IronMagazine № 2 (19) 2018 goes online www.metalloinvest.com THE DIGITAL IM Betting on innovative SPEAKS AND MOVES ON You can comment on SBQ Iron Magazine articles online at products WWW.metalloinvest.COM IRON MAGAZINE № 2 (19) 2018 1 №2 (19) 2018 Founder: Management Company METALLOINVEST LLC Editorial office: 28, Rublevskoye Shosse, Moscow, 121609, Russia Tel.: + 7 (495) 981-5555, ext. 7574 Fax: + 7 (495) 981-9992 [email protected] Project Manager 02 | Editor’s notE Alexander Goryunov [email protected] CovEr story Editor-in-Chief 04 | New deal on the steel market Anton Troshin How trade wars are changing the global steel [email protected] market The issue was approved for printing industry on November 07, 2018 16 | Product innovation Circulation: 500 copies A viable method to stay ahead of competitors Printed by Union Print LLC, 2, is to constantly improve technologies. ul. Okskiy Syezd, Nizhny Novgorod, Metalloinvest is developing new steel grades 603022 with high-quality rolled steel products (SBQ) The content of the issue may taking a special place in the company’s not be used without the consent product portfolio of the Editorial office. sEal of quality Audience: 16+ BusinEss plan 30 | Clean steel 20 | Taking customer relations What makes steel producers invest in to a new level environmentally friendly technologies, Key stages of Metalloinvest’s comprehensive encourage care for the environment and how programme for developing sales, improving this affects the quality of steel quality and customer focus in its SBQ business. arChivE 34 | Men of steel Growth path The founders of modern steelmaking, who Publisher: Energeticheskaya str., 16, 22 | Future of steel took up the challenges, made revolutionary building 2, floor 1, pom. 67, room. 1, Development trends in the steel industry, technological breakthroughs and changed the 111116, Moscow, Russia which guarantee producers profit growth and industry forever Tel.: +7 (495) 988-18-06 a successful future in the market vashagazeta.com E-mail: [email protected] ManaGEMEnt Director General: Vladimir Zmeyushchenko 26 | In touch Executive Editor: Vilorika Ivanova Proven methods of customer engagement, availaBlE Editor: Olga Filatova which can help not only to improve the quality Designer: Natalia Tikhonkova on thE of customer service, but also to develop new Production Director: Oleg Merochkin products and technologies app storE Photo: AFP, TASS, East News, AKG, Shutterstock 2 EDITor’s noTE IRON MAGAZINE №2 (19) 2018 3 Steel remains the backbone of global construction and industrial production, but it is competing with other materials, such as aluminium and composites. Due to this competition, steel is looking at ways to improve. The steel industry is on a mission to improve product quality, expanding and diversifying Dear readers! its product lines and developing new grades with This issue of Iron Magazine is a specific set of characteristics for individual special. It is dedicated to the 24th customer needs. Metal-Expo Industrial Exhibition, the main forum for Russian steel- A special place in the steel industry is occupied by workers. The event brings to- high-quality rolled steel products (SBQ), developed gether producers and consumers of steel products from dozens of specifically for use in mechanical engineering, countries to develop mutually-ben- primarily in the automotive industry – Metalloinvest eficial partnerships, find solutions is a leading player in the SBQ market. for improving business efficiency, while reducing production costs This issue of Iron Magazine covers Metalloinvest’s and economic risks. plans to modernise production processes and further strengthen its position on the SBQ market, as well as the latest trends in the global steel industry and the different ways in which steel companies are engaging with their customers. Andrey Varichev, CEO of Management Company Metalloinvest Competition in the market of high-quality steel products is increasing and customer requirements are becoming more critical. In order to win the competitive struggle, we must constantly improve technologies and develop new steel grades for our partners 4 FEATURE IRON MAGAZINE №2 (19) 2018 5 he summer of 2018 brought a new wave of international trade conflicts. In June, the US extended its 25% tariffs on steel imports to products from the EU, Canada and Mexico. From July 19 Tthe European Union imposed its own restrictions on steel imports, applicable New deal to all exporters except those based in countries that are part of the European economic zone. At the same time, US trade relations with China are tenser than ever before. on the steel Metalloinvest experts point out that the biggest uncertainties are not directly caused by the US tariffs, but by the chain reaction of