Fitch’s outlook for Russian steelmakers is positive for 2020, supported by producers’ strong profitability and financial positions, as well as healthy domestic demand.
Fitch foresees Russian GDP growth expanding towards 1.9% in 2020 from an estimated 1.2% in 2019 on the back of higher government spending and looser Central Bank monetary policy. Healthy domestic demand coinciding with major maintenances at several mills has pushed domestic premiums to record high levels. However, margins have already started to normalise on higher imports and overhaul completions.
With large infrastructure projects spending to only start supporting the industry after 2020, Fitch has forecast low single-digit level domestic growth in 2020, the credit rating agency tells Kallanish.
Steelmakers are seen as retaining their robust performances in 2020. However, considering export trade barriers in many regions, competition in the export market is likely to intensify in trade-free jurisdictions.
Exemption from safeguards for export of semi-finished products may not be enough in Europe, for instance, as the bloc is looking to introduce a carbon border adjustment tariff. This could potentially affect blast furnace-route-manufactured semis, Fitch notes.
