Steel consumption has dropped significantly in Russia in the past months due to the heavy international sanctions applied against various companies and imports of certain products. The Russian automotive sector has as expected been among the first domestic sectors to be hit since it was clear that a lot of production would be impacted by a lack of foreign spare parts and technologies.
In April, Russia witnessed a record-low light vehicle production of 19,900 units, down 6.8-fold year on year, according to the domestic statistics. In addition, the figure for April this year is 53.1 percent lower compared to March. In the trucks segment, production decreased by 30.43 percent year on year to 12,300 units.
The sanctions applied against Russia due to its invasion of Ukraine have impacted local automotive production in a critical way. The segment stopped receiving imported spare parts and consumables, on which it had been heavily dependent. In addition, a lot of companies have left the market in Russia, while the instability of the currency exchange rate has affected pricing negatively. Overall, in the January-April period this year Russian automotive producers manufactured 264,000 vehicles, down 47.4 percent year on year. Various segments of the market fixed different percentages for the decrease, while none of them saw positive dynamics. The month of March set a 15-year negative record for local automotive sales, which dropped by 43 percent to 78,900 units.
The constant weakening of local automotive production in Russia, coupled with the similar situation in other sectors of the local economy, including construction, may result in higher volumes of flat steel exports from Russia, despite sanctions-related restrictions. In particular, some of the companies might decrease their utilization rates for coated and cold rolled steel and try selling more of hot-rolled materials. For now, Turkey and Asian countries are considered to be the target markets, according to the latest sales information. However, a lot of market sources believe production cuts in June would be a more probable scenario.