Novolipetsk Steel NLMK, Russia Oil and Gas
As the Kommersant has found, following Rosneft and Gazprom metallurgical companies have asked not to disclose publicly information. NLMK complained Dmitry Medvedev on the statements of Gazprom that the price of gas in Russia was underestimated and subsidized economy. This, says the owner of NLMK Vladimir Lisin, became an argument for the introduction of US countervailing duties. The Government examines the situation. Gazprom officially promises to continue publishing "objective pricing picture", but most of the statements that caused the Mr. Lisin’s dissatisfaction, disappeared from the monopoly’s website.
Chairman of the NLMK’s Board and owner of the companyVladimir Lisin applied to the Prime Minister Dmitry Medvedev in mid-May with a request to assist in the "exclusion of information about subsidizing the Russian industry, non-market or low gas price level from all public sources". As the letter noted, from 2015 "a new tool of trade combat" is applied against Russian exporters - countervailing investigation, by results of which duties are set on the basis of evidence of state subsidies, received by the exporter.
Next year, Novolipetsk Steel (NLMK) of Vladimir Lisin will change its gas supplier, left Gazprom and signed a contract with Novatek. Perhaps, in conditions of surplus on the market and start of gas exchange trading, NLMK achieved more favorable contract terms than it had with Gazprom. This transaction will allow Novatek to close a part of the gas volumes, which will be free since the next year after the expiration of the contract with Inter RAO UES.
NLMK has signed a five-year contract with Novatek for the supply of gas, the company reported yesterday. The contract amount is 2.8 billion cubic meters per year, it will enter into force from 2016 and will cover "100% of the needs of Russian enterprises of Novolipetsk Steel". Now NLMK has a valid contract with Gazprom. The metallurgical company reported to the Kommersant that under the contract with Gazprom NLMK has the opportunity "to buy 2.6 billion cubic meters of gas per year, but this year NLMK began to actively buy gas at SPIMEX, and "in several months the purchases covered 70% of the needs". NLMK doesn’t disclose the reasons for the transfer to the purchase from Novatek and the contract price, but says that the principle of take-or-pay is not included in the contracts.
Over 200 thousand tons of pipes have been delivered to Yakutia for the construction of Power of Siberia. This is a half of the necessary volume.
Currently 216 thousand tons of pipes have been shipped, this is 49% of the total volume (plan – 439 thousand tons). This winter over 185 thousand pipes will be welded in the Olekminsky district.
The total volume of cargo which will be delivered in the navigation period for the construction of Power of Siberia is 800 thousand tons. The navigation will be over in late September-October.
The cargo shipment is held according to the schedule. The first shipment started in May.
Russian metallurgists reduce steel production: in June they reduced the volume by 4.3% to 5.5 million tons. The market participants explain that at the beginning of the year an abnormal demand was due to concerns of further devaluation of the ruble, caused, including, overstocking. According to pessimistic forecasts, in 2015, the demand for steel in Russia and the CIS countries will decrease by 15%. The production of pipes is growing, but Gazprom has already canceled a number of large tenders.
The production of steel in Russia again began to decline, the data of the Russian Statisctics Committee shows: in June, steelmakers reduced the output by 7.5% to 5.5 million tons. Back in May, the fall made up only 1.6%, and in April there was an increase by 0.6%. By results of the first six months, it was managed to keep the fall at symbolic 0.2% to 34.9 million tons, and rolled products - at 0.6%, to 30 million tons.
Foreign investors are once again lending to Russian companies.
There appeared first signs of significant foreign investment into the Russian capital market, because of the sanctions being in international isolation a year. New deals appear in the segment of foreign syndicated loans actually closed to Russian borrowers last year. And it is not only the fact that instead of Western banks Russian companies borrow from pooling of Chinese banks. For European lenders Russian rates are now so attractive that they are willing to compete for some Russian borrowers with colleagues from China.
Tube producers want advances from the state-owned companies.
Russian pipe producers, unlike the majority of metal producers, not much benefiting from the devaluation can get support from the government. According to "the Kommersant", Arkadiy Dvorkovich instructed ministries to examine the issue of the advance of the mandatory procurement of pipes by the companies owned by the fuel and energy complex by 30%. Currently this practice is applied only by "Gazprom"’s pipeline "The Power of Siberia", and, according to "the Kommersant", the state-owned companies do not want its expansion.
A. Khalikov, the chief analyst of Veles Capital
The ferrous metallurgy states the considerable improve at the steel market in spring and summer. The main reason for that is ruble devaluation, growth in internal demand and reduction in supplies from the Ukraine.
OMK CJSC will supply before August 2014 50,000 tons of oil and gas pipeline pipes for arrangement of the deposit in h. of V. Filanovsky developed by Lukoil in the Caspian sea water area.