In 2009 the Russian steel producer Severstal expects a 25 percent decrease year on year in Russian domestic steel demand, Severstal head of strategic planning Andrei Laptev said at the 15th CRU steel conference in Vienna.
According to Mr. A. Laptev, the domestic automobile sector may be the hardest hit in 2009, with demand forecasted to decrease by 70 percent year on year.
In addition, Mr. Laptev said that the Russian steel industry was affected by the crisis, as its largest consumers, the automobile and construction sectors, decreased their orders. However, Severstal is expecting an improvement in domestic steel consumption as early as the second quarter of 2009, while a recovery is expected to be felt in the second half of the current year.
The Russian steelmakers have been able deliver a big part of their production to the export markets because the ruble depreciated 50 percent from its peak last year and many large Russian steelmakers have their own raw materials, meaning they were not exposed to last year's surge in annual raw material prices for the fiscal year ending March 31, 2009, added Mr. Laptev. Russian steel export currently account for 65 percent of total Russian steel production, up from less than 50 percent of total Russian output in 2008, he said.
Moreover, Mr. Laptev said that he expects the economic crisis will reshape the structure of the Russian steel industry, with many of the country's open-hearth plants to be closed, due to their inefficiency and relatively high pollution levels. Open hearths account for 20 percent of Russia's production capacity and 40 percent of Ukraine's steel production.