RUSAL, Russia Oil and Gas
Five Russian companies have appeared in the rating of hundred companies with the most transparent reports among developing countries, made by the international organization Transparency International. The list of the hundred most transparent companies on the developing markets includes Evraz (the 34th place), Lukoil (the 58th place), Norilsk Nickel (the 67th place), Severstal (the 74th place) and UC Rusal (the 92th place).
The outgoing year in metallurgy will be remembered by everyone, first of all, due to events with Mechel. In 2014, the most indebted company in the industry lost most of its capitalization. It was threatened with bankruptcy, default, was asked to sell assets, restructure its debt and convert it into shares. It was threatened with the dismissing of its general director and principal owner of the company Igor Zyuzin from its management - but there are still no specifics on the future of Mechel.
The first problems of Mechel were found at the end of February, when its shares "went" down for unknown reasons, although some analysts suspected that this was due to its debts. The manipulation with the shares was attributed to speculators, and the Central Bank undertook to investigate. But no one then imagined that everything would go so far.
But the company also had positive aspects in the current year, in particular, the sale of assets, and the fall of the ruble allowed it to significantly reduce its debt.
In the first half of Wednesday bidding, the Russian stock market holds trading in different dynamics. Ruble MICEX index slightly grows, and USD RTS index reduces at the background of considerable growth in USD rate versus rubles.
The fall of oil below the key level of $80 per barrel of Brent oil pressures the whole market.
As at 11:43 (GMT+3), MICEX index increased by 0.1% to 1530.28 points, and RTS index declined by 2.04% to 1,032.95, MICEX reports.
After stagnation of 2013, the Russian metallurgic sector has increased production again despite he common negative tendencies in the economy balancing near the zero. In H1 2014, the sector increased by 2.4% compared to 1.2% in Q1 2014.
The rolled steel yield increased by 3.9% including by 4.7% more of sort steel and by 3.7% more of steel plates. Sort steel yield increases mostly at the expense of growth in demand at the internal market by the construction sector. Last year they launched several new electric metal mini-mills producing hardware with total capacity of over 1.5 million tons. Steel plates yield increases at the expense of growth in exports. FTS reports that exports of flat sections made of carbonaceous steel increased in H1 2014 by 5.3% to 4.0 million tons, the highest results for the latest 4 years. Growth in exports is connected with ruble devaluation and political crisis in the Ukraine due to that the Ukrainian metal commodities was partially substituted with the Russian analogues. Due to this reason in 2014 one can observe growth in internal demand for the commodities of the Russian metal plants.
The RF Ministry of Industry and Trade is concerned about the oil reforms.
The tax manoeuvre in the oil industry, proposed by the RF Ministry of Finance to reduce indirect subsidies to the domestic market, may hit the competitiveness of other industries, according to the RF Ministry of Industry and Trade. The reduction of export duties on benzene and petroleum coke will lead to a shortage of raw materials and raise their prices, which will affect not only the petrochemists, but also the metallurgy, including the aluminum industry.
"The Kommersant" has a letter dated September 3rd from Viktor Evtuhov, the deputy head of the RF Ministry of Industry and Trade, to Arkady Dvorkovich, the Deputy Prime Minister, with comments regarding the proposals of the RF Ministry of Finance to amend the Tax Code and the law on customs tariff associated with the "big tax manoeuvre" in the oil industry, at the disposal. The manoeuvre was necessary to increase the revenues and reduce the indirect subsidies to the internal market (see "the Kommersant" dated August 21). The fears of the RF Ministry of Industry and Trade have led to changes in export tariff rates for benzene and petroleum coke. The duty on benzene (raw materials for the petrochemical industry) should be reduced from 66% of the duty on crude oil to 48% in 2015, to 40% in 2016 and to 30% in 2017. The RF Ministry of Finance proposes to set the coke rate no higher than 6.5% of the duty on crude oil. Now it is 66% and is expected to grow to 100% in 2015.
UC Rusal and Gazprom Energoholding have agreed about the sale of the Ondskaya GES in Karelia. The negotiations have lasted for 1.5 years. The Board of Directors of TGK-1 agred on June 9th the sale of the station for 2.1 billion rubles.
The Nadvoitsky aluminum plant is the majority consumer of Ondskaya GES with capacity of 80 MW. In 2007 – 2012, aluminum dropped in price by 14% to $2,000 per ton, and production at Nadvoitsky aluminum plant became unprofitable. The owner was going to close the plant but agreed to maintain production if it purchases the GES and the network. The President V. Putin approved that in spring 2013.
UC Rusal and Rosneft have concluded a contract providing for the supply of coke and natural gas to UC Rusal’s enterprises. The document was signed by UC Rusal’s CEO, Oleg Deripaska and Rosneft’s president, Igor Sechin at the XVIII St. Petersburg International Economic Forum.
The agreement is long-term and provides supply of 2.65 million tons of petroleum coke and up to 12 billion cubic meters of gas at the UC Rusal’s enterprises. Such cooperation creates a guaranteed market of the gas and coke for Rosneft. In turn, the contract provides a stable supply of raw materials for UC Rusal to load its enterprises.
The Russian Government can abandon copper and nickel export duties in 2014, and to establish some other measures for supporting of the metallurgy companies, Vedomosti writes referring to the project of the protocol of the session with participation of the Premier D. Medvedev on November 25.
Under the document, Mr. Medvedev will order to the Ministries of Economy Development, of Finances and of Industry and Trade to elaborate before December 23 the measures for supporting of the metallurgy companies while the era of worsening of the state of affairs.