Metalloinvest, Novolipetsk Steel NLMK, Severstal

Turkey not to protect itself from Russian steel

Turkey, the largest export market for Russian steelmakers, has decided not to introduce special protective measures against supply of steel products from Russia.

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Metallurgical companies don’t agree to forgive energy companies for delays

For the first time, major steel companies have tried to block the decision of the Government and regulators, that are ready to forgive the energy sector with the late launch of new generation units. As the Kommersant has got to know, consumers didn’t sign the additional agreement to the contract for the supply of power, allowing the Russian-Chinese joint venture of TGK-2 and Huadian to postpone the launch of a heat and power station in Yaroslavl to the end of 2016. Steelmakers are not willing to forgive the joint venture penalties that exceed 1 billion rubles, and would prefer to give up the construction of the heat and power station in principle.
Investors of the building the Huadian-Teninskaya heat and power station in Yaroslavl – joint venture of TGK-2 and Chinese Huadian – may not to receive a consistent postponement of the station launch. In October 2015, the Government approved the postponement of the heat and power station launch, which is built on power delivery contract, from December 31, 2013 to December 31, 2016. Last December, the decision to postpone the joint venture’s obligations was also approved by the Supervisory Board of Market Council (energy markets regulator), but the change of the power delivery contract itself requires additional agreement, signed by all suppliers and consumers of the wholesale energy market. Market Council held the subscription campaign last week, and the organization received formal waivers from four companies - NLMK, Severstal, Evraz and Metalloinvest, the Kommersant’s source in the energy industry reported and two source of the Kommersant in the steel industry confirmed.

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Steel sector promises not to reduce shipment

In the first quarter of 2016, Evraz, “Metalloinvest”, NLMK and “Severstal” will keep ferrous metals shipment volume via the railroad at the same level as in 2015, Interfax reports citing the corporate newspaper of OJSC RZhD.

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Iron ore project in the Far East proves to be unprofitable

The subsidiary of gold company Petropavlovsk iron ore IRC in the Far East has suspended mining at the Kuranakh mine, the company reports. The costs in winter make the operation unprofitable, and IRC decided to transfer the mine in the mood of care and maintenance. The prime cost of the iron ore mining from this mine was $53 per ton by results of the second quarter.
Yesterday, on December 14, ore with 62% content of iron cost $39 per ton, according to the Bloomberg.
"We believe we did everything possible to prolong the economic life of Kuranakh, - executive chairman of IRC Jay Hambro states. - Continuation of the Kuranakh operation will be devastating to IRC".

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The total debt of Russian Steel’s member companies is $34 billion

Russian steel industry has been weakened by significant debt burden, vice president of the nonprofit partnership Russian Steel Igor Khoroshy reported at the meeting of the Coordinating Council on industrial policy in the metallurgical complex, chaired by the Russian Deputy Minister of Industry and Trade Sergey Tsyba.
According to the representative of Russian Steel, in 2013, the ratio of net debt to EBITDA of the member companies was 3.2, which is $34 billion in absolute terms.

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Russian Steel has faced a new competitor, The Union of Steel Smelting Industry Enterprises

The Russian leading transport machine building companies, Transmashholding, The Tractor Plants concern and The United Railway Car Company have announced about foundation of The Union of Steel Smelting Industry Enterprises. The new partnership was announced at the 9th International Railway Business Forum ‘Strategy Partnership 1520’. Besides from the companies mentioned above, the participants in the partnership of the transport machine building companies obtaining their own steel smelting capacities include, Bezhitskaya Steel JSC, Promtractor-Promlit Ltd, Tikhvin Railway Car Building Plant CJSC and Titran-Express TSZ CJSC.
The main task of foundation of the new non-commercial partnership is the forming of the sole technical policy for the steel smelting enterprises of transport machine building concerning the growing demands of the market, the provision of the mass transition to the modern models of cast details for freight rolling stock and protection from counterfeit and antidumping initiatives.

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Metallurgical plants of Russian Steel increase production of finished rolled metal by 11%

In March of 2014, the main enterprises-members of Russian Steel produced 4.7 million tons of finished rolled metal that is by 11% more than in the previous month and by 0.5% more than in March of 2013.
In the first 3 months of 2014, production of finished rolled metal fell by 0.76% as compared with the same period of the previous year to 13.5 million tons.

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Evraz operates without profit the second year in a row

In 2013, Evraz made a loss in the amount of $572 million because of bad market conditions. The company plans to reduce capital investments, to decrease costs and not to pay regular dividends till 2016 at least to remedy the situation. Last year was difficult for all companies in ferrous metallurgy, but some competitors of Evraz were profitable in spite of this.
Evraz of Roman Abramovich, Alexander Abramov and Alexander Frolov (together they have 67.13%) disclosed its financial accounting under IAS today. On the results of 2013, the company proved to be unprofitable - $572 million (against the loss in the amount of $425 million in 2012). The proceeds of Evraz fell by 2.1% to $14.4 billion and EBITDA by 10.2% to $1.8 billion (the EBITDA margin reduced by 12%). Other steel-smelting and mining companies in the country, which reported their results for the previous year, also significantly deteriorated their performances, but made the profit: Severstal made $83 million, NLMK - $189 million and Metalloinvest - $1.08 billion. However, Mechel, which, as analysts expect, will show the loss (in the first 9 months of 2013, the loss was $2.2 billion), and MMK haven’t disclosed their results yet.
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In February 2014, Russian Steel reduced steel production by 8%

Russian Steel,the non-commercial partnership announced the results of the work of its member enterprises in February 2014. Russian Steel reduced steel production by 7.8% compared to the corresponding period of the previous year, and by 3.45 compared to January 2014, to 4.18 million tons. In January - February 2014, steel production reduced by 2.1% to 8.7 million tons.

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In January, enterprises of Russian steel increased production of rolled metal by 0.4%

In January of 2014, enterprises of uncommercial partnership Russian steel increased production of finished rolled metal by 0.4% as compared with January of 2013 to 4.59 million tons, Russian steel reports.

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