Eurobench.com

voda 18 februari 2015 17:08

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European car sales upward momenturm for 17th straight month

Industry data showed that the European car market maintained its modest upward momentum in the first month of the year, with sales gaining for a 17th straight month.

Registrations of new passenger cars in the European Union, a proxy for sales, rose 6.7% in January from a year earlier, the European Automobile Manufacturers' Association reported from Brussels. That brought the monthly sales figure to 999,157 units.

Sales have been slowly fighting their way back for nearly one and a half years, but analysts do not expect that, by the end of the decade, the market will attain the levels reached before the 2008 financial crisis. The European market has been hurt by high unemployment and economic stagnation, and younger people do not seem to have the same interest in owning a car as their parents' generation did.

Sales bottomed out in the summer of 2013, but more than six years after the financial crisis, the market has not regained its 2007 peak of nearly 16 million new passenger vehicles. Last year, the market expanded by 5.7%, sending sales of new passenger cars to about 12.6 million vehicles; that was the first annual expansion since before the crisis.

Manufacturer incentives, which erode profit margins, and government rebate programs in some countries helped to lift sales, adding to demand from car owners seeking to trade in worn out older models.

Mr Carlos Ghosn, who fills the top roles at Renault and Nissan Motor and serves as president of the automakers' association, said this month that while the steady comeback was welcome, “our optimism about this early sign of recovery must be tempered with caution, given the economic uncertainties still facing many countries.”

The automakers' association expects the market to grow again this year, but with the pace slowing to about 2% over the 2014 level, bringing sales close to three million units.

Spain, which has a government trade-in incentive program, was by far the strongest European Union market, with sales rising nearly 28% in January from a year earlier. The British, French and Italian markets were also strong, and sales rose 2.6% in Germany, the bloc's largest economy.

The rising tide did help all of Europe. Sales of Volkswagen Group, the biggest European automaker, rose 6.8% in January from a year earlier, while sales of Renault, the French company that ranks as No. 3 in Europe, rose 10%. But PSA Peugeot Citroën, the second-largest European carmaker, fell 1.4%.

Fiat Chrysler's sales rose 7.1%, including a 183% gain in sales of Jeep models, albeit from a low base.

Ford Motor sales gained 5.1%, while General Motors' Opel Group sales fell 2.8%.

BMW posted an 8.6% rise in sales. Daimler, its rival and the maker of Mercedes-Benz cars, had a 15% gain.

Source - www.nytimes.com

voda 18 februari 2015 17:08

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Iron ore and Rebar futures climb in China on hopes of stimulus post Holiday

Rising hopes of definite measures to stimulate the economy and lower the lending rates led to buoyancy in the futures market in China.

On the Dalian Commodity Exchange, the May iron ore contract was up 2.3 percent at CNY 497 a tonne, after touching CNY 499 earlier, its highest since January 21.

The most-traded rebar for May delivery on the Shanghai Futures Exchange hit a session high of CNY 2,549 (USD 408) a tonne, its loftiest since January 12.

Amidst emerging hopes of cut in interest rates, increase liquidity and tolerate some currency weakness to ensure that economy grows around 7 percent this year. China's parliament will unveil the official 2015 growth target when it meets next month and 7 percent is seen as the minimum needed to stop unemployment from rising.

A lot of activity is expected after the Lunar Holiday with demand expected to pick up with warming weather and pick up in construction activity. Market is agog with expectancy of policy support raising hopes even on the eve of Lunar Holiday as stockiest indulged in replenishment apprehending increase in price levels after the holiday.

Stockpiles of imported iron ore at major Chinese ports stood at 96.7 million tonnes as of February 13, the lowest since January 2014.

However it is expected that lower consumption ratio is likely to keep price levels low unless there is shift in finished demand.

Source - Strategic Research Insstitute

voda 18 februari 2015 17:10

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ArcelorMittal SA reports tough year for steel

SA's primary steel maker, ArcelorMittal SA, has reported a headline loss of ZAR 227 million for the year to December similar to the ZAR 224 million loss posted in 2013 saying it has been a tough year not only for itself but for the country's steel industry.

However, the group's net loss of ZAR 158 million was a considerable improvement on the net loss of ZAR 2.15 billion in 2013 though earnings before interest, tax, depreciation and amortisation (ebitda) was ZAR 510 million lower at ZAR 1.258 billion.

