What to expect in 2013?

Next year is unlikely to bring significant relief to steel producers in the absence of visible points of economic growth, which could boost demand, and due to the overcapacity in steel production. The global financial crisis has predetermined decline in investments and therefore slump in demand and reduction in prices on steel, which led to excess steel-production capacity. At the moment about a quarter of the world’s capacities are excessive (about 450 mln tons of 1,95 bln tons). A number of companies have already started making cutbacks – mainly high-cost smelters located in countries with no access to cheap raw materials, where demand on steel products has decreased.

When we add the growth of iron ore and coal markets, and high employee expenses, the margin narrows. And steelmakers are forced to work in these conditions. Another trend – import reduction. Reorientation of commodity flows, import substitution and localization of domestic markets happens in all countries. Steel is becoming a local product. In these circumstances when markets are closing on themselves, product quality, transportation and logistical costs have come to the fore. Overall these trends indicate the need to focus on control over production costs, and on growth opportunities on the local markets since it is getting harder and harder to enter foreign markets.

Dmitry Baranov, Vice President of Sales at NLMK, presented this viewpoint during the round table with the participation of company management – members of Russian Steel, which was organized by Metal Supply & Sales in the run-up to autumn Moscow Metal Week. Find more about opinions on current metallurgical industry issues expressed by executives of such companies as NLMK Group, MMK Group, Severstal, METALLOINVEST, Evraz, Mechel, KOKS Group, and TMK in November edition of Metal Supply & Sales Magazine, which will be in print this week and will be widely represented at Metal-Expo (13-16 November, All-Russian Exhibition Center).