Russia : In Q2, ferrous metal made a profit

In the second quarter, Russian steelmakers were able to show good financial results against the background of the still weak global demand for steel and raised prices. According to analysts, the massive reduction of costs, a fall of raw materials’ prices and the low exchange rate of the ruble helped to the companies. But Russian metallurgical companies traditionally have strong positions on the domestic market, which may tighten up in the next year, and as for foreign markets – they will face competition from local producers and China there.

Yesterday, Evraz of Roman Abramovich, Alexander Abramov and Alexander Frolov (who control 68.3% of the shares) reported for the first six months - the last of the major Russian steel companies (only Mechel of Igor Zyuzin will report in October). By results of the first six months, the companies of the sector were profitable, excluding Severstal of Alexei Mordashov. But it would reflect a profit in the amount of $426 million, if it didn’t take into account the non-cash loss in the amount of $1 billion from the sale of American assets and the negative effect of foreign exchange ($121 million). For the first time since the first quarter of 2013, MMK of Victor Rashnikov made the profit - it made up $159 million in the second quarter ($80 million in the first six months). Yesterday, Evraz announced a symbolic profit in the amount of $1 million, but the last time the company was profitable in 2011 ($453 million).