Russia Metals Report

Published 18 December 2014

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Russia Metals Report

BMI V iew: T he Russian metals sector will post weak growth over the remainder of 2014 as the aluminium sector returns to modest growth after extensive cuts and weak prices plague the steel sector . Beyond 2015, growth will pick up as we see higher prices for aluminium and global demand growth for steel improves. Still, we expect companies' investment plans to focus on improving plant efficiency and reducing costs rather than building new plants or expanding production capacity. Despite only modest growth, Russia will remain one of the world's largest producers of base and industrial metals including nickel, steel and aluminium.

Growth To Pick Up
Russia: Steel, Aluminium & Nickel Production Growth

Oligopolies To Remain In Place

Russia's metals output is highly consolidated within each metal segment, as restrictive foreign ownership rights and established oligopolies prevent foreign competition. Within nickel production, Norilsk Nickel is the primary producer and also a major mining company. Its vertical integration across mining and refining capacity will allow it to remain the largest nickel producer in Russia for the foreseeable future. Similarly, steel and aluminium production are consolidated among just a few producers including RUSAL and Severstal. We do not expect the metals sector to diversify over our forecast period to 2018.

Table of Contents

BMI Industry View
7
SWOT
9
Industry Forecast
11
Steel: Growth To Pick Up In 2015
11
High Relative Capacity Utilisation Rates
13
Table: Steel Production & Consumption (Russia 2010-2018)
14
Table: Steel Industry Historical Data (Russia 2005-2012)
14
Aluminium: In The Midst Of Production Cuts
15
Table: Aluminium Production & Consumption (Russia 2010-2018)
18
Nickel: Stagnant Outlook
19
Table: Refined Nickel Production & Consumption (Russia 2010-2018)
21
Regulatory Development
22
Key Details
22
Political Risk Update
22
Table: Political Overview
25
Commodities Forecast
26
Commodity Strategy
26
Ferrous Metals:
26
Steel: Prices To Remain Subdued
28
Non-Ferrous Metals:
29
Aluminium: Price Strength To Continue In Q314
29
Copper: Further Decline By Year's End
30
Lead: Constructive Price Outlook
31
Nickel: Moderation To Continue
32
Tin: Upside Ahead
33
Zinc: Consolidation Before Multi-Year Gains
35
Table: Select Commodities - Performance & BMI Forecasts
37
Commodities Forecast
37
Table: BMI Steel Price Forecast
37
Short-Term Outlook
37
Core View
38
Surplus Set To Slim
39
Production: Reining In Growth
39
Consumption: Deceleration Ahead
41
No Respite From Chinese Exports Over Coming Months
43
Arbitrage Set To Grow Between East And West
44
Risks To Price Outlook
45
Table: Steel Data & Forecasts
45
Table: Global Steel Prices By Region & Product, USD/tonne (average)
46
Competitive Landscape
47
Table: Russia - Largest Listed Metals Producers - Financial Data
48
Company Profile
49
Severstal
49
Table: Severstal - Key Financial Data
52
Norilsk Nickel
53
Company Overview
54
Company Strategy
55
Table: Norilsk Nickel - Key Financial Data
57
RUSAL
58
Latest Results
61
Table: Rusal - Supply Chain Analysis
62
Table: RUSAL - Key Financial Data
62
Methodology
64
Cross Checks
64

The Russia Metals Report has been researched at source, and features latest-available data for steel, aluminium and other major globally-traded commodities. Our analysis covers all primary indicators, including production, exports and price, with our forecasts underpinned by Business Monitor International (BMI)'s macroeconomists global economic outlook. The report analyses trends and prospects and critically evaluates latest industry news, trends and regulatory developments in Russia.

BMI's Russia Metals Report provides industry professionals and strategists, sector analysts, business investors, trade associations and regulatory bodies with independent forecasts and competitive intelligence on the metals industry in Russia.

Key Benefits

  • Benchmark BMI's independent metals industry forecasts for Russia to test other views - a key input for successful budgeting and strategic business planning in the Russia metals market.
  • Target business opportunities and risks in Russia through our reviews of latest industry trends, regulatory changes and major projects and investments.
  • Exploit the latest competitive intelligence and company profiles on your competitors and peers.

Coverage

BMI Industry View

A comprehensive summary of the impact and implications of the latest regulatory developments and key forecast indicators covering metals production, consumption and upside/downside risks to our outlook. The Metals SWOT analysis outlines strategic factors that affect the basic assumptions underpinning BMI’s forecast analysis, and taken together with BMI’s political, economic and business environment SWOTs, it gives a complete overview of market climate.

Industry Forecast

Industry forecasts to end-2019 for all key indicators, supported by explicit assumptions, plus analysis of key downside risks to the main forecasts:

  • Steel: Steel production & consumption (‘000 tonnes).
  • Aluminium: Aluminium consumption production & balance (‘000 tonnes).
  • Copper: Refined copper production & consumption (‘000 tonnes).
  • Zinc: Refined zinc production & consumption (‘000 tonnes).
  • Lead: Refined Lead production, consumption & balance (‘000 tonnes).
  • Nickel: Refined nickel production & consumption (‘000 tonnes).
  • Tin: Refined tin production, consumption & balance (‘000 tonnes).

Regulatory Development

Details of the industry regulatory framework, relevant key legislation and environmental standards that impact the metals industry. The regulatory developments section provides analysis of the overall regulatory burden, the tax regime (including income tax rates), bureaucratic framework, corruption and a country specific political overview. Details of the industry regulatory framework provide information on relevant key legislation and regulations that will impact the metals industry.

Commodities Forecast

Provides in depth coverage and forecasting of steel prices and includes BMI’s core view of what to expect in upcoming months. Within the monthly metals update, BMI provides performance data and key forecasts for select commodities, including prices for aluminium, copper, gold, iron ore, lead, nickel, palladium, platinum, silver, steel (MEPS Carbon Steel), tin and zinc.

Competitive landscape

The competitive landscape section provides comparative company analyses of detailed financial data for key listed metals firms, ranked in order of market cap (USDmn).

Company Profiles*

Examines the competitive position and short to medium-term business strategies of key industry players. Strategy is examined within the context of BMI’s industry forecasts, our macroeconomic views and our understanding of the wider competitive landscape to generate company SWOT analyses. The latest financial and operating statistics and key company developments are also incorporated within the company profiles, enabling a full evaluation of recent company performance and future growth prospects. Details of products and services provide a full overview of each company’s operations.

Sources

The Metals Reports draw on an extensive network of primary sources, such as manufacturing associations, statistical bureaus, government ministries, national chambers of commerce and industry, national statistical offices, government ministries and central banks, and multinational companies.

*Company profiles are not available for every country. Those reports instead contain information on the current activities of prominent companies operating in the market.

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Testimonials

'An essential, multi-faceted research tool. BMI’s thorough understanding of the major market players enables an informed – and informative – review of the sector’s actual performance, together with useful insights into current industry issues, which are topped-off with detailed and invaluable forecasts of industry and macroeconomic trends.’

Senior Research Analyst, ABC International Bank plc