2. Consumption of steel products in
Russia
According to the Program of strategic development of metallurgical industry of the Russian
Federation till 2015 (approved by the Government in May 2007) consumption of steel
products in Russia is expected to increase in 2015 by 53%.
Consum ption flat products in Russia, m m t Consum ption long products in Russia, m m t
30 30
25 25
20 20
15 15
10 10
5 5
0 0
2003 2004 2005 2006 2015 2003 2004 2005 2006 2015
Source: Metallcourier, Minpromenergo RF Source: Metallcourier, Minpromenergo RF
3. Russia steel production
Crude steel production in Russia in 2006 was over 70 mln mt. Since 2002 average growth
rate of Russian steel production is 3.7%.
EAF production in 2007 will reach 19 mln. Mt. According to the forecast of the Russian
Government EAF steel production is expected to increase to 25 mln. Mt. by 2015.
Steel m aking by process in Russia, m m t
90,00
80,00 BOF EAF OH
70,00
60,00
50,00
40,00
30,00
20,00
10,00
0,00
2000 2001 2002 2003 2004 2005 2006 2007 2015
Source: IISI, Rosstat
4. Structure of rolled steel
production and sales
The main items of Russian steel export are slabs and billets. Share of semifinished
products is about 50%.
Structure of rolled steel production
and sales 2006, M tons
35,0
30,0
8,2
25,0 5,8 Slab export
Squares export
20,0 4,0 9,6
Rolled steel export
15,0 Domestic sales
10,0 16,8
14,2
5,0
0,0
Long Flat
Source: Metall-Courier, GTK RF
5. Russian steel product shipments
In 2006 Russia produced 58 mln. mt. of finished steel products. 49% were exported.
According to optimistic scenario of the Government forecast In 2015 production of finished
steel products is expected to reach 76 mln. Mt. Export tonnage will drop by 2 M t. but its
share in total output will change from 50% to 35%. The share of semis in export will also
decrease.
Russian steel products shipm ents, m m t
90
80 Export
Domestic market
70
27,0
60
27,8
27,9
50 29,0
28,3 28,9
40 29,5
30
49,6
20 40,1 43,6
31,7 35,1
25,2 29,9
10
0
2005 2006 2007 2008 2009 2010 2015
Source: Minpromenergo RF
6. Continuous casting in Russia
In 2006 the share of continuous casting was 67%. By 2015 it will exceed 90%. Home scrap
amount shall drop.
Continuous casting in Russia, m m t
90
80
70
60
50
40
30
20
10
0
2003 2004 2005 2006 2015
Source: Metallcourier, Metalloinvest
7. Steelmaking raw materials
structure
Due to increase of steel production and changes in steel production technology structure
(BOF, EAF, OH) the demand for steel making raw materials in Russia will raise. It should be
mentioned that scrap collection in Russia during the last 15 years was higher than
consumption of steel products.
Russian charge m etallics structure, m m t
100
90
80
70 46
60
44
50
40
30
39
20
32
10
8
0 2
2006 2015
Source: Minpromenergo RF, Metalloinvest DRI/HBI Scrap Iron
8. Russian scrap export
Within the next 3 years export of scrap from Russia will continue to decrease and it will
drop to 1-1.5 mln mtpy.
Scrap export from CIS, m ln. ton Russian EAF steel production and scrap
18
export from Russia, m ln. ton
20
19
18
16 Scrap export
17 EAF steel production
16
14 15
14
13
12 12
11
10
10
9
8
8 7
2004 2005 2006 2007 2004 2005 2006 2007
Source: CRU Source: Rosstat, CRU
9. Russian scrap resources
Due to changes in Russian steel industry the structure of scrap origin by source will
change. Certain increase in industrial scrap will not compensate decrease of home scrap
generation and obsolete scrap collection.
Russian scrap resources, m m t
45
40
35 12
7
30
25 9 12
20
15
10 21 19
5
0
2006 2015
Source: MAIR, Metalloinvest Old scrap New scrap Home
10. Net steel scrap trade on the
world market
There is no reason to expect that the volume of the global scrap market will increase in the
nearest few years. Unless China turns into exporter of scrap.
Scrap international m arket, m m t
70
60
50
40
30
20
10
0
2002 2003 2004 2005 2006
Source: UN
11. Pig iron international market
According to the UN statistics international pig iron trade has been growing during the last
5 years. According Russian official forecast pig iron production in Russia is not going to
increase. By 2015 pig iron output in Russia is expected to drop by 2-3%.
Pig iron international m arket, m m t
18,0
16,0
14,0
12,0
10,0
8,0
6,0
4,0
2,0
0,0
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
12. World DRI/HBI production
After a relatively long period of stagnation DRI/HBI production now is booming. During the
next 4 years global HBI/DRI production will grow by 60%. Only relatively small amount of
additional material will be supplied to the market. The most part will be used for
steelmaking on the spot.
World DRI/HBI production, m m t DRI/HBI international m arket, m m t
100 9
90 8
80
7
70
6
60
5
50
4
40
3
30
20 2
10 1
0 0
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2010* 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Source: Midrex * forecast Source: ISSB, UN
13. Russia on the World SRM
market
After 2010 Russia will stop massive export of steel scrap
Russia on international m etallics m arkets, 2006 Russia on international m etallics m arkets, 2015
45% 50%
40% 45%
40%
35%
35%
30%
30%
25%
25%
20% 39% 44%
20%
15%
15% 30%
10% 10%
17% 17%
5% 5%
0%
0% 0%
Pig iron Steel scrap DRI/HBI Pig iron Steel scrap DRI/HBI
Source: UN Source: Metalloinvest
14. Metalloinvest DRI/HBI shipments
By 2015 Metalloivest will supply to the world market 5 mln. Tpy of HBI.
M etalloinvest m erchant DRI/HBI shipm ents, m m t
6
5
4
3
2
1
0
2006 2007 2008 2009 2010 2011 2015
Source: Metalloinvest
15. Structure of Metalloinvest
Holding, 2006
Metalloinvest
Iron Ore Products Steel Products
Lebedinsky GOK Ural Steel
Mikhailovsky GOK OEMK
Saleable Material Production Volumes
Pellets 18,2 m t Pig Iron 2,5 m t
Concentrate 16,2 m t Steel 6,3 m t
Ore 2,5 m t Rolled Products 5,2 m t
HBI 1,0 m t
16. Main Targets of Metalloinvest mining
To increase the share of higher value added products
(HBI) in the sales mix
To save production costs
To improve product quality
To unify management technologies and processes
To introduce advanced technical and solutions
To realize efficient energy saving program
The principal strategic target of the Iron Ore Division
is to increase the production of
HBI by 2015 to 8 mtpa
16
17. Technical Development of
Metalloinvest Iron Ore Division
Iron Ore Division Development Strategy
2.8 m tons of
2015 briquettes
8 m tons
of 5.2 m tons of
briquettes
briquettes
Estimated HBI production
2006 2008 2015
1.0 m tons 2.5 m tons 8 m tons
LGOK – 100% LGOK – 100% MGOK – 35% LGOK – 65%
17