The pre-crisis output levels in Russia's metallurgical and automotive sectors will be reached in 2012, Russia's deputy minister of industry and trade Georgy Kalamanov has said.
According to Mr. Kalamanov, over the past few years Russia's steel industry has significantly upgraded its main assets, which has allowed an increase in the output of high-tech products with high added-value. "To date, the equipment deterioration in the (metallurgical) industry does not exceed 43 percent, which is a very good figure, even when compared to developed countries. This circumstance has allowed more flexibility to respond to negative changes in the outside environment," said Mr. Kalamanov.
As regards Russia's automotive industry, Mr. Kalamanov noted that it was severely affected in the early stage of the crisis, adding, however, that the implementation of government-supported schemes changed the situation. "Passenger car production in 2010 is estimated at 1.2 million units, up 99.7 percent compared to 2009. In 2011, because of the satisfaction of initial demand for automobiles, production levels will increase slightly by one percent," Mr. Kalamanov said.
Earlier this week, the leading global ratings agency Fitch Ratings said that in 2011 Russia's government-supported schemes for the auto industry are gradually being withdrawn, and, as a result, demand for steel from auto manufacturers will grow materially only if commercial bank lending to buyers reverts to pre‐crisis levels. In 2011, Fitch expects Russian steel production to grow by six percent, while steel prices are to continue to increase but not sufficiently to offset rising raw material prices. In Fitch's view, steel demand will be driven by exports and to a lesser extent by an increase in domestic demand.