As the last quarter of the year is at its mid-point, domestic steel consumption in Russia, particularly in the construction sector, has dropped significantly. One of the reasons is the seasonal weakening of activity, and also sanctions-related financial issues and the lack of spare parts, specifically in the machinery segment. Earlier this month, Severstal, one of the largest Russian producers, reported it estimates the drop in construction demand at the end of 2022 to be in the range of four percent to 32.9 percent. The overall negative situation and gloomy prospects for steel consumption in Russia are having a negative effect on the spot market. Over the past two weeks, local rebar prices have dropped, naturally affecting the domestic scrap situation.
In the domestic market in Russia, rebar prices from the mills have dropped by RUB 3,500/mt ($35/mt) since early February to RUB 42,500/mt ($585/mt) CPT in the northern region, SteelOrbis has learned. The local retailers dropped their offers by RUB 2,000/mt ($15/mt) over the same period, down to around RUB 41,000/mt ($565/mt) CPT. “Domestic construction has considerably weakened due to seasonal and sanctions-related reasons,” a Russian seller said. In the southern region, no firm rebar offer has been reported as it seems the suppliers are avoiding offering openly. However, some local buyers have reported several indications at RUB 40,000-42,000/mt ($540-580/mt) ex-works/ex-warehouse. It is noteworthy, according to sources, that some of the mills based in Russia’s southern region started using ex-Belarus square billet several weeks back and are barely or not at all utilizing their crude steel capacities. Moreover, these producers may therefore offer lower prices for steel rebar. Rebar exports from Russia remain scarce and only in North Africa has there been talk about $550-560/mt FOB offers.
Lower demand rates in the construction, which is the key consumer of steel products in Russia, have been affecting local scrap prices. Mills’ purchase price levels have dropped by around the same amount as rebar over the past two weeks and prices range within RUB 17,500-20,000/mt ($289-330/mt) FCA/CPT depending on the region. The higher end of the range is seen mainly in the southern part of Russia, though the lower end is reportedly also available for ex-Ukraine scrap cargoes, which are being illegally supplied from the occupied territories in the country.
$1 = RUB 60.6