special measures and debates, which they have prompted market in a growing circle of countries and industries. Meanwhile, the use of How trade wars are changing the global concepts such as “national security” to justify protectionism opens a Pandora’s steel market box in international trade. The US has imposed steel tariffs and the EU has introduced quotas and duties to protect itself from the effect of the US action. Trade conflicts, which grew more What other countries will do after acute over the summer, could upset reaching the export ceiling imposed by the balance of power on the global the EU quotas is hard to predict. Further Vasilya steel market and force steelmakers to consequences of the new steel tariffs Plekhanova urgently seek new distribution channels are also unclear. Steel is one of the most conflict-prone sectors of international trade, and upsets in that segment spread quickly to other markets and industries, which will be forced to adjust their demand for steel. How far the ripples will spread remains to be seen. Steelmakers are thinking hard about how they can maintain profitability of steel exports, taking into account the anti-dumping duties and levels of access of foreign competitors to their own domestic markets. The winners in the new environment will be companies that can improve the quality of their products and customise their steel supplies to meet the needs of specific customers. 6 FEATURE IRON MAGAZINE №2 (19) 2018 7 Figure 1. Top-10 steel-producing countries Steel production in Change from Share in world Export in 2017 Country 2017 (mn tons) 2016 (%) production (%) (mn tons) China 831.7 5.7 49.18 108.1 Asia. Production in the region, Steel production Japan 104.7 –0.1 6.19 40.5 without China, grew by 5.5% in 2017, India 101.4 6.2 5.99 10.3 despite the fact that Japan, the USA 81.6 4 4.83 9.2 second largest steel producer in the Here comes protectionism Russia 71.3 1.3 4.22 31.2 world, reduced its output by 0.1%. South Korea 71.1 3.6 4.2 30.6 Indian and Vietnamese Global steel production increased by 5.3% to 1691 million tonnes in 2017, but growth in 2018 is Germany 43.6 3.5 2.58 25.1 steelmakers launched more capacity, reacting to a reduction expected to be just 0.5% (figures from Deloitte, citing the Economic Intelligence Unit). There are Turkey 37.5 13.2 2.22 15.3 different forecasts for 2019: the World Steel Association expects slight growth, while Deloitte sees of Chinese export volumes. South Brazil 34.4 9.9 2.03 13.4 a possible reduction of 0.4%. Korea and Taiwan also contributed Italy 24 2.9 1.42 17.9 to the growth, increasing volumes Source: WSA. by 3.6% and 6.8% respectively. No increase of Chinese exports is According to the World Steel expected this year, so the Economist Association, world steel production Intelligence Unit (EIU) predicts grew by 4.8% (to 1194 million tonnes) production in Asia without China in January-August 2018 compared to grow by 3.8% in 2018. Forecasts with the same period last year. The Over 20% of Chinese for 2019 are more modest (1.5% growth leaders were: growth), although experts see large • China (+5.8% to 617 million steelmaking capacity is potential for greater steel volumes tonnes); from companies in Vietnam and • India (+6.7% to 71.1 million scheduled for closure by 2020 India. The EIU predicts that India will tonnes); increase production by 5% in 2018, • United States (+4.8% to 56.9 million tonnes). China. The Chinese government Figure 2. World steel resolved in 2015 to reduce excess steelmaking capacity by 2020 in production by order to curb negative environmental impacts and improve the financial regions in 2017 (%) state of the industry. The target is to close down more than 20% of capacity and the Chinese government 3 2 Latin Europe (except EU) announced this July that it will America speed up the liquidation of outdated 2 steelmaking facilities. According 6 Middle East to official data, the Chinese CIS have already reduced domestic 1 7 Africa capacity by 150 million tonnes North per year (equal to the combined America capacities of the US, Canada and Mexico). The closures will not affect China’s status as the main global 2017 год supplier of steel (see Figures 1 and 2). At the same time, the Central Bank (%) of China is continuing to devalue the yuan in order to protect its industry, 10 including the steel industry. Growth Europian in prices for Chinese steel will also Union have a positive effect on producers: 19 50 Morgan Stanley expects price rises of Rest of Asia China 7% this year. The Chinese government is targeting a reduction in excess capacity by 2020, with the aim of reducing the industry’s environmental impact while improving its financial situation Sources: EIU, WSA, Delloite. 8 FEATURE IRON MAGAZINE №2 (19) 2018 9 Figure 3.