Logistics now constitute up to 40% of the final cost of Severstal products due to the cessation of export supplies to Europe and reorientation to new markets, the company confirms to Kallanish.
“Today, we have a very competitive product, but in the absence of export sales to Europe and forced sales to Southeast Asia and neighbouring countries, logistical costs range from 20% to 40% of the cost of the final product,” Severstal chief executive Alexander Shevelev said at the RBC.TECH plenary session. “Currently, Severstal supplies 80% of its products to the Russian market and 20% goes for export.”
Russian steelmaking capacity is 70 million tonnes/year but the domestic market consumes only 40m t/y, he added.
According to Shevelev, the main task is to find sales markets for products that cannot be sold domestically. “We need to effectively export about 30mt of products, otherwise we will have to significantly stop production and dismiss personnel, and this is an increase in costs with all the ensuing social consequences,” he explained.
Other significant obstacles for Russian steelmakers are limitations to modernising technology due to Western sanctions against Russia, limited seaborne exports and the strong rouble, Shevelev observes.
Severstal previously said that the main blow to its sales structure for high value-added products occurred due to the loss of Europe as a key sales market – over 30% of sales went there in 2021 (see Kallanish passim).
Severstal supplied galvanized steel and thick sheet to the European market and now predicts it will probably need from 3-5 years to restore the share of deliveries of products for export.
It noted nevertheless that Russian steel consumption in 2022 is expected to decline by only 2-4%. Severstal considers the construction of housing and industrial facilities based on a steel frame to be the most promising direction in Russia.
Svetoslav Abrossimov Bulgaria
