New market study, "Russia Metals Report Q2 2011", has been published

New Materials market report from Business Monitor International: "Russia Metals Report Q2 2011"
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* Steel
* Aluminium
* Tpa
* Russian
* Smelter
* Construction
* Lipetsk
* Furnace
* Metals
* Ladle

* Industrial
* Manufacturing
* Energy

* Massachusetts - US

April 24, 2011 - PRLog -- With Russia possessing a healthy stock of its own raw material resources and energy, Russian metals producers are set to become global cost leaders in production, although over the medium term, growth in output will largely serve the domestic industry.

In 2010, Russian steelmakers have largely made up for the collapse of production in 2009 caused by the worldwide economic crisis. Crude steel output was up 13.9% year-on-year (y-o-y) to 66.96mn tonnes, recovering most of the decline witnessed in 2009. Steel-maker Severstal says that Russian demand for flat products was back to pre-crisis levels in 2010, while demand for long products was showing a slower recovery at 70% of 2007-2008 levels.

Growth in raw materials has been strong. At the same time, increasingly sophisticated domestic downstream industries will flourish, providing a captive market for Russian steelmaking. Russian finished steel production grew 10.1% y-o-y to 57.8mn tonnes in 2010. Steel pipe production was up 35.8% y-o-y to 9.1mn tonnes, making it the most dynamic segment in the steel sector thanks to the growth in the country's pipeline infrastructure. One of the most important end users of Russian steel, the automotive sector, saw passenger car output soar due to various government-supported schemes and heightened consumer confidence.

BMI forecasts a return to pre-crisis levels in Russia's steel industry in 2011 with output and consumption rising to new highs with long products set to increase their share of the market. Steel margins are expected to stabilise in 2011 as the market undergoes more restocking activity and is lifted by increased demand. As they are highly vertically integrated, Russian steelmakers will be better equipped than many rivals to absorb raw material price inflation, although there is a downside risk that rises in product value will not keep up with costs. In Russia and the CIS, steel demand is estimated to increase by around 8% in 2011, supported by infrastructural investment, pipeline developments and a revival of residential construction.

Overall, BMI expects Russian crude steel production to grow 6.8% to 71.54mn tonnes in 2011 and hot-rolled steel production to increase 7.8% to 53.48mn tonnes. The increase will be led by export growth rather than domestic demand, with semi-finished and finished exports set to rise 16.2% to 23.63mn tonnes while imports will decline 4.1% to 4.86mn tonnes, thereby reversing the decline in the trade surplus seen in 2010. While the rate of growth would disappoint some producers who had been banking on double-digit growth, we anticipate a fairly stable upward trend in output over the rest of the forecast period to exceed 94mn tonnes by 2015, bolstered by strong export growth, solid domestic demand and capacity expansion. Our long-term market outlook is bullish, with finished steel consumption reaching 45.01mn tonnes by 2015, an increase of nearly 38%. Growth will be driven by both exports and healthy consumer demand, with residential construction growth set to pick up over the period, generating demand for long products while growth in automotive capacity will support flats. BMI anticipates 6% longs product growth in 2011, accounting for 55% of consumption.

Domestic aluminium production is set to follow the trend seen in the steel industry, as industrial demand recovers and exports grow. Around 600,000 tonnes per annum (tpa) of capacity was idled as aluminium prices dropped below the cost price of US$1,950 per tonne. With aluminium prices forecast at an average of US$2,550/tonne in 2011, the global market is tight enough for RUSAL to be confident of bringing more capacity back online and offsetting slow growth at home with export growth. In 2010, RUSAL's output at its Russian operations totalled 3.95mn tonnes, an increase of 3.5% y-o-y, while its aluminium foil and packaging production volume increased by 17% to 81,400 tonnes. Its Irkutsk smelter benefited from the commissioning of potline 5 in April 2010, which reached full capacity in July 2010 and remained at 100% capacity throughout H210. Meanwhile, the No.1 Novokuznetsk aluminium smelter (NkAZ), which was mothballed in March 2009, was brought back to full capacity in April 2010.

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Tags:Steel, Aluminium, Tpa, Russian, Smelter, Construction, Lipetsk, Furnace, Metals, Ladle
Industry:Industrial, Manufacturing, Energy
Location:Massachusetts - United States
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