May 31, 2019 / 10:27 AM / 4 months ago

NLMK scrambles to supply U.S. plants, Lisin flags Russia's Chinese imports

LIPETSK, Russia (Reuters) - Russia’s largest steelmaker, NLMK, has had to scramble to supply its U.S. operations after a 25% U.S. tariff imposed last year disrupted its shipments of steel slab from Russia.

“At the moment we do not deliver Russian slabs there. At the moment we buy Brazilian slabs and we partly buy U.S. slabs,” CEO Grigory Fedorishin said, adding the company is struggling to source enough material on the U.S. domestic market

“Now we live in the market, pretty much. We sit down every month or two and start deciding from scratch where we’re going to source (steel slabs),” he said.

With the U.S. lifting tariffs this month on steel and aluminum imports from Canada and Mexico, Fedorishin said NLMK would also search for steel slabs there.

NLMK, whose request for an exemption from the U.S. restrictions was denied in April, had previously said the cost of the tariffs could force it to close its U.S. operations, which consist mainly of two steel mills in Pennsylvania and Indiana.

But Fedorishin said the company was currently committed to the U.S. market: “We’re looking very carefully at our strategy to see how to make it effective.”

He said NLMK expects global steel prices to gradually decline, with weak steel consumption in Europe and slower-than-expected economic growth in China.

“My forecast is that prices on metal will continue to fall. They will reach some sort of level when raw materials become too expensive... And then I think raw material prices will begin to fall too,” he said.

CHINA

Vladimir Lisin, NLMK’s controlling shareholder and Russia’s second richest businessman, said Moscow ought to look at better regulating imports too, citing Chinese metalware as an example based on quality and dumping concerns.

“Some barriers need to be considered,” Lisin said. “The whole world is doing it,” he said.

Lisin told reporters on Thursday the U.S.-China trade war - that has seen the U.S. impose tariffs on $200 billion in Chinese goods - would have a neutral effect on Russian steel overall.

“It’s not our war. It will bring neither positives nor negatives,” Lisin said.

“Ultimately, it’s not going to be long-term. Sooner or later they will agree on something,” Lisin told reporters in Lipetsk, central Russia, where NLMK’s production facilities are based.

Reporting by Polina Ivanova; editing by Polina Devitt and Jason Neely

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