Total sales volumes stayed largely unchanged at 4.2 million tonnes. But domestic sales fell 4% due to lower overall demand for steel, the ZAR 1.8 billion reline of a blast furnace at its Newcastle works in KwaZulu Natal and stronger competition from imports.

Mr Paul O'Flaherty CEO of said that cheaper imports most notably from China were damaging sales. The worldwide steel industry has continued to be intensely volatile.

Last year Chinese demand for the metal dropped for the first time in 14 years. China consumes almost half of global output. This has created further excess capacity worldwide, also leading to higher levels of exports from Europe and Japan. Meanwhile, international prices for steel and commodities have plunged, while SA's weakened currency has pulled down the company's profit margins in export markets.

The company's liquid steel production of 4.5 million tonnes dropped by 578,000 tonnes compared to the same period last year. This was largely due to the blast furnace reline at Newcastle that took longer than the expected six months. This meant the group's capacity utilisation averaged 70% for the year, compared with 76% in 2013.

Source - Bdlive

voda 18 februari 2015 17:10

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ArcelorMittal update on situation in ACIS

ACIS segment crude steel production in Q4 2014 decreased by 2.7% to 3.5 million tonnes as compared to Q3 2014. Production was lower in Ukraine on account of electricity shortage, offset in part by higher production in South Africa following the reline of the Newcastle blast furnace.

Steel shipments in Q4 2014 decreased by 3.7% to 3.1 million tonnes as compared to Q3 2014, primarily due to seasonally lower demand in South Africa and CIS.

Sales in Q4 2014 decreased by 1.4% to USD 2.0 billion as compared to 3Q 2014. This decline was primarily due to lower steel shipment volumes, lower average steel selling prices (-7.4%), and were offset in part by higher non steel revenues. Average steel selling prices were particularly lower in Ukraine and Kazakhstan.

EBITDA in Q4 2014 decreased to USD 147 million as compared to USD 208 million in 3Q 2014, due to weaker performance of CIS countries (volume and price) offset in part by improved South African performance primarily on account of lower costs.

EBITDA in Q4 2014 was 173.6% higher as compared to Q4 2013 due to higher steel shipments (+3.4%), improved operations and lower costs primarily in the CIS, offset in part by lower average steel selling prices (-7.3%).

Operating income for Q4 2013 was impacted by impairment charges of USD 181 million related to the Thabazimbi mine in South Africa following the transfer of the operating and financial risks of the asset to Kumba as part of a new iron ore supply agreement with Sishen.

Source - Strategic Research Institute

voda 19 februari 2015 16:52

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Essar Steel Algoma announces Q3 results Signal Return to Profitability

Essar Steel Algoma Inc signaled its return to profitability reporting a net income of CAD 26.8 million for the three month period ended December 31st 2014 as compared to a net loss of CAD 38.6 million for the same three month period ending December 31st 2013.

The gain is attributable to higher shipments coupled with higher selling prices and lower costs. EBITDA for the quarter was CAD 70.6 million and CAD 168.2 million for the nine month period ended December 31st 2014. EBITDA is a non GAAP measure of profitability used by management as an indicator of the operational health of the business.

The Company successfully completed a comprehensive recapitalization and refinancing during the quarter, resulting in a deleveraging of the balance sheet by more than USD 200 million and an approximate USD 47 million reduction in annual cash interest expense.

Shipments for the quarter were 618,538 tonnes up 4.7% as compared to the same three month period ended December 31st 2103. Average realized sales returns improved in the quarter by 15.8% and by 19% for the nine months ended December 31st 2014 over last year's comparable periods.

Mr Kalyan Ghosh CEO of Essar Steel Algoma said that "The recapitalization was a significant and important milestone this quarter. While we are seeing some near term softening in market fundamentals we are confident our balanced product mix and low cost position provide a sound foundation for strategic reinvestment in optimization and growth in the months and years ahead. In the interim we remain focused on sustaining a safe and reliable operation during the winter season."

Source - Strategic Research Institute

voda 19 februari 2015 16:53

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Arrium plunges to AUD 1.5 billion loss on iron ore slump

The Australian reported that mining and materials group Arrium has warned of continued softness in iron ore markets as it declared a loss of AUD 1.5 billion in the first half.

The weak numbers were driven by AUD 1.335 billion in impairments, which the company had previously flagged to the market due largely to plummeting ore prices. The commodity's price is seen unlikely to recover sharply soon.

