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1)
Ukrainian steelmakers look to raise output; POSITIVE
Interfax reports that Ukrainian steelmakers plan to increase steel output in
February by 9% m-o-m to 2.2 mmt. Steel output in January will be flat m-o-m
at 2 mmt, which is also good news in light of the gas shortage in the first two
weeks of this month and the usual holiday slowdown. The increase in output
suggests that orders are slowly starting to pick up. Steel prices for Ukrainian
semi-finished products have rebounded by 10-15% in the last two weeks,
putting billets at $380-390/t and HRC at $400-420/t. These developments,
while not yet constituting a trend, suggest a revival on the steel market and
give hope that the trough was reached in November.
2)
Mechel to launch two previously idled steel furnaces;
Yesterday, Mechel announced that it would launch two previously idled steel
furnaces at ChMK: an electric arc furnace (EAF) on January 24 and a blast
furnace in April. The company sees a change in the trend in steel demand and
hopes for an increase in orders in the spring-summer period. Mechel has
generally been the first Russian steel producer to re-launch idle furnaces. The
company’s move suggests that steel demand is recovering slowly but surely;
otherwise it would make no economic sense for the company to restart its
furnaces.
With one EAF restarted soon, Mechel may boost its capacity utilization from
the current ~80% to approximately 85%. MMK and Evraz also recently
announced plans to increase production levels on the back of returningdemand and the completion of destocking. At the same time, today’s
Kommersant notes that December steel production at Mechel’s ChMK was
only half as much as expected by Chermet. That means that in December
Mechel ran at roughly 70% capacity, though this was still higher than its peers.
