International credit ratings agency Standard & Poor's (S&P) has announced that it has lowered
Russia-based steelmaker
NLMK's long-term corporate credit rating to 'BB+' from 'BBB-', with the outlook being stable.
S&P stated that the downgrade decision was based on the weakening prospects for global
steelmaking and a conservative assessment of the country risk for
Russia. The agency said that
NLMK is indirectly exposed to low steel capacity utilization globally and especially in Europe. S&P expects iron ore prices to fall further, against overcapacity in China and softer demand growth from the same country.
The ratings agency does not see a ratings upside, since it would require material improvement in steel and iron ore industry conditions, or Russian country risks, which is not anticipated.
According to
NLMK's statement, "The steel product market is currently experiencing a difficult period. In the short term, this will affect expert outlook for the sector. However, the fact that the market has been sluggish for over twelve months could act as a catalyst for the recovery of the sector through the closure of inefficient production facilities."
NLMK does not expect S&P's decision to have any significant impact on the company's operating plans and financial performance.