Estar pins hopes on rise in Q2 Russian demand

Estar is planning to boost production levels back up to 60-70% of capacity in the second quarter of the year in anticipation of rising domestic demand, company sources told MB.

Estar, part-owned by oligarch Vadim Varshavsky, cut production levels to around half across its nine Russian production sites as demand dropped and customers struggled to pay for material, the company told MB at the beginning of December.

Steady demand for billet, angles and channels at home and abroad have kept production levels steady, while demand for other key products such as tube and pipe remains low, according to company sources.

“We see demand improving domestically,” said the source, “and we have seen orders from the Middle East, China and Southeast Asia.”

Estar was considering acquiring Amurmetal in the far east of the country back in September, according to market sources, potentially bringing the group’s global capacity to 4-5 million tpy. Estar has crude steel capacity of 2 million tpy and produced 1.45 mln tn of finished product in 2007.

Estar bosses are confident they can respond quicker to the volatile sales environment and take quicker advantage of increasing demand due to their EAF-based business model, sources added.

“Our mini-mills were constructed close to transportation systems and they have good connections to scrap,” said the source. “Mini-mills are more flexible and reactive to the market; it’s easier to lower output and then to refocus.”

The company has introduced a four-day working week alongside a programme of cost savings.