By the end of 2022, steel production in Russia decreased by 7%. This is less than the projected before decrease by 15%. Experts differ in their estimates of the recovery of steel output in 2023.
According to recent data from the World Steel Association (WSA), steel production in Russia in 2022 decreased by 7.2%, reaching 71.5 million tons. Total global production amounted to 1.8 billion tons, which is 4.2% less than in 2021. Among the top 10 largest steel producers, only India (5.5%) and Iran (8%) managed to increase production.
The decline in steel production in Russia is due to the effect of sanctions, primarily the EU embargo on Russian metal, a shortage of components and the disruption of supply chains.
At the same time, the decline in steel production in Russia turned out to be lower than predicted. In April of 2022, WSA expected a 20% drop in steel consumption, but in October it improved the forecast to a decrease by 6%.
The relative stability of consumer industries was achieved, among other things, due to measures taken by the state. In the construction segment, the decline was about 4%, and in the mechanical engineering segment — 18% year-on-year. According to Kommersant, the main driver in the rolled metal market in 2022 was the fuel and energy sector, where consumption growth amounted to 28% and was associated with the implementation of Gazprom's largest investment program over the past five years.
Experts believe that the state of the residential real estate market will play an important role for the dynamics of metal consumption in 2023. The large-scale reduction in metal production in 2022 was managed to be stopped, among other things, due to the record housing commissioning in Russia — 102.7 million sq. m. This, on the one hand, indicates a high need for new housing, but creates risks of decline from the high levels achieved, on the other.
Factors that may affect the recovery of output in 2023 are the devaluation of the ruble and the rise in steel prices, according to BCS financial expert Kirill Chuiko. Boris Krasnozhenov from Alfa-Bank believes that in 2023 we should not expect an increase in production, since a number of large infrastructure projects have longer horizons, where the most metal-intensive phase is beyond 2023. Consumption growth, according to the analyst, can be expected on the horizon of 2024-2025.
Sourse — Kommersant
