Russian market

Steel market

In 2007, Russian steel production grew at rates ahead of global production. Consumption of finished steel grew by 14% and reached 40 million tonnes.

In 2007, volumes of rolled product deliveries to the Russian domestic markets increased by 8.6%. Export of metal products from Russia decreased by 6% compared to 2006, from 31.4 million tonnes to 29.5 million tonnes. Imports of rolled metal products into Russia grew by 46% compared with 2006, amounting to 6.3 million tonnes. Imports of steel pipes increased by 21% and amounted to 1.6 million tonnes. Growth in domestic consumption was driven by construction companies and the oil and gas industry.

The Russian coal and iron ore markets

Coking coal

Total volumes of Russian coal concentrate production were 48.5 million tonnes. In 2007 Vorkutaugol’s share of overall coking coal production volumes was 11.4%, 0.6% less than the previous year. Vorkutaugol’s share in overall coal concentrate production volumes was 8.4%, 2.1% less than in 2006.

Total volumes of coking coal concentrate consumption in Russia were 42.4 million tonnes in 2007, 4 million tonnes more than in 2006. The volume of export deliveries was 9.9 million tonnes, which is 120,000 tonnes more than in 2006. 86% of deliveries went to integrated steel mills and 14% to chemical plants.

Iron ore

There are 13 Russian companies producing iron ore, the majority of which are a part of the metallurgic business. Russian companies produced 97.9 million tonnes of iron ore in 2007, up 0.6% on 2006. In 2007 volumes of iron ore consumption in Russia were 84.8 million tonnes, 0.5% more than in the previous year.

In 2007, Severstal’s Mining share of Russian production of iron ore was 14.6%, a decrease of 0.3% on the previous year.

The market for metal-intensive industries

Automotive industry

In 2007, the market size was 2.3 million tonnes, down 2% from 2006 levels. The market saw a decline in the production of domestic cars and exponential growth in foreign car production at Russian joint venture automotive companies. Future prospects for this market are linked to both production volumes at the joint venture companies and to the increasing level of localisation of production.

Pipe industry

In 2007, the steel consumption in the pipe market was some 5.6 million tonnes – without seamless pipes – which is 15–18% larger than it was in 2006.

The pipe industry is divided into two segments: producers of pipes for the oil and gas industry and producers of pipes for the public utilities and housing sector.

The oil and gas industry pipe market saw strong demand, with a large number of announced projects for construction of oil and gas pipelines, and by growing competition among the pipe producers.

The public utilities and housing sector pipe market shows demand growth tied to more residential construction. The principal risk for the steel producers is in the growing consumption of plastic pipes.

Machinery building

In 2007 the size of the market for metal products for machinery building was approximately 6.7 million tonnes, which is 7–9% larger than in 2006. The market is characterised by stable consumption growth, especially in railway machinery, handling machinery, agricultural equipment, extracting and metallurgical equipment.

Construction and Steel Service Centres

In 2007, this segment consumed almost 18 million tonnes. The segment grew by 13–14% in comparison with 2006, while construction industry growth was just over 10%. One important growth factor was the implementation of a top priority national project called “Accessible and Comfortable Housing for the Citizens of Russia”.