According to the report issued by the Mining and Metallurgical Trade Union of Russia positive changes have started to be registered in the Russian ferrous metals sector.
In the H1 of 2009, the Russian steel industry showed a steady positive dynamic in the production of the main steel products.
GMPR stated that in June this year Russia’s iron ore output increased by 4.1%, its pig iron production went up by 2.9%, its crude steel output rose by 3.2%, its finished steel products output increased by 3.3% and its pipes production went up by 11.9% 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% of the H1 2008 levels.
At the end of the Q2 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 to April 2009 the overall profit of the Russian mining and metallurgical sector amounted to RUB 9.5 billion.
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 RUB 8.8 billion compared to RUB 3.9 billion in Q1. NLMK posted a net income of RUB 22.3 billion compared to RUB 138.9 million in Q1. Mechel Chelyabinsk Metallurgical Plant saw a net income of RUB 2.1 billion against RUB 6.5 billion in losses in Q1. Evraz ZapSib posted a net income of RUB 735.2 million against RUB 1.38 billion in losses in Q1 while ChTPZ registered a net income of RUB 590.5 million up by 28YoY.
GMPR considers that the situation at some Russian steel mills such as ESTAR Zlatoust Metallurgical Works continues to be strained. GMPR said "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."