Posted on 04 Jun 2019
NLMK's investment strategy for its US assets is ready to be implemented. It is only a question of time when it is to be carried out, company chairman Vladimir Lisin said during a media briefing monitored by Kallanish.
"NLMK invests where the market is: we controlled part of the US slab import market, and were planning considerable investments into product quality improvement and expanding product range,” he said. “But since the sanctions and import duties happened, we became spot buyers of slab, and currently we do not consider such investment to be economically viable. But it is fine, we can wait until the relationships are sorted out.”
Since Washington implemented a blanket 25% import duty on all steel products a year ago, NLMK turned from importing captive Russian slab to sourcing slab in the merchant market, mainly from Brazil. But in the last two weeks, since Canada's and Mexico's import duties were provisionally cancelled, NLMK started looking at purchasing slab from these two North American countries.
"It was clear that the Brazilian [slab] quota will expire by 1 July, and having a shortage of supply will lead to higher prices in the US domestic market, making domestic US producers (re-rollers) much less happy," Lisin observed. He added that NLMK is unlikely to be re-applying for an exemption and will monitor the situation instead, holding off the planned investment of $400-600 million until it becomes economically viable.
Meanwhile, the timing of the US slab predicament has been beneficial for NLMK, as it is undertaking blast furnace and converter upgrades, removing around 2 million tonnes of crude steel from its output this year. "We were sending around 2 million tonnes of slab to the US per year, which we now buy in the spot market, leaving us with just 1 million tonne of extra slab to sell," said NLMK ceo Grigory Fedorishin.
