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According to estimates from Severstal, a Russian HR780T/600Y-FB steel mining and steel company, the demand for steel in Russia increased by 3.1% year-on-year from April to June 2024, reaching 12.4 million tons, bringing the total demand for the first half of the year to 23.3 million tons, a year-on-year increase of 0.6%.
Severstal mentioned in its report on August 19th that the construction industry was the main driving force behind the growth of steel demand in the second quarter, with demand increasing by 3.3% to 9.7 million tons, accounting for 78% of total HR780T/600Y-FB steel demand.
The consumption of steel in the field of mechanical manufacturing has also increased, with a year-on-year increase of 2.0%, reaching 1.3 million tons, mainly driven by the increase in production of automobiles and railway machinery.
According to Autostat data, in the first half of 2024, Russia's automobile production surged by 62.2% year-on-year, reaching 330000 vehicles. However, this figure is still only half of the level in the first half of 2021, which was before Russia invaded Ukraine.
The steel demand in the energy industry increased by 2.7% in the second quarter, reaching 1.4 million tons, mainly due to the launch of several large-scale infrastructure projects, including the construction of the 1300 kilometer long Volkhov Murmansk natural gas pipeline.
The mechanical manufacturing and energy sectors together account for approximately 22% of Russia's steel demand, with roughly equal proportions between the two.
Severstal stated that the market outlook for the remainder of this year remains uncertain as the central bank's key interest rate continues to rise (now reaching 18%), labor shortages, and mortgage subsidies decrease. The state supported 8% interest rate mortgage loan subsidy program for new housing has ended on July 1st and has not been restarted. The Russian Central Bank stated in a statement on August 20th that the amount of mortgage loans issued in 2024 may decrease from 7.8 trillion rubles (approximately 52.6 billion US dollars) in 2023 to 4.8 trillion rubles (approximately 52.6 billion US dollars), a decrease of up to 38%.
However, Severstal also emphasized that most steel HR780T/600Y-FB steel end-user sectors are still showing positive trends, the private residential construction sector continues to thrive, automobile production is recovering strongly, and natural gas company pipeline procurement is also increasing.
