Last Update: 29/02/2012 12:37:59
Russia made 6m tonnes of crude steel in January, its highest monthly output since September 2008. Its January production went up 1% and 2% in month-on-month and year-on-year comparisons, Moscow-based investment bank Uralsib reports citing national industry association Chermet and state statistics service Rosstat. In January, the average steel capacity utilization in Russia reached 92% compared with a world average of less than 72%. The main steel production growth drivers were NLMK, which has been ramping up the new No 7 blast furnace at its principal steelworks in Lipetsk and MMK. The latter increased steel output at its Magnitogorsk works by 10% on January 2011 and 9% on December 2011, according to Uralsib. A recovery in steel demand within Russia, which remains 10-15% below the pre-recession level, will be the ultimate catalyst for Russian steel companies’ performance, with strong oil prices being a key driving force behind the recovery, Uralsib suggests. “With the Urals oil price firmly above $120/bbl, we believe it is the steel sector that benefits more than others thanks to stronger consumption of oil & gas pipes, a recovery in the construction sector and rising car sales”, says Dmitry Smolin of Uralsib. However, the second half of last year saw a divergence in the dynamics of global oil and hot rolled coil price moves for the first time since the early 2000s, another analyst says. “HRC prices broke off from what used to be a long-lasting correlation, and whilst oil prices were steadily strong, HRC prices plunged on poor demand from end-users”, Boris Krasnozhenov, analyst at Moscow-based Renaissance Capital Group, told Steel Business Briefing in an interview.
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