We expect demand for seaborne iron ore to remain strong but prices in the second half to continue to be subject to the supply and demand balance and negative sentiment.

Mr Andrew Roberts MD of Arrium said that “The company had been hurt by market turbulence, but had performed well operationally. External factors, including the sharp and substantial fall in iron ore prices, as well as historic low South East Asian steel margins, made the half a very challenging one.”

Despite the heavy losses the company remained optimistic, telling shareholders the fall in the Australian dollar would be a major positive for the group in the second half.

Mr Roberts said that “We expect underlying earnings for FY15 to be weighted to the H2. We have significant earnings and cash leverage to the recent significant fall in the Australian dollar and expect this to be realised in the second half. Earnings in steel and mining consumables' are expected to be stronger, and we expect to benefit from the timing of our cost reduction program, which is weighted to the second half.”

Source - The Australian

voda 19 februari 2015 16:54

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Steel producers Aceros Arequipa and Siderperu hit by prices

BNamericas reported that Peruvian steel producers Aceros Arequipa and Siderperu both saw their fourth quarter earnings affected by slumping steel prices and rising costs.

Aceros Arequipa's fourth quarter profit fell 12.5% to PEN 23.8 million from PEN 27.2 million a year earlier. Sales rose 5% to PEN 614 million from PEN 586 million a year ago, while sales and administrative costs rose 7.7%.

Aceros Arequipa said that earnings for the full year 2014 tripled to PEN 68.2 million while sales rose 12% to PEN 2.40 billion. Exports rose to PEN 370 million in 2014 from PEN 303 million the previous year. Peru mainly exports steel to Colombia, Ecuador and Bolivia.

Aceros Arequipa, which is controlled by the local Cilloniz group, completed a USD 145 million rolled steel plant last year in the port of Pisco to boost annual production to 1.35 MT per year.

Siderperu, a unit of Brazilian steel giant Gerdau, posted PEN 221 million fourth quarter loss compared with an PEN 11.5 million profit a year earlier. Sales fell 7.4% to PEN 417 million from PEN 450 million. Sales and administrative costs jumped 24.8%.

The steelmaker reported PEN 205 million loss for the full year 2014 compared with a PEN 1.9 million loss a year earlier, while sales dropped 7.5% to PEN 1.61 billion. Exports plummeted to PEN 10.1 million in 2014 from PEN 83 million the previous year

Source - Business News Americas

voda 19 februari 2015 16:54

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Dry bulk shipping rates to recover in late 2015 - Drewry

According to the latest edition of the Dry Bulk Forecaster, published by global shipping consultancy Drewry, strong trade growth, moderating fleet development and deployment of new fuel efficient vessels are expected to lead to a recovery in dry bulk shipping rates later in 2015.

Mr Rahul Sharan, Drewry's dry bulk shipping lead analyst, said that “We expect rates to remain under pressure through the first quarter of 2015. However, thereafter earnings will recover as modern fuel efficient ships gain employment at higher rates relative to older ships. This is one of the reasons why average charter rates recovered in 2014 compared to 2013, despite continuing capacity pressure.”

Modern vessels command higher rates due to their superior fuel efficiency and environmental credentials, relative to older units. Drewry estimates that since 2011 the average age of the dry bulk fleet has declined from 12 to 9 years which is one of several factors that has helped to support charter rates in an otherwise weak market.

Drewry estimates that the dry bulk shipping trade increased 8.3% in 2014, supported by strong iron ore demand and a 20% leap in grain trade. New vessel deliveries declined in 2014 as owners deferred orders in light of a weak market which limited 2014 fleet growth to 5.3% compared with 6.2% in 2013. Future capacity additions to the dry bulk fleet are likely to be checked by the conversion of some existing dry bulk orders to tankers, and continued slippage with new deliveries.

Mr Sharan said that “We expect to see some acceleration in 2015 deliveries despite a moderating orderbook, thanks largely to increased slippage from 2014. However, despite the uncertainty surrounding the global economy, we anticipate that 2015 will be another year in which dry bulk demand outpaces supply. This more favourable capacity outlook coupled with the influx of modern fuel efficient ships points to a recovery in the dry bulk shipping market in the second half of 2015.”

