Posted on 13 Nov 2018
Russian vertically integrated steelmaker and miner Severstal sees global fnished steel demand growth slowing from to 1.9% in 2019 from its earlier estimate of 2.1%.
The 1.9% growth its now expects translates to 1.67 million tonnes, Kallanish notes.
Overall, despite major demand downturns in some areas, Chinese output cuts and the on-going global demand growth will lead to the global capacity utilisation rate returning to 2012's 78%, for the first time this year, head of corporate strategy Maxim Semenovykh told the audience at Severstal's corporate investor day last week.
Although a major slowdown of demand in Turkey this year has had a knock-on effect on some of the corresponding markets and producers, Severstal has managed to redirect most (66%) of its exports to Northern and Central European markets, with 15% being sold in the CIS, 11% in Middle East, North Africa and Turkey, 4% in NAFTA, and 2% in both Latin America and Asia.
Increasing protectionism and trade restrictions borne by the US' section 232 import tariffs remain a significant challenge, and enable fragmentation of the market with stark price differences emerging. Severstal says it is well positioned to weather the situation, as it has lowest of all CIS suppliers EU export duties and advantageous logistics.
But the domestic Russian market continues to disappoint, with demand growth estimated at 1% in 2018-2019, and GDP, industrial production and household consumption all set to decrease in 2019 by -0.5p.p. to 1.3%, -0.6p.p. to 2.4% and -1p.p. to 1.6% respectively.
Severstal sees construction sector demand staying level in 2019 after falling -2% in 2018. Automotive demand will rise by 5% in 2019, having risen 9% this year, while heavy machinery manufacturing demand will fall -4% in 2019, having risen 7% in 2018. Demand from large-diameter pipe manufacturers will increase by 10% next year, following a 15% rise in 2018.
Severstal says Russia is bound to go through slow, 1%-per-year demand increases for the next five years, but it will accelerate after 2023 on the back of major government infrustructure spending and projects and energy sector demand.
