Lifting of export duties on pig iron, rod expected to boost exports, production - Russian Industry Minister

MOSCOW. Dec 25 (Interfax) - The lifting of export duties on pig iron and wire rod will enable steelmakers to increase exports and boost production, Industry and Trade Minister Anton Alikhanov told Interfax.

However, he confirmed that steel production is expected to drop slightly this year.

"We expect an increase in export shipments of domestic steel products after the elimination of export duties, which will spur production. Secondly, the further growth of demand on the domestic market, including from our machine manufacturers, should also affect production," Alikhanov said.

About 40% of Russia's ferrous metal products are exported, so the industry faced a disruption in logistics chains, he recalled. When exports dropped, record domestic demand became the main driver of the recovery and growth of steel production. Amid the growth of demand from the construction sector, which accounts for 65% of shipments, steel production increased by more than 13% or 5 million tonnes last year, Alikhanov said.

Domestic demand remained generally strong in the first half of 2024, but Chinese steel products entered the world market, which was already in surplus. "We got competition with large amounts of cheap rolled steel, plus the exchange rate-linked customs duties had a negative impact on the export volumes of Russian steel products," Alikhanov said. This is why the government decided in the summer to lift the duties on pig iron and wire rod until December 31.

"In the second half of the year, these factors were compounded by the macroeconomic situation on the domestic market, due to which business activity decreased in the construction sector, so now we have a decrease in steel consumption on the domestic market," Alikhanov said.

"Against such a backdrop, production, of course, will also not show growth. Nonetheless, we hope that for the year steel production will not decrease by much compared to last year's record," the minister said.

He said in November that the Industry and Trade Ministry was forecasting Russia will produce 73 million tonnes of crude steel this year and that risks may arise as the construction sector cools and mortgage lending rates increase.

Russia produced 76 million tonnes of steel in 2023, so output could fall 3.9% this year, according to the ministry's forecast. The ministry said in March that steel output might rise 1.3% in 2024 after it grew 5.3% last year.