Sergey Ushakov, deputy general director for sales at Magnitogorsk Iron and Steel Works (MMK), estimates that the level of metal consumption in Russia may not recover to pre-pandemic levels until mid- 2021.
Metal consumption in Russia decreased by 8.4pc in the first seven months of 2020 compared to the same period in 2019 Ushakov said in a media statement. However, consumer orders have been gaining momentum after reaching their lowest point in Q2 2020.
Ushakov noted that the trend is tied to state support for the economy, especially through the financing of national projects, support for mortgage lending, renewal of railway systems, industrial machinery sector, and stimulation of the automotive industry.
Large metal buyers such as chain metal trading companies, regional traders, and metal service centers comprise 50-60pc of MMK’s volumes while the other 40-50pc is sold to independent companies. According to Ushakov, the balance provides for healthy competition in the market. MMK sells 75pc of its steel in flat form and 25pc in long products.
MMK plans to support competition in the steel market by increasing sales through its MMK Trading House and independent companies.
The Russian steelmaker sells to smaller companies and end-users, who require lower volumes and credit facilitation, through its trading house, which has a warehouse network of 30 distribution sites in Russian steel-consuming regions and five sites in Kazakhstan. Ushakov also mentioned the potential for the entity to take advantage of opportunities for import substitution.
MMK also plans to grow sales by focusing on new types of metal products and higher value-added services next year.