All news
The builders behaved in a non-constructive manner
Companies and experts say demand in the metal construction market is falling. This trend is linked to high central bank interest rates, which are forcing investors to cut investments in industrial and infrastructure projects and increase stocks of steel beams in warehouses. Last month, finished product production fell by 18.1%, and the industry is expecting a difficult fourth quarter.
Evraz Steel's statement says that there is a decline in demand in the metal structures market. According to the results of the third quarter, compared to the second quarter, the labor hygiene coefficient (calculated based on the strength of metal in industrial and infrastructure facilities in the Russian Federation and neighboring countries) increased by 2.4 percentage points to 85.4%. However, Evraz Steel notes that growth is inherently inertial and has a tendency to slow down. From September to August, this figure fell from 86% to 85.8%.
"This points to a slight cooling of demand in Russia due to the recent increase in interest rates by the central bank, which has noticeably affected small and medium investment projects, mainly in the trade and industrial sectors. Some of them investors prefer a pause," the report says. Kommersant's sources in other large metallurgical companies confirmed this.
"We expect the fourth quarter to be very difficult as clients put development projects on hold due to expensive loans," he said.
Dmitry Pukhnarevich, head of the Evraz project solutions sales department, notes that the accumulation of steel beams in the company's warehouses is an indirect sign of the refrigeration market. "When the market was in full swing, products were often delivered directly from the production site to the buyer. "Now we see how the Beam market is becoming saturated." According to him, large strategic projects in the Russian Federation, including mines and infrastructure, continue to actively consume metal, especially in the Far East. These projects are provided with long-term financing and do not depend on the current financial situation, Evraz notes.
Steel companies declined to comment on the record. Russia produced 4.5 million tons of finished steel in September, down 18.1 percent from the same period last year, according to preliminary data from Chermet. Over the first nine months, production fell 5.3 percent to 46.7 million tons. Severstal said in August that the situation would remain uncertain until the end of the year, given rising interest rates, labor shortages in various sectors of the economy, and the end of preferential mortgages.
In fact, steel production and project volumes are falling, largely due to lower exports, but domestic consumption is also slowing, says Maxim Khudalov, chief strategist at investment firm Vector Capital.
In his opinion, the positive dynamics of demand in the first half of the year should not be misleading, since consumers at that time tried to take advantage of preferential mortgage benefits. According to analysts, metallurgists are beginning to feel the high rates at which banks are attracting funds as a disruption to the country's investment dynamics.