Source - Drewry Maritime Research

voda 19 februari 2015 16:55

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Insteel Industries declares quarterly cash dividend

Insteel Industries Inc announced that its board of directors declared a quarterly cash dividend of USD 0.03 per share on the Company's common stock payable on March 27th 2015 to shareholders of record as of March 13th 2015.

Source - Strategic Research Institute

voda 19 februari 2015 16:56

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Nucor announces 168th consecutive cash dividend

The board of directors of Nucor Corporation declared the regular quarterly cash dividend of USD 0.3725 per share on Nucor's common stock. This cash dividend is payable on May 11th 2015 to stockholders of record on March 31st 2015 and is Nucor's 168th consecutive quarterly cash dividend.

Source - Strategic Research Institute

voda 19 februari 2015 16:58

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ArcelorMittal supplies rebar for New Volkswagen dealer centre in Ukraine

ArcelorMittal Kryvyi Rih has supplied more than 700 tonnes of 8 mm to 28 mm rebar for the construction of a new, flagship Volkswagen car showroom, Volkswagen Center Kryvyi Rih, which will open in Kryvyi Rih, Ukraine in February 2015.

Mr Valeriy Hresko, Director of Volkswagen Center Kryvyi Rih LLC said that “In 2013 we began the construction of the first Volkswagen dealer center in Kryvyi Rih and finished the works at the end of 2014. Usage of ArcelorMittal Kryvyi Rih's products (rebar, wire rod, angle bar, flat steel bar) allowed us to implement complicated architectural and constructional decisions in the process of construction. Volkswagen Group appreciates the quality of ArcelorMittal Kryvyi Rih's rolled steel, which is certificated at international level in line with European requirements this is the background to our supplier choice for the construction of the auto center in Kryvyi Rih.”

Mr Anastasia Tatarulieva, Director Sales for Domestic and CIS, ArcelorMittal Kryvyi Rih, said that “We are very pleased to be involved in new construction projects in Kryvyi Rih and in Ukraine as a whole. We guarantee the quality of our products, short deadlines, and also technical support during construction. Despite our business being predominantly export-focussed, the domestic market is also a priority for ArcelorMittal Kryvyi Rih. In particular, the company is developing its regional marketing network in order to be closer to the consumer. Since the end of 2013 we have opened four warehouses (in Kryvyi Rih, Odessa, Kyiv and Ternopil). We'd like to create a quality model of distribution that provides continuous availability of our products in the different regions of Ukraine.”

Volkswagen Center Kryvyi Rih LLC is the first dealer center in Kryvyi Rih, and is set to open for business in February, 2015. Along with car sales, Volkswagen Center Kryvyi Rih provides services in terms of maintenance operations, repairs and retooling of all car models in the Volkswagen Group:
1. Maintenance operations, diagnostics of running gear and computer testing of all electronic systems of a car;

2. Maintenance of engine devices, automatic and mechanical transmissions;

3. Maintenance of fuel accessory of petrol and diesel engine devices, checkout procedure and fill-up of conditioning system;

4. Tyre fitting and trim control, adjustment of camber angle at the modern 3D stand.

Source - Strategic Research Institute

voda 19 februari 2015 17:00

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Moody's affirms ArcelorMittal's rating at Ba1

Moody's Investors Service affirmed ArcelorMittal's corporate family rating and probability of default rating at Ba1 and Ba1-PD, respectively. The rating action also includes the affirmation of the Ba1 senior unsecured ratings and the Not Prime short term ratings of ArcelorMittal. The outlook on all the ratings remains negative.

The negative outlook is maintained as the company will continue to face challenging market conditions in its core markets notably on price for steel finished products and continued pressure for its mining division profitability.

Today's action reflects the improvement in ArcelorMittal's profitability in 2014 despite lower iron ore prices and declining steel price environment. ArcelorMittal's steel EBITDA increased by 27% driven its strong performance in the North American Free Trade Agreement region and improved market conditions in Europe, particularly the automotive market.

The company also benefitted in some extent from the lower raw material prices, albeit offset by the mining division shortfall, and cost improvements. Moody's expects sustained volume in 2015, but price pressure from the two core regions of North America and Europe will impact the company's profitability. While we expect the Moody's adjusted EBITDA to erode in 2015, the company is expected to remain free cash flow positive.

ArcelorMittal has well positioned worldwide businesses with diversified revenue streams displayinglow profitability levels, but in line with the challenging operating conditions of the industry. The company high market share on the growing North American and European auto markets will continue to support volume and maintain a high capacity utilisation ratio for flat steel products.

