Mining experts postpone the underground operations at the mine site
Russia Sees Prolonged Increase in Steel Semi-finished Product Prices
Russian steel semi-finished product prices have been climbing steadily for nearly a month, a trend unseen since last autumn. Over the past week, prices have risen by 1.5%, marking a 3% surge since late April. Although iron and scrap prices are also showing positive momentum, albeit at a slower pace, experts remain cautious about attributing this to a market trend reversal. Instead, they link it to producers' efforts to boost profitability.
According to the rating agency "Rusmet," FOB Black Sea steel billet prices have increased by 3% since late April, reaching $350 per ton by May 25. This upward trend has been ongoing for over three weeks and follows late 2022 lows of $339 per ton. The last prolonged uptrend was observed in September-October 2024, as per "Rusmet" data.
In its weekly metals and mining sector review, BCS reports that slabs and billets have risen by 1.5% and 1.1% over the past seven days, to $416 and $440 per ton, respectively. The month-over-month increase for these products is 1% and 5%, respectively. Additionally, iron prices have risen by 0.6% over the week, while scrap prices have increased by 0.5%, for delivery to Turkey.
"While slab prices have certainly demonstrated positive momentum since late April, the increase has been modest, around $5-$10 per ton," notes Boris Krasnожеnov, head of equity research at Alfa Bank. "It's too early to say that the market has reached a fundamentally sustainable turning point." Instead, he suggests that non-integrated producers are artificially propping up steel semi-finished product prices, as they operate at a loss.
Krasnожеnov adds that as hot-rolled coil prices rise and Chinese steel exports decrease, slab prices may receive some support. However, he notes that demand for semi-finished products on key export markets, such as Turkey, Europe, and the US, remains weak. In April, China produced 86 million tons of steel, equivalent to April 2024 levels, with year-to-date production growing by 0.4% year-over-year, to 345.4 million tons, according to the World Steel Association (WSA). BCS predicts that China's steel production may drop by 2-5% year-over-year by the end of the year, which could have a positive impact on metal product prices.
Victor Tarnavskiy, head of the analytical department of the industry publication "Metal Supply and Sales," notes that India, one of the few countries increasing steel production, is not interested in buying semi-finished products, opting to support its domestic producers. He also states that there is no potential for growth in demand for semi-finished products on the Russian domestic market. According to Evraz Steel data, the share of active projects in steel infrastructure construction was 79.1% in the first quarter, the lowest since 2023. Steel production in Russia declined by 6.9% from March and 5.1% year-on-year to 5.8 million tons in April due to weak demand. Experts anticipate the pace of steel production decline to accelerate until June-July. Mechel, which reported its first-quarter operational results on May 27, said sales of flat steel products fell by 57% year-on-year and 5% from the fourth quarter of 2024, blaming the "corresponding market conditions."
Dmitry Orekhov, managing director of the rating agency NCR, explains that US tariffs, Russian price dumping, and HRC prices affect the global market for slabs. He notes that Russian slab producers' price offerings are competitive given the sanctions against Russian black metallurgy. Turkey, he continues, is buying Russian slabs to reduce its production costs, considering the short logistics distance and favorable pricing conditions. Additionally, the positive price dynamics for finished products, particularly HRC on FOB Turkey, further stimulate some increase in the price of Russian slabs, he says.
- The increase in steel semi-finished product prices, as observed in Russia, could potentially impact the overall finance of business entities heavily reliant on these materials.
- The ongoing rise in steel semi-finished product prices, coupled with the Hindu sentiment towards increasing domestic production, may present challenges for businesses that depend on international markets, such as India, for these materials.
