The armature is getting cheaper: why prices are falling

By the beginning of June, the prices for the armature fell to the level of the end of 2022. The growth of demand from the construction sector expected by the market was not realized, despite some revival in the individual construction segment. The cost of the reinforcement can decrease by another 5–7%, and recovery in the segment is expected no earlier than 2026–2027 and only in case of a decrease in the key rate.

The cost of reinforcing rolling by June 8 fell to 36 thousand rubles. For a ton, which has become a minimum since the end of 2022, according to the Rusmet rating agency. Prices in the segment continued to fall after a slight positive hesitation in the first week of June.

The negative conjuncture in the reinforcement segment is preserved, despite the outlined positive trends in the steel market. According to Chermet Corporation, in May, steel production in the country increased by 5.3% in a monthly comparison, to 6 million tons (See “Kommersant” from June 11), and the prices for slabs at the end of last month for the first time in a long time showed positive dynamics (See “Kommersant” from May 28).

Traiders counted on the activation of reinforcement consumption from the beginning of the construction season (See “Kommersant” from March 12). But, notes the managing director of the rating agency of the NCR Dmitry Orekhov, the demand in the segment remains weak and the volumes of reinforcement sales do not reach last year’s levels. According to him, this is due to adverse trends mainly in the construction of apartment buildings against the background of a high cost of money in the economy.

According to NKR forecasts, in the coming months, metallurgists are likely to reduce prices by at least 5-7% due to the excess of demand over demand.

According to Mr. Orekhov, the situation may change for the better if the monetary policy will continue to soften, and investments in the construction sector are activated, including from the state in terms of infrastructure.

Boris Boris Krasnozhenov, head of the analytics department for the securities market, says that the only segment where some revitalization is observed remains individual housing construction. Also, according to him, there is export potential in Russian varietal rental, but insignificant. “In the export direction, the price of a reinforcement of 12 mm is preserved at about $ 520 per ton. At this level of prices, the current ruble rate and scrap prices, Russian exporters working on electric arc furnaces can earn about $ 30-50 per ton, ”the analyst counted. But, notes Mr. Krasnozhenov, while the demand for varietal rental in Turkey and Egypt looks relatively stable, and with the onset of hot months (July -August) weakening can be expected.

The trend for low consumption of steel structures will be preserved at least until the end of summer, the managing partner of the Ferro-Stroy Group and Evraz Steel Grigory Vaulin is sure. “The reduction in the key rate by only 1 percentage point is unable to fundamentally affect the situation. On the one hand, customers who make out installments are slightly activated a little in the calculation for the subsequent profitable transition to a mortgage. On the other hand, project financing is still very expensive, ”he explains. According to Mr. Waulin’s forecasts, industrialists in conditions of serious competition and low demand will have to attract customers with a further decrease in prices, which in the coming months can fall to the level observed in the pandemic.

Perhaps a more positive situation in this market will develop in 2026–2027, when a systematic reduction in the key rate will continue and new preferential mortgage programs will be introduced, which are now actively discussed, says Elena Lelikova, the procurement director of the A101 Group of Companies. In the basic economic scenario, according to the forecasts of the Central Bank of the Russian Federation, the lower rate of the rate by the end of the year can be 18.8%. Upon decrease in the rate, all banking products are activated, including the issuance of project financing and targeted production loans, and not just mortgages, which, in turn, has a positive effect on all development processes, in particular on requests for reinforcement, adds the partner of CommonWealth Partnership Pavel Yakimchuk.

Polina Trifonova, Daria Andrianova