The company has also managed to annually reduce its overall gross debt through free cash flow generation although Moody's notes that this was largely offset by a reduced level of cash (USD 4.0 billion at fiscal year ending 2014). ArcelorMittal's gross leverage (on a Moody's adjusted basis) for the fiscal year ended in 31 December 2014 is expected to remain high for the Ba1 rating category above 4.5x, but to decrease from the high level reached in 2012. In its assessment Moody's expects that gross debt will continue to decrease as a result of maturities coming due and management commitment to ongoing debt reduction though the pace is expected to be gradual and slow.

Moody's continues to see as risks;
(1) The pricing environment for steel products in both North America and Europe;
(2) Exposure to cyclical demand trends with a reliance on automotive sector growth;
(3) The high level of competition from imported products from Asia andor Russia, which affects pricing discipline and
(4) High capital expenditures stemming from the capital intensive nature of the steel and mining industries and the company's push to increase iron ore and coal production.

Mr Hubert Allemani, a Moody's Vice President Senior Analyst and lead analyst for ArcelorMittal said that "We have affirmed ArcelorMittal's Ba1 ratings primarily because the company's credit profile and business operations remain fundamentally solid despite the volatility in its mining profitability. Cash generation remains robust with free cash flow generation and the company liquidity profile is good."

Mr Allemani said that "The affirmation of ArcelorMittal's Ba1 ratings also reflects the improvement of the group's trading performance in 2014, with notably a strong improvement of the steel margin though partly offset by the mining division results. Moody's finally notes some reduction of the company's net reported financial debt, which could continue in 2015 and 2016 though at a slow pace."

Source - Strategic Research Institute

voda 19 februari 2015 17:01

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No planned redundancy at ArcelorMittal Liberia - Union

Mr Amos Morweh, Arcelor Mittal Liberia Workers Union Secretary General has dispelled rumors that the company has begun the redundancy of over 400 workers due to the global slump in iron ore price.

Rumors have been spreading in Buchanan and its surroundings that the company is on the verge of laying off some of its workforce due to decline in the price of iron ore on the world market.

Mr Morweh said that but such assertion is untrue and misleading and that the union is therefore urging its workforce to not pay attention to it.

He indicated that the information is untrue because the company and the union signed an agreement which states that before a redundancy is done, management has to inform the union through a written communication of its intention one month prior to its decision.

Source - GNN Liberia

marcel13 20 februari 2015 10:13

1

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voda 20 februari 2015 13:30

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India steel consumption lags the global average by 4 times

Business Line reported that from 110 million tonne to 300 million tonnes by 2025, reads the Steel Ministry's vision document.

At 60 kg per capita, the country's steel consumption lags the global average by over four times, however, even at today's subdued volumes it contributes nearly four% to the nation's industrial output.

Despite the uninspiring history and the huge capital investments involved, the 300 million tonne target may not be over-ambitious, if the government is able to back its talk with appropriate action.

Topping the industry's wishlist is a 25% safeguard duty on the imports of all semi and fully finished steel products, liberalising capital flows to new steel projects, extending benefits currently enjoyed by the infrastructure sector and preferential allocation of natural minerals for meeting its captive production needs. Integrated steel projects are clearly of national importance, it is time for policy makers to acknowledge this and fast track approvals.

Any delay in responding to the threat of imports from China and Russia may derail India's plans of spurring the growth of the domestic manufacturing sector and may even turn the industry sick.

In recent years, the industry has built up a huge excess capacity for manufacturing pellet and should, therefore, be allowed to export it freely, unhindered by duties or punitive rail freights. This will give the industry a much-needed boost.

Also, the government must aim to soften rail freight rates given that Indian businesses already fork out far more on logistics as a percentage of their turnover compared to their peers in China or in any developed economy.

Similarly, the global slowdown in demand has forced many transnational steel majors to push into India for sales creating a glut that has seen the price crash by 20% in the last two months. The resultant crisis has placed even India's large steel makers under stress and led to the closure of several medium and small units.

Sure, steps like the recent amendments to the MMRDA Act have kindled a sense of relief among steel makers with regard to raw material security. But much more needs to be done. Otherwise, the 2025 vision will be just a dream.

