According to the report issued by the Mining and Metallurgical Trade Union of Russia (GMPR), positive changes have started to be registered in the Russian ferrous metals sector. In the first half of 2009, the Russian steel industry showed a steady positive dynamic in the production of the main steel products, GMPR says.
In June this year, Russia's iron ore output increased by 4.1 percent, its pig iron production went up by 2.9 percent, its crude steel output rose by 3.2 percent, its finished steel products output increased by 3.3 percent, and its pipes production went up by 11.9 percent, all compared to the previous month. After being almost halved in Q4 2008 compared to the immediate pre-crisis period, production levels in H1 2009 reached about 70 percent of the H1 2008 levels, GMPR states.
At the end of the second quarter of 2009, the Russian domestic and external markets registered a rebound of demand for steel products, conditioned by the replenishment of warehouses by users and the seasonal reanimation of the construction sector. According to GMPR, this allowed many mining and steel producers to increase their capacity utilization level, again reaching pre-crisis output volumes in July.
GMPR notes that after negative financial results in Q4 2008 and Q1 2009, in January-April 2009 the overall profit of the Russian mining and metallurgical sector amounted to Ruble 9.5 billion (approx. $299.8 million).
Accordingly, in Q2 2009 many Russian steel mills registered a net profit in their financial results. Thus, during the period in question, MMK saw a net income of Ruble 8.8 billion (approx. $277.7 million) compared to Ruble 3.9 billion in Q1 (approx. $123 million). NLMK posted a net income of Ruble 22.3 billion (approx. $703.7) compared to Ruble 138.9 million in Q1 (approx. $4.4 million). Mechel's Chelyabinsk Metallurgical Plant saw a net income of Ruble 2.1 billion (approx. $66,300) against Ruble 6.5 billion in losses in Q1 (approx. $205 million). Evraz's ZapSib posted a net income of Ruble 735.2 million (approx. $23.2 million) against Ruble 1.38 billion in losses in Q1 (approx. $43.5), while ChTPZ registered a net income of Ruble 590.5 million (approx. $18.6 million), up 28 percent year on year.
Meanwhile, GMPR considers that the situation at some Russian steel mills, such as ESTAR's Zlatoust Metallurgical Works (ZMZ), continues to be strained. "The main problems of ZMZ are the lack of working capital and the reduced capacity utilization level - it operates four of its nine electric furnaces," GMPR says.