VVPS (Volgo-Vyatsk Industrial Supply Co.) – outlook for the future

Corr. – Mr. Alexey V. Orlov here with us today and he has kindly agreed to give an interview and share his opinion on some vital topics concerning the Russian stainless steel market. Mr. Orlov, would you tell the readers in brief about your company?

A.O. Our company ‘Volgo-Vyatsk Industrial Supply Co.’ was established in 1999 in the city of Nizhny Novgorod (Russia). The main activity is service-aided supplies of stainless steel grades. Since 2004, the company has been an official dealer of Steel Group ‘Mechel’. In addition to supply of home-made produce, we import flat-rolled stainless steel products from EU countries, Brazil and China.


Corr. What kind of stainless steel products do you offer to your customers?

A.O. We supply a wide range of stainless and special steel products including HR and CR, tubes, long steel, wire and welding materials. We trade both austenitic and ferritic grades. As a result of 2006, our sales volume hit 8000 tonnes and we are planning a considerable increase in trade volumes in 2007.


Corr. How do you estimate the change in consumption of stainless steel in Russia over the recent years?

A.O. I think the consumption of stainless steel has been growing stably over these years. The number of orders placed with our company indicates an apparent increase in demand for HR stainless steel products.


Corr. What might be the key reason to such an increase?

A.O. Primarily what we see is the general invigoration of Russia’s economy, in the first place, because of vast fundings from the state government for the realization of large projects in the sectors of machinery, power engineering, ship building, oil and gas production, and construction. In addition, there are active renovations going on at chemical and petrochemical enterprises.


Corr. Nonetheless, the per capita consumption of stainless steel in Russia remains still at a low level. What do you think keeps back the growth of stainless steel consumption in Russia?

A.O. One of the predominant factors is the low staff proficiency level along with inferior management running at Russian enterprises. This is the matter with both suppliers and consumers. The former have low supply range while the latter have limited requirements for product mix and its quality. In addition, there are some problems with the substitution of stainless steel grades. Often the grades certified for use according to technical documents are no longer being produced or do not meet the world’s up-to-date standards as well as they are not required on the market. A general result to it – a manyfold price rise. The problem remains the issue of the day since the major share of consumed stainless steel is being imported.


Corr. By the way, over the recent years the EU dumping investigation, initiated by Steel Group Mechel, has been talked over a lot. What is your estimation of the investigation run?

A.O. I believe there is no need to fight against imports; rather Russian producers should concentrate on bettering the quality of their products and services. There is enough of making no headway. I think it is high time for creation of metal service centers. By the way, it is our principal task for 2007. Now we are looking for foreign partners to launch the project and would be glad to consider any proposal on their part.


Corr. Do you think that metal service centers in Russia are really in need?

A.O. Yes, there are, indeed. Some Russian companies are taking actions towards setting up their own service centers. The question is where such a center will be erected. I believe building a metal service center in the city of Nizhny Novgorod has many positive aspects such as a high concentration of end-users along with the convenient geographical location and the availability of proficient staff.


Corr. What is your appraisal for the development trends of the Russian stainless steel market for 2007?

A.O. Most likely, the price for stainless steel will become stable in the third quarter of 2007. The consumption will keep on rising but not so fast as in 2006. A major increase will be the result of realization of state-initiated invigorating plans in the sectors of power engineering, aviation etc. We hope for the accomplishment of these plans and that stainless steel suppliers will ready to cope with the demand on the part of end-users.


Corr. Thank you very much for being with us today. We wish good luck for your plans in 2007.


The key issues concerning the future of the Russian stainless steel market will be discussed at the International conference ‘Prospects for the development of the Russian stainless steel market’ that will take place in the city of Chelyabinsk (Russia) on March 22, 2007.

The detailed information can be found on http://chelyabinsk.ussa.su/eng