Russian steel demand likely to decline 12% in 2015

MOSCOW (Scrap Monster):The latest report published by the Russian Steel Association, the domestic demand for finished steel products by the country is likely to post significant decline during 2015. The crude steel production by the country may also decline when compared with the previous year.

The domestic demand is likely to drop by 11.5% on yearly basis in 2015 to 40 mt, in comparison with the total demand of 45 mt during 2014. The projected drop in demand will be significantly higher when considering the fact that domestic demand had dropped only 1.4% from 2013 to 2014. However, the mills are unlikely to implement production cuts. Rather, the mills may seek to increase exports and find new markets for their products to offset the decline in domestic demand.

The country’s crude steel output is likely to drop by almost 3% during the year. The report forecasts Russia’s crude steel production during 2015 at 69 million tonnes in comparison with 71 million tonnes during 2014. The decline is mainly attributed to the declining steel demand in the country and rising economic worries.

Citing data from Worldsteel Association, the automotive sector steel demand is likely to witness sharpest decline. The steel demand from the sector is likely to tumble almost 15% year-on-year. The steel demand from plantmaking and engineering sector is likely to decline by 10.2%. Also, the association foresees 8% drop in demand from domestic construction sector in the country.

The exports of finished steel products during the entire year 2015 may increase 8% to 27mt when compared with the exports of 25 mt in 2014. On the other hand, finished steel imports to Russia are likely to drop to 4 mt this year from 5mt during 2014.

The report also states that EAF-based production will see sharp decline during 2015. Open-hearth production is expected to fall to almost half. On the other hand, steel production through basic oxygen route is likely to remain flat over the year.