Most Russian steelmakers are preparing to roll back their production in order to cope with the consequences of the global financial crisis, which has created a huge imbalance between supply and demand in the steel industry. As a result of uncertainty in the global financial markets, many end-users of steel are holding back from purchases, thereby pushing steel demand down to minimum levels on the one hand and causing steelmakers' stocks to shoot up on the other.
So far plans to cut production by 10-15 percent have been confirmed by two Russian flat steel producers, namely Magnitogorsk Iron and Steel Works (MMK) and Severstal. The confirmed production cuts of these steelmakers will lead to decreases in monthly capacities from about one million mt to about 850,000-900,000 mt for MMK and from about 1.3 million mt to 1.1-1.2 million mt for Severstal.
Meanwhile, if most Russian steelmakers cut their production by 15 percent, the country's average monthly finished steel production volume may decline from the current 5.0-5.5 million mt to 4.25 - 4.7 million mt.