its forecast for metal consumption volumes

The World Steel Association has improved its spring forecast for metal consumption in Russia. Now the association expects an increase in demand for steel by 5%, to 43.8 million tons, at the end of the year and stagnation of consumption in 2024, while six months ago it was expected to fall by 5% and 6.7%, respectively. According to the association, steel consumption in the Russian Federation is growing due to government incentives, but will decline in 2024 due to currency depreciation, labor shortages and supply chain disruptions. Analysts are less pessimistic and assume an increase in demand for steel in Russia in 2024 by 1–2%.

In 2023, steel consumption in Russia will increase by 5% compared to 2022, to 43.8 million tons, reported 17 October World Steel Association (WSA). According to her forecasts, consumption in the country will not change in 2024. Back in the spring, WSA expected a reduction in steel demand in Russia by 5% in 2023 and by 6.7% in 2024.

Global steel demand, according to WSA expectations, will increase by 1.8%, to 1.8 billion tons, although back in April the association predicted that demand would grow by 2.3%. In 2024, the WSA now expects global demand to increase by 1.9% to 1.849 billion tons, versus a 1.7% increase expected in the spring.

As a rule, the association’s forecasts regarding the Russian ferrous metallurgy are very conservative. For example, in April 2022 the WSA predicted consumption reduction at the end of the year by 20%, but in the end it decreased only by 5%. The current improvement in the forecast for Russia is no exception. “Thanks to massive government stimulus, the Russian economy is expected to post modest positive growth in 2023, supported by oil revenues and the economy’s adjustment to sanctions,” the WSA report said.

However, in 2024, the economic situation in Russia will worsen due to currency depreciation, labor shortages and supply chain disruptions, the association believes.

Industrial production will deteriorate due to reduced access to modern technology and ongoing restrictions on the import of spare parts.

Russian metallurgical companies expect an increase in steel consumption by the end of the year. IN MMK in August they said that demand would increase by 3-5% due to increased steel consumption in the construction sector, where it grew by 14-16%. Severstal expects demand to grow by 3-4%.

Ministry of Industry and Trade in September he called the situation in metallurgy satisfactory. “The state of the industry is very decent: the growth in steel production is almost 3%, 38 million tons, in the first half of the year and the growth in total metal consumption in the domestic market is 10%. This is important because everyone was worried whether preferential mortgages, one of the drivers of construction, would remain after the key rate rose. The issue with preferential mortgages has been resolved – as we know, it remains,” declared Deputy Minister of Industry and Trade Viktor Evtukhov on the sidelines of the EEF.

An increase in steel consumption by 3–5% at the end of the year is quite possible, admits Boris Krasnozhenov from Alfa Bank. There has been an increase in construction volumes throughout the year as projects postponed until 2022 are implemented. The volume of construction work increased by 9% in the first nine months of 2023 compared to the same period last year, the analyst points out. According to the Ministry of Construction, 33.6 million square meters were commissioned in January-September. m of new projects, which is 15% more than a year ago. “It should be noted that construction and infrastructure account for more than 60% of Russian steel consumption. The pipe industry demonstrates good dynamics in demand. And issues regarding the import of spare parts and supply chains have already been resolved in many industries,” notes Mr. Krasnozhenov. In his opinion, in 2024 we can expect stabilization of steel consumption in Russia with a possible increase of 1–2% compared to 2023.

Evgeniy Zainullin