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New Market Research Report: Russia Metals Report Q1 2011

New Materials research report from Business Monitor International is now available from Fast Market Research

FOR IMMEDIATE RELEASE

 
PRLog (Press Release) - Feb. 3, 2011 - Russian steel output growth was impressive in 2010 and the recovery is likely to be sustained in 2011, supported by a healthy domestic market, according to this latest Russia Metals Report from BMI.

In 2010, Russian crude steel output was up 12.5% year-on-year (y-o-y), to 67.4mn tonnes. Steel capacity utilisation level was around 88% by end-2010 and finished steel output grew by around 11% to 57.8mn tonnes, according to BMI estimates. Domestic steel consumption grew by around 11.2% to 31.2mn tonnes in 2010. In January-October 2010, Russia's rolled steel product exports amounted to 24.8mn tonnes, up by 5.5% y-o-y, while its imports reached 4.21mn tonnes, up by 52.7% y-o-y. The narrowing steel trade surplus demonstrated that growth was led by domestic consumption, with GDP growth of around 3.5% in 2010. Similarly, output strengthened towards the end of the year as GDP growth hit 4.7% y-o-y and industrial growth reached 6.7% y-o-y in November 2010. The government projected 8.3% industrial growth in 2010 as a whole.

Production growth was supported by capacity expansion. In September 2010, NLMK commenced production at a second 4mn tonnes per annum (tpa) ladle furnace at its Lipetsk site. A similar complex was opened at Lipetsk in March 2010. The total capacity of the two ladle furnaces amounts to approximately 8mn tpa, with total investment of over RUB3bn. As part of its production upgrade NLMK is planning to commission two more ladle furnaces with total capacity of 4mn tpa at the Lipetsk production site in 2011, ensuring that growth in consumption and exports are covered by domestic facilities. In total, these new facilities will be able to process about 12mn tpa of steel. Meanwhile, NLMK is building a new mini mill in the Kaluga region that will be capable of processing all scrap steel generated in the Moscow region. Capacity would be 1.5mn tpa and the project would cost more than US$1.5bn.

Despite a mixed performance among different producers, there is widespread confidence that 2011 will see a continuation of strong growth. BMI believes consumption will grow 12.5% y-o-y to 35.1mn tonnes in 2011, thereby prompting a 12.0% rise in crude output to 75.5mn tonnes. Our long-term outlook is also bullish, with consumption reaching 45mn tonnes and output set to rise to 92mn tonnes, shored up by capacity expansion and export growth. However, construction growth will be slow amid a low level of housing starts with longs steel products continuing to struggle to recover. BMI anticipates 6% longs product growth in 2011, accounting for 55% of consumption. Although Russia won the bid for the 2018 FIFA World Cup, construction activity for the rebuilding and construction of 14 stadia is unlikely before 2013. When it does, it should help support longs demand, although by then BMI anticipates a stronger recovery in demand for housing.

Aside from restocking, infrastructure construction, shipbuilding and automotive production are leading growth in steel output and consumption. However, consumption volumes are still 15-20% below pre-crisis levels and Russian production is still down by 10% on 2007 levels. The failure to follow Asian producers in a quick return to pre-crisis levels is in large part due to the relatively late onset of government support for the industry. While Russia is now well on its way towards recovery, government support in Asia is now waning and as such the Russian steel market can expect to outperform global peers in terms of growth over the short term. Nevertheless, exports will be constrained by a slowdown in global growth rates, particularly in China, forcing Russian producers to depend more on the domestic market for recovery. BMI believes the late onset of the government recovery programme should help offset the effects of the external downturn.

Domestic aluminium production is set to follow the trend seen in the steel industry as industrial demand recovers and exports grow. In H110, UC RUSAL reported its total global aluminium output grew 1% y-o-y to just under 2mn tonnes, with Q210 output up 5% compared with Q1. Assisting its growth in output was the completion of the commissioning of potline 5 at the Irkutsk aluminium smelter and restarted production at RUSAL's No.1 Novokuznetsk aluminium smelter (NkAZ), which was mothballed in March 2009 before being brought back to full capacity in April 2010. Aluminium output is set to grow as capacity increases. RUSAL has finalised financing for the completion of the 600,000tpa smelter at the Boguchanskoye Energy and Metals Complex (BEMO) and the 750,000tpa Taishet Aluminium Smelter, which is likely to come onstream in 2013.

For more information or to purchase this report, go to:
-  http://www.fastmr.com/prod/111595_russia_metals_report_q1...

About Business Monitor International

Business Monitor International (BMI) offers a comprehensive range of products and services designed to help senior executives, analysts and researchers assess and better manage operating risks, and exploit business opportunities, across 175 markets.  BMI offers three main areas of expertise: Country Risk BMI's country risk and macroeconomic forecast portfolio includes weekly financial market reports, monthly regional Monitors, and in-depth quarterly Business Forecast Reports.  Industry Analysis BMI covers a total of 17 industry verticals through a portfolio of services, including in-depth quarterly Country Forecast Reports.  View more research from Business Monitor International at http://www.fastmr.com/catalog/publishers.aspx?pubid=1010

About Fast Market Research

Fast Market Research is an online aggregator and distributor of market research and business information. We represent the world's top research publishers and analysts and provide quick and easy access to the best competitive intelligence available.

For more information about these or related research reports, please visit our website at http://www.fastmr.com or call us at 1.800.844.8156.

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Fast Market Research is an online aggregator and distributor of market research and business information. We represent the world's top research publishers and analysts and provide quick and easy access to the best competitive intelligence available.

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Industry:Industrial, Manufacturing, Energy
Tags:steel, tpa, aluminium, construction, smelter, metals, russian, investment, lipetsk, furnace
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