Severstal forecasts strong 2011, eyes capacity increase

The Russian steel and mining company Severstal has said that in the first half of 2011 it expects the steel market to remain strong as a result of high raw material pricing and steel product restocking.
 
The improvement in steel margins is likely to stimulate increased steel output globally. "As a result, in the second half of the year we expect steel and raw material prices to moderate, while production volumes remain high with average capacity utilization staying below 80 percent against a background of solid demand growth," Severstal said. 
 
In Russia and CIS steel demand is estimated to increase by approximately eight percent year on year in 2011, supported by infrastructure investment, investments in pipelines and a revival of residential construction. Raw material price inflation will benefit vertically-integrated steelmakers.
 
In the US, Severstal expects that, following the sharp steel price increase since the end of 2010, the market in 2011 will remain tight but will continue its growth on the back of restocking, improvement of end-customer demand and growth of key raw material prices. The automotive industry will continue to be the best-performing steel consuming segment.
 
Meanwhile, according to Severstal's CEO Alexey Mordashov, the company aims to increase its total steel production capacities from the current level of 18 million mt to 20 million mt by 2012, and to more than 25 million mt in the longer-term, considering projects in India, Southeast Asia and capacity expansion in Russia.  Severstal's main goal is to enter the world's top five steel companies in terms of EBITDA size, said Mordashov.