Metallurgists reported on a decrease in steel smelting according to the results of the first quarter
The largest metallurgists reported on a decrease in steel smelting according to the results of January -Marot. Traditionally, the second quarter is more successful against the backdrop of the active construction season, but this year the seasonal factor may not be realized due to the high key rate of the Central Bank and frosts of most construction projects. Additional pressure factors for the industry in the past quarter were a drop in prices for steel products and aggravation of competition with Chinese steel in foreign markets.
The largest metallurgists reported on reducing the smelting of steel following the results of the first quarter. So, « Severstal » produced 2% less than a year earlier, or 2.8 million tons, according to the company’s reports, published April 22. A slight increase, by 5%, showed the production of cast iron. Saluations of steel products increased by 7%, to 2.7 million tons, mainly due to the segment of semi -finished products, which showed an increase of more than 100%.
Last week about the operating results of the quarter also Reported Magnitogorsk Metallurgical Plant (MMK)reducing the production of steel by 13.4%, to 2.6 million tons, and cast iron by 6.9%, to 2.2 million tons. Sales of metal products were reduced by 11.1%, to 2.4 million tons, and in the segment of high redistribution the fall is much more gentle – by 3.7%. This trend was already observed in the market following the results of the fourth quarter of 2024: the company and analysts associated it, including more active repair work, which metallurgists conduct in 2025, taking advantage of low demand for steel products (See “Kommersant” from February 25).
In total at Severstal and MMK there are almost a third of Russian production of steel. NLMK stopped revealing its operating and financial results since 2022.
Against the background of both low demand in the domestic market and limited export capabilities, as well as falling prices for steel products, the financial indicators of companies were expected to be weak. According to the results of the first quarter, the revenue of Severstal fell by 5%, to 178.7 billion rubles, EBITDA – by 40%, up to 39.3 billion rubles. The free cash flow of the company, to which the payment of dividends is tied, turned out to be negative, amounting to minus 32.7 billion rubles. Against plus 33.1 billion rubles. In the first quarter of 2024. Against this background, as well as in connection with the “situation of high uncertainty in the market,” the company decided not to distribute dividends following the results of the quarter.
According to Rusmet on April 20, the cost of a steel blank dropped to a minimum indicator from the beginning of 2023 – 36.3 thousand rubles. per ton on FOB conditions Black Sea (See “Kommersant” from March 29). Chinese export also continues to exert pressure on world prices. In the domestic market of the PRC, the rolling of the rolling of the rental was sank at the end of the first decade of April to $ 440 per ton. But Russian fleets have already lifted the factory prices for a hot rolled roll in April, and in May they plan to increase through the entire sheet rental sector by 2-4 thousand rubles. For a ton, explaining this by the constant increase in costs, cites the head of the Analytics Department for the securities market of Alfa-Bank Boris Krasnozhenov.
Traditionally, the second quarter in the market was more lively against the background of the active construction season. However, this year this factor may not be realized due to the high key rate and freezing of most construction projects, including in the housing sector (See “Kommersant” from April 7). And this despite the fact that mechanical engineering and automotive industry show stable demand for steel, emphasizes the director of corporate ratings « Expert RA » Maria Kolomiyets.
“According to the results of the first quarter, the smelting of steel amounted to 17-18 million tons, which is 3-4% lower in an annual comparison,” says Ahmed Aliyev BCS investigation. “This fall is primarily associated with a crisis in the domestic market. Historically, the second quarter was more alive, as the construction season began. However, before there were no such record interest rates on the market, so I would be careful about direct extrapolation of past periods. ”
To restore internal prices for steel, at least a factor in reducing the key rate of the Central Bank to 14–16%, says Mr. Aliyev.
It can also help increase state investment in the real sector, construction and infrastructure, says Viktor Tarnavsky, head of the analytical block of Metal School and Sales. While this has not happened, it is worth expecting a further reduction in smelting in the country and reducing the level of power load, the expert is sure. According to his estimates, the worst of all “feel the mini-veins that smel up steel in electricity” (See “Kommersant” from April 18).
Dmitry Orekhov, managing director of the NCR rating agency, notes that, taking into account the foregoing, it is expected to drop the volume of steel production by 5-10% this year and a decrease in steel consumption by 10%.
