Russia steel demand drops in Q4 2011, to show positive trends in 2012: Severstal
Metal Stocks | 2012-04-19 06:24:22
The company expects Russian steel demand to slightly exceed GDP growth as the share of investments in GDP is set to grow. Increasing car market volume and local production will support steel consumption by the automotive industry
By Paul Ploumis
MOSCOW (Scrap Monster): Steel major Severstal whose Russian business was adversely impacted by slowdown in steel sales in Q4 2011 expects positive outllook for Russian steel demnad in 2012.Severstal Russian Steel's Q4 revenue was down 21.7% quarter on quarter to $2,341 mn on lowe sales volumes (15.8% down) and prices.
The company said that decrease in volumes was expected and driven by lower demand in Q4, exceptionally strong demand in Q3, sale of inventories in Q3 and some inventory build-up by the division’s traders in Q4 on anticipation of higher prices in Q1 2012. These accumulated stocks were sold in Jan-Feb’12 at higher prices. Share of high-value-added products was 46% in Q4, up from 44% in Q3. The share of sales on the domestic market went up to 59% in 2011, from 54% in 2010.
The company expects Russian steel demand to slightly exceed GDP growth as the share of investments in GDP is set to grow. Increasing car market volume and local production will support steel consumption by the automotive industry. " We anticipate import pressure to continue while import price arbitrage exists. HRC demand is stable driven by oil & gas tubes and pipes, machinery and agriculture, while the HDG market is gaining strength on recovering activity in the construction sector," the company said.
Despite sustained macroeconomic uncertainty, Q1 2012 has seen some recovery in steel demand and pricing. "We expect global steel prices to remain firm until the summer period, when some price correction may occur due to steel production ramp-up and real demand deceleration. We anticipate price upturn to return after the summer due to demand revival. China’s economic growth could decelerate due to slowdown in its residential property market, although additional monetary easing has potential to improve the economic situation in the country. Uncertainty over European sovereign debt and the Eurozones’ banking system remain major risks," the comapny said in a press release.
