The largest metallurgical companies in Russia reduced steel production by 2.4%, or 1.5 million tons, by the end of 2020, follows from the company's reporting and calculations of Kommersant. In total, NLMK, MMK, Severstal, Evraz, Metalloinvest and Mechel smelted 60.8 million tonnes of steel against 62.3 million tonnes in 2019. Evraz of Alexander Abramov, Roman Abramovich and Alexander Frolov, NLMK Vladimir Lisin, MMK Viktor Rashnikov and Alexey Mordashov's Severstal have officially disclosed their production results.
Evraz reduced production by 1.3% to 13.6 million tons. Steel production at the holding's American assets decreased by 15.1%, which was caused by a drop in demand for oil and gas pipes due to a decrease in oil and gas prices during the pandemic. NLMK increased production by 1% to 15.8 million tonnes. MMK's smelting amounted to 11.6 million, which is 7.1% less than in 2019. The company attributed this to the planned reconstruction of the 2500 mill and the slowdown in business activity due to the pandemic. Severstal cut production by 4% to 11.3 million tonnes. Its performance is affected by the reduction in electric steel production due to the sale of a long-range mill in Balakovo.
Metalloinvest and Mechel have not yet reported on the results. Metalloinvest told Kommersant that steel production at enterprises by the end of 2020 increased by 2%, to almost 5 million tons, which became possible as a result of the completion in 2019 of the reconstruction of electric furnaces at Ural Steel. Mechel reduced production by 3% in the first nine months of 2020. If the company maintains its momentum, it will produce 3.5 million tonnes of steel by the end of the year.
NLMK reduced sales in home markets, which mean Russia, the EU and the United States, by 6%, to 10.7 million, due to a decrease in supplies to the US market and sales of long products in Russia. Export sales rose 17% to 6.8 million tonnes on the back of increased exports of pig iron and billets.
The share of Severstal's sales in the domestic market decreased by 5% to 60%. This is due to the weakening of demand in the domestic market in 2020, as well as the sale of the long-range plant in Balakovo, which was mainly focused on sales to Russian customers. Evraz reported an increase in exports of semi-finished products by 6.1%. This is due to an increase in the share of export sales of square and round billets in the product portfolio amid falling demand in Russia due to the COVID-19 pandemic.
At the same time, in the fourth quarter of 2020, the demand for steel in the world increased sharply, and now prices for metal products have reached multi-year highs. As MMK writes in its report, due to an increase in world quotations for metal products in the fourth quarter, there was a sharp rise in prices on the Russian warehouse market.
Of the ten largest producers, China, Russia, Turkey and Iran managed to increase their output. China's growth amounted to 5.2%, to just over 1 billion tons, Turkey increased production by 6%, to 35.8 million tons, and Iran - by 13.4%, to 29 million tons. By the end of 2020, Russia became the fourth country in terms of production after China, India and Japan.
According to Ayrat Khalikov, executive director of the Gazprombank Center for Economic Forecasting, the main factor that allowed Russian metallurgists to overcome the crisis with minimal losses was the improvement in export opportunities starting from the second quarter. The expert notes that in the USA, China and the EU, due to quarantines, scrap collection has decreased. As a result, steel smelting decreased more than the demand for metal products. In these conditions, the countries began to increase imports, which allowed Russian metallurgists to redirect excess volumes to the world market.
