"Q2 2017 saw the consumption of stainless steel grow 18 % year on year and in H1 2017 it went up 25.7%, with the bulk of the increase coming from imported products," said Analytical Center expert Olga Skvirskaya, speaking at a round table on the prospects of import substitution in stainless steel production in Russia, which was held at the Analytical Center. During the round table the experts discussed the prospects of launching modern stainless still rolling mills in Russia, the barriers to the development of the local market and the potential competitive advantages of Russian producers.
Despite the significant increase of over 16 % in stainless steel production, local producers are still failing to meet the growing demand, Olga Skvriskaya noted. "The increase in total output came primarily in the form of rolled steel produced by the Red October, Zlatoustky and Izhstal plants. In the meantime, the output of flat rolled products actually fell because of the situation at the Chelyabinsk Metal Production Complex," the expert said.
Ms. Skvirskaya also presented the results of a poll of the market participants and industry experts on issues of developing stainless steel production that the Analytical Center conducted in August-September 2017. The expert noted that Russian producers are currently talking about considering diversifying into new market segments. However, there are 2 segments that few respondents were interested in and these were stainless steel slabs and stainless still rolled products.
Profit can only be made at slow production levels if metal scrap is used as the nickel raw material, the expert believes. "There are several advantages to using nickel-containing scrap in the production of stainless steel," Ms. Skvirskaya said. "First of all its production efficiency achieved thanks to a low melting temperature and shorter casting runs." Other advantages that were mentioned include low cost and availability of this kind of scrap in Russia.
"We need come up with a comprehensive solution regarding pricing because in terms of cost our stainless steel cannot compete with imports," said Alexander Semin, head of the ferrous metals, pipes and metal parts production development unit of the Russian Ministry of Industry and Trade. In effect all the civilian industries that use stainless till rolled products import them. "So for the moment our products are only being used by the defense industry that cannot import stainless steel products," the expert said.
The event participants also noted that producers expected support from the State in the form of demand for stainless steel products. In the meantime, Russian producers should focus on production and promotion of innovative products.