Steel price growth will stop in three months - Severstal

Severstal predicts that the rise in world steel prices will continue for about three more months, says CEO Alexander Shevelev.

“I believe that the shortage in the steel market will soon lead to higher prices,” says Shevelev. “However, sooner or later the market must balance: the deferred demand will end, the supply will react to the rise in prices. Most likely, this will happen on the horizon of three months. "

Indeed, prices have jumped and have now reached nearly 10-year highs, Shevelev notes. He attributed the growth to several factors, the main of which are good demand in China, high prices for raw materials, low inventories against the background of the fact that there were expectations of new blocks. Another important factor, he said, is the unprecedented low rates on bank deposits in Russia and in the world.

“In conditions of devaluation, people have no other choice but to invest in purchases - housing, cars, household appliances, which logically leads to an increase in demand and, consequently, steel prices,” concludes the CEO of Severstal.

When asked about a proposal by Russian pipe producers to introduce much higher export duties on scrap, he said the situation was difficult.

“Metallurgical enterprises are experiencing a serious shortage of ferrous metal scrap, because many companies have not fully formed their winter stocks, and the shortage of steel scrap has already caused scrap prices to rise by more than 25% in the fall, while prices continue to rise,” Shevelev said. ... "Any government action that restricts the export of scrap metal can help stabilize the situation."

The loading of the pipe division of Severstal was not completed in 2020 due to a decrease in market demand; at the moment it has been reduced by -30% -50%, he notes.

“Taking into account our export plans and the fact that our Izhora Pipe Plant won the tender for the supply of 320 thousand tons of LDP for Gazprom, we see that in 2021 we will be able to ensure almost 100% capacity utilization.”