Source – Business Line

voda 20 februari 2015 13:34

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New chairman of CISA raises concerns as China steel enters peak zone

CNBC reported that Mr Zhang Guangning, who was elected chairman of the China Iron & Steel Association last month, did not mince his words when he gave his first speech.

Mr Zhang said that “As China's economy enters a new normal the steel industry faces unprecedented challenges. China's steel production has already hit a peak, or to put it another way, it has hit a turning point. The industry must shift its focus from expansion to quality and efficiency, adding that it is currently in its most difficult period, it is the most optimal time for adjustment and upgrading.”

After growing at an average rate of 15% between 2000 and 2013, a peaking of China's steel production would be a powerful symbol of a shift in the world's second largest economy after years of growth based on urbanization and industrialization.

Based on optimistic forecasts for continuing urbanization, many analysts had previously predicted a peak for steel production in China by 2025. Now that point could be much closer.

China produced half of the world's steel last year, at 820 million tonnes, yet exports accounted for nearly all net steel production growth, according to consultancy Wood Mackenzie.

Source – CNBC

voda 20 februari 2015 13:35

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TATA Steel Scunthorpe bags contract for new London underground railway

TATA Steel has landed a major contract for new London underground services with the steel set to be manufactured in Scunthorpe.

The contract is to supply highly wear resistant rail for the Crossrail project beneath the heart of London. In total, 7,000 tonnes of TATA Steel rail will be used on the Crossrail route which will serve 40 stations below the capital.

It will travel more than 100 kilometer from Reading and Heathrow in the west, through new twin bore 21 kilometer tunnels below central London to Shenfield and Abbey Wood in the east.

Steel will be manufactured at TATA Steel's Scunthorpe site before being rolled at the company's Hayange mill in northern France.

Mr Gerard Glas, TATA Steel's rail sector head said that “The Crossrail project will have a huge impact on improving the commuting experience in London and we are delighted to be a part of that. Our premium heat-treated rail is produced using a unique patented process which ensures it has exceptional wear resistance.”

Mr Gerard Glas said that “Rather than using traditional methods of heating and cooling, TATA Steel has developed a system where the rail moves through an induction furnace which uses an electromagnetic field to heat the steel to 950°C.”

He said that "The rail is then rapidly cooled using compressed air. The resulting uniquely low residual stresses provide further protection against risk of rail failure compared to other in-line heat treatment processes.”

He added that “This combination of innovation and a close working relationship with the customer means Tata Steel is able to provide the best possible solution for this historic new line.”

Source – Strategic Research Institute

voda 20 februari 2015 13:36

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Severstal announces financial results for Q4 & FY 2014

PAO Severstal announced its Q4 and FY 2014 financial results for the period ended 31 December 2014.

FY 2014 vs. FY 2013 Analysis:
1. Consistent focus on further increasing operational efficiency and reducing costs whilst continually improving service standards and putting customers first;

2. FY 2014 revenue decreased 12.1% y/y to USD 8,296 million (FY 2013: USD 9,434 million) as a result of lower realized prices and sales volumes YoY at Russian Steel and Resources and despite substantial improvements in product mix at both divisions;

3. EBITDA increased 21.2% YoY to USD 2,203 million (FY 2013: USD 1,818 million) driven by a strong result at Russian Steel on the back of operational enhancements, lower input costs and RUB devaluation, more than offsetting lower deliveries at Resources;

4. EBITDA margin increased by 7.3ppts to 26.6%, which is amongst the highest in the global industry;

5. FY 2014 net loss was USD 1,602 million (FY 2013: net profit of USD 83 million) has been impacted by FX losses on continuing operations of USD 1,807 million, impairments for continuing and discontinued operations of USD 1,222 million and a gain on disposal of USD 101 million of the discontinued operation. Excluding these non-cash items, Severstal would have posted a net profit of USD 1,326 million (FY 2013: net profit of USD 749 million);

6. Continued strong improvement in free cash flow at USD 1,232 million for the FY 2014 (FY 2013: USD 381 million), is in line with the Company's strategic focus;

7. Capex2 of USD 779 million for the FY 2014 was 28.1% lower YoY (FY 2013: USD 1,084 million) and 10.3% below FY 2014 capex target of USD 868 million. Severstal's FY 2015 capex target is RUB 30 billion, subject to FX fluctuations.

