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Research on importance of energy products for Russian steelmakers

In 2012 Metal Expert Consulting examined the role energy products play for the key steel producers.

The largest steelmakers of Russia produce a great part of electricity they consume, running their own generating facilities. For instance, MMK produces up to 75% of electricity it needs. Companies having no electricity generating facilities of their own make purchases in the wholesale electricity market OREM.

According to our estimates, it is in early 2000s that regional steelmakers made their major investments into installation/development of generating facilities. In the recent years, producers based in the region have not announced any new large-scale projects concerning energy production. However, optimization of the costs is among strategic tasks most steelmakers will aim to fulfil in the medium term.

Electric steel production is very electricity intensive. Specific consumption of electricity per 1 t of melted electric steel is 300-400 kW/h, Metal Expert Consulting estimates. This is 3-5% of electric steel production costs (the electricity situation at MMK, ChMK and NSMMZ is taken as an example).

Electricity costs mills incur while making steel products (longs and flats) are even lower at 1% of the aggregate inputs. The share of electricity in the total (through) cost of rolled steel production is 2.5-4% for companies equipped with EAFs.

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