Building boom drives up Russian steel demand- Evraz Group

At the SteelOrbis Spring '07 Conference and IREPAS 56th meeting, Ivan Osadchiy of Evraz Group focused on the recent boom seen in steel demand during his presentation on the state of the Russian market. While remarking that Russian steel consumption has been on the increase since the mid-90s, Mr. Osadchiy stressed that the growth observed last year was exceptional. Mr. Osadchiy told his audience that Russian steel demand is dominated by construction and that the recent boom in Russia's demand for construction grades of steel is a direct result of Russia's thriving construction market. In the past year, the Russian government has launched numerous infrastructure projects. In addition to these, a growth in home construction is also taking place and is expected to continue at an annual rate of 10 percent. While Russian and CIS steel construction per capita remains below the global benchmark, this situation is rapidly changing, as construction growth in Russia and the CIS countries outperforms GDP growth in those countries . Mr. Osadchiy pointed out in this connection that as a result of the construction boom Russia's rebar consumption increased by 30 percent in 2006. There was also growth in the sections market, due to strong investment in industrial and infrastructure construction which ensures good demand for H-beams and channels. Meanwhile, Russian demand for angles has softened, as channels are now being used more frequently as substitutes for angles. In 2006, Russian crude steel production grew by 6.8 percent to 70.6 million metric tons. The vanadium business also grew significantly in 2006, as it provides the best strength-to-weight ratio among common engineering materials. Evraz expects that the supply/demand situation in Russia will become more balanced by the mid-term, as additional steelmaking capacity is expected to be launched in '07 and '08. Steel consumption should continue growing in 2007, but not at as fast a pace as it did in 2006.