Kazakhstan-based mining group Eurasian Natural Resources Corporation Plc. (ENRC) has announced that for 2010 it has greater confidence in ferroalloy and iron ore demand growth from China and other emerging markets.
In addition, although signals remain mixed and short-term prospects are subdued, ENRC sees also signs of stabilization and even some growth emerging in the United States and Europe, whilst the outlook for Russia is better for 2010.
"Going into 2010, conditions for recovery in our main markets now seem to be firmly established, although we recognize that there remain some points of vulnerability in the global economy," reads the company's statement
Even with only a limited recovery in the traditional markets, 2010 could emerge as a strong year for stainless steel production, EMRC said. Although fiscal stimulus packages are likely to be reduced during 2010, and as initiatives such as car scrapping schemes are ended, some recovery in developed world consumption is forecast to continue. "We had said in the past that a sustainable recovery in prices will only be possible when demand results in a significant increase in capacity utilization in the ferrochrome industry. The recent price increases and more confidence in the economic recovery again turned attention to supply side constraints, such as electricity and logistics in South Africa. Overall, with uncertainties remaining for both demand and supply, some volatility can be expected to continue but the overall outlook is positive," said ENRC in its statement.
Meanwhile, ENRC noted that the ongoing industrialization of its traditional markets in northwest China, along with the improved access offered by the new China Gateway rail link in due course, will provide it with further opportunities to develop iron ore sales in China. In 2009, Chinese customers' share of the company's total sales volume increased to 42.9 percent from 20.5 percent in 2008.
"In addition the current improvement in the Russian steel industry is providing us with a recovery in iron ore sales volumes to MMK," added the company. In 2009, MMK accounted for 52.6 percent of ENRC's iron ore division's revenue and for 8.8 million mt of saleable products.
In 2009, ENRC reported a 60.4 percent fall in its net profit to $1.045 billion, a 43.9 percent decrease in its revenue to $3.83 billion, and a 64.9 percent drop in its underlying EBITDA to $1.46 billion, all compared to 2008.