At the SteelOrbis Fall'11 Conference&65th IREPAS Meeting held in St.Petersburg on September 25-27,the ChermetServis Snabzenie General Manager Sergey Labintsev made statements about the company and the scrap market in Russia.
Can you please inform our readers about the operations of ChermetServis Snabzenie and your personal role within the company?What is your company's annual scrap processing capacity?
ChermetServis Snabzenie is one of the largest punters on the Russian market of ferrous metals.The company provides a full cycle of scrap metal recycling,acting as a centralized supplier of scrap to the largest Russian metallurgical enterprises.Shipments of scrap in 2010 amounted to more than 1.6 million tons.Since 2002,apart from the activities of harvesting,processing and sale of scrap,our enterprise has been selling pipes,produced by the largest Russian pipe manufacturers,as well as providing the complex logistics of metallurgical production.
Do you only supply scrap domestically,or are you also active in export markets?
We supply scrap to the domestic market only.We have established strategic relationships with several major Russian consumers,and,according to our strategy,we are not going to export.
How do you assess Russia's measures for limiting scrap exports,such as applying export duty or reducing customs clearance export points for scrap?
As a company focused on the domestic market,we want scrap,which is a strategic resource,not to be exported.
According to Worldsteel figures,volume of Russian EAF capacities have been increasing steadily and this increase is predicted to continue in the coming years.Do you also observe the results of this situation in your business operations?
The growth of steel production in electric furnaces has an impact on our operations.First and foremost,of course,this affects on the steady increase of domestic demand for scrap metal.Hence,it causes the growth of prices and increases competition for volume.Therefore,it became necessary for the government?to resort to such measures as export restrictions.If we look at the international experience,the few countries encourage export of strategic resources.
How do you see the current situation in scrap markets and what is your outlook for the short term?
Today the Russian market is balanced,such situation has been observed quite rarely in recent years.Large consumers secured a good stock of scrap and it allows them to carry out accurate pricing.In future,we see the deterioration of the market due to seasonal factors and increasing rivalry in some Russian regions.
Do you think high trending freight rates are affecting negatively scrap trade from the Black Sea basin?
I find it hard to judge this because we are not connected with the export of scrap.In principle,it is logical that the increase of freight rates makes scrap export less attractive.
Swap contracts have started to cover also scrap as a product?What do you think about scrap futures contracts?
I believe that the futures contracts are a good indicator of the scrap prices.I think,this tool will be interesting to the exporters as a hedge instrument.However,much depends on the technology of trade organization-liquidity and trading volumes.
