Escalation of trade wars will impact Norilsk Nickel's revenue, but company expects to sell all output - senior manager
MOSCOW. June 27 (Interfax) - The escalation of trade wars may affect the revenue of MMC Norilsk Nickel , but the company plans to sell all of its output this year, the company's vice president and head of its sales division Anton Berlin told journalists.
"I hope export volumes won't change. We aim to sell everything we produce. However, revenue may be affected because tariffs ultimately fall on consumers," he said.
Norilsk Nickel's production remains on track with this year's forecast, he said.
So far, the situation hasn't impacted metal prices, as the U.S. tariff moratorium remains in effect.
Some customers have tried to build up inventories ahead of impending tariffs, but industrial companies typically avoid holding more than 1-2 months' worth of inventory to prevent overpaying and losing competitiveness, he said. "Changes don't happen in real time. Industrial companies purchase 70%-80% [of metals] through regular contracts, with the rest bought through auctions," he said.
"It's impossible to currently quantify how international trade flow changes will impact us financially. Half of our sales go to China, and China largely produces for export. It's still unclear what tariffs will apply to this supply chain, where we're at the very beginning, and how this might affect sales," he said.
Norilsk Nickel does not directly supply much to the U.S., having a 15% share in 2022, he said. Asia has become the key market with a 50% share, up from 25% previously. Europe, which previously accounted for 50% of sales, has seen its share of Norilsk Nickel's metal sales drop to 25%. Russia accounts for 12%-15% of revenue.
Overall, metal consumption continues to stagnate, Berlin said. "We're seeing a significant decline in Europe, our former main market. There's growth in China, but only in single-digit percentages - nothing like 20 years ago when China grew at 20% annually. There's some recovery in the U.S.," he said.
The automotive industry, one of Norilsk Nickel's main metal consumers, still hasn't recovered from the pandemic-induced crisis. In 2019, when 97 million vehicles were produced, projections suggested 120 million by 2025, but current forecasts indicate only 91-92 million.
"Tens of millions of vehicles weren't produced during this six-year period, meaning they didn't consume metals. This has significantly impacted the non-ferrous and precious metals economy," Berlin said. Consumer demand has also slowed considerably due to rising interest rates.
