Oct 20 2009
Research and Markets has announced the addition of the "Russia Metals Report Q4 2009" report to their offering.
Russia Metals Report provides industry professionals and strategists, corporate analysts, metals associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Russia's metals industry.
Steelmakers in Russia have suffered from a massive decline in orders from the construction and automotive sectors, although output was expected to improve in H209 and a recovery should be well under way in 2010, led by exports, according to this latest Russia Metals Report.
According to data from the World Steel Association (WSA), Russian crude steel output fell 26.8% year-on-year (y-o-y) to 31.83mn tonnes in the January-July period of 2009. Meanwhile, the Russian Federal State Statistics Service (FSSS) reported that the manufacture of basic metals and fabricated metal products was down 24.3% over the period. However, while crude steel production was down 18.4% y-o-y to 5.02mn tonnes in July, it was up 3.1% month-on-month (m-o-m), according to the WSA. The decline in steel output followed trends in industrial production, which fell 14.2% y-o-y in the first seven months of 2009 and 10.8% y-o-y in July (up 4.7% m-o-m). The cuts in output come at a time when average prices are set to fall by 50% y-o-y, leading to a decline in operating margins - despite efforts to cut costs through measures including reining in capital expenditure, reducing the workforce and limiting shifts.
However, Q209 production figures released by Russian steelmakers have encouraged a sense of cautious optimism. Growth in output is being led by exports, which have partly offset the decline in the domestic market. In response, some countries have considered imposing protectionist measures to stop the surge in Russian steel exports, although the authors do not believe this poses a significant threat to the industry. Russian export markets are highly diversified and a smattering of tariff measures is unlikely to have a major impact. The report forecasts a 2.7% rise in exports in 2009 to 29.98mn tonnes, while imports are forecast to fall by a third to 4.11mn tonnes. However, falling prices in external markets will result in the trade surplus narrowing by around 20% to US$12.96bn.
Modest growth in orders and improved financial results prompted steelmakers to resume operations at plants that were temporarily closed earlier in the year. At the same time, new capacity is coming online. In August 2009, a heavy plate mill came online at the Magnitogorsk Iron and Steel Works (MMK). The mill has capacity of 1.5mn tonnes per annum (tpa) and produces plates of up to 4,800mm wide. It is producing pipe-grade material for large diameter pipes for the oil and gas sector as well as material for the bridge construction, mechanical engineering and ship-building industries. By Q309 there were signs that some Russian producers were keen to raise production to pre-crisis levels as demand recovered. The authors do not believe the conditions are right and that pre-crisis levels cannot possibly be sustained. As such, Russian metallurgical companies will struggle to reach market equilibrium. In spite of the signs of a recovery or stabilisation in Q209, the authors still believe that the Russian metallurgical industry will decline in 2009, with crude steel output undergoing a 17.6% contraction to 56.44mn tonnes owing to the state of the economy and serious weaknesses in endmarkets, notably the automotive and construction sectors.
The long-term situation is more worrying in the aluminium industry, despite RusAl's efforts to limit losses and cut debt. A serious accident at a turbine room at the Sayano Shushenskaya hydroelectric plant in mid-2009 has disrupted power supply to two smelters in Siberia, leading to a potential loss of annual aluminium production of at least 500,000 tonnes. RusAl executives have indicated that it could take two to three years for electricity supply to return to normal. While the loss of output will not pose a problem for RusAl while it seeks to reduce output, it will hamper the company's ability to take full advantage of a recovery in the aluminium market and its growth potential will be severely curtailed.
Source: http://www.researchandmarkets.com/