According to leading global ratings agency Fitch Ratings, in 2011 Russian steel production is expected to grow by around six percent year on year, while domestic consumption is not expected to reach pre-crisis levels until 2012. Utilization rates are expected to continue to run above 85 percent.
Fitch noted that steel production in Russia benefits from a relatively high degree of captive domestic raw materials, which has allowed exports to be quite cost-competitive given the ruble's depreciation from Ruble 23 = $1 in July 2008 to Ruble 36 = $1 in February 2009 and to Ruble 31 = $1 currently.
Russian producers increased metallurgical coal production in response to high prices in 2007 and 2008. While some of this high-cost production went offline in 2009, production ramped up with the return of steel demand. More recently, coal production disruptions from mine explosions have reduced the country's metallurgical coal production. The Raspadskaya mine accident in May 2010 is expected to result in 2.3 million mt of lost production up to the end of the year and a further 2.5 million mt of lost production in 2011, Fitch said.