Q4 2014 vs. Q3 2014 Analysis:
1. Group revenue decreased 16.2% QoQ to USD 1,878 million (Q3 2014: USD 2,240 million) despite a high share of high value added (HVA) products in the sales portfolio at Russian Steel as well as significant sales volumes growth at Resources. The revenue decrease reflects a decline in average selling prices (at both divisions) on the back of the sharp RUB devaluation;

2. EBITDA margin expanded further by 3.7ppts QoQ to 32.1% (Q3 2014: 28.4%), representing the highest level since Q3 2008 and primarily reflecting a combination of ongoing efficiency improvements at both Russian Steel and Resources as well as lower input costs and the RUB devaluation mitigating the impact of lower selling prices. Group EBITDA decreased 5.3% QoQ to USD 602 million (Q3 2014: USD 636 million);

3. Net loss1 of USD 795 million (Q3 2014: net loss1 of USD 45 million) was primarily impacted by FX losses of continuing operations of USD 1,214 million, impairment of USD 131 million and a gain on disposal of USD 16 million of the discontinued operation. Adjusting for those non cash items, Severstal would have posted a net profit of USD 534 million (Q3 2014: net profit of USD 323 million);

4. Continuous robust free cash flow generation of USD 425 million, almost double the previous quarter (Q3 2014: USD 218 million), is in line with our key strategic focus;

5. Capex2 of USD 157 million, 13.3% lower QoQ (Q3 2014: USD 181 million) reflecting our prudent approach to investments as well as the completion of the majority of Severstal's large scale development projects.

6. Recommended dividend payment of 14.65 RUB per share for the 12 months ended 31 December 2014, reflecting the previously announced modified dividend policy.

Financial position highlights:
1. Despite the fact that our debt is predominantly Public, further deleveraging remains our priority. That said Severstal gross debt declin ed another 2.8% since the end of Q3 2014 to USD 3,429 million. Aided by proceeds from the Severstal North America (SNA) disposal, Group gross debt over the last year decreased by more than USD 1 billion (YE 2013: USD 4,7543 million);

2. Committed unused credit lines temporarily reduced to USD 388 million as a result of USD 300 million of short term debt raised in Q4 via committed facilities to be repaid during Q1 2015;

3. As at the end of Q4 2014, cash and cash equivalents reduced to USD 1,897 million (Q3 2014: USD 2,753 million) reflecting the special dividend payout during the quarter. This resulted in a 97.7% QoQ increase in net debt as at the end of Q4 to USD 1,532 million (Q3 2014: USD 775 million). As at the end of 2014, net debt was less than half as compared to YE 2013 of USD 3,7183 million reflecting the SNA deal completion and strong free cash flow generation during 2014;

4. Net Debt/EBITDA ratio increased QoQ in line with Company's expectations to 0.7 x at the end of Q4(Q3 2014:0.4x) after the special dividend payout. During FY 2014 our net debt/EBITDA ratio went down to 0.7x from 1.6x4 as of YE2013 driven by both 21.2% YoY higher FY 2014 EBITDA and substantial reduction of net debt.

5. Continued solid liquidity position with USD 1,897 million in cash and cash equivalents and committed unused credit lines of USD 388 million, more than covering short term debt of USD 768million.

Post period end highlights:
1. Given the Group's strong financial position, during Q1 2015 Severstal announced a public tender offer to buy back its 2016 and 2017 Eurobonds. A total of approximately USD 2 20 million of both bond issues was purchased from the total outstanding of USD 500 million and USD 1,000 million of the 2016 and 2017 Eurobonds respectively.

Mr Alexey Mordashov CEO of JSC Severstal Management said that “In 2014, Severstal was consistent in its focus on becoming the most efficient steelmaker globally. This has been achieved through the consistent execution of our strategy focused on increasing operational efficiency and reducing costs whilst continually improving our service standards and putting our customers first.”

Mr Mordashov said that “The resilience of our financial results and continued progress against the Company's strategic objectives is underpinned by our vertically integrated business model and highly efficient assets portfolio, which provide a strong competitive advantage throughout the industry cycle. Severstal is now fully focused on its most profitable assets. The sale of the Company's North American business during the year realized significant value for shareholders as well as structurally upgrading the Group's profitability.”

He said that the Company has returned a significant share of the proceeds to shareholders through a special dividend. The Board has also modified the Company's dividend policy to return 50% of net profit for a given reporting period to shareholders provided that the net debt/E BITDA ratio is below 1.0 times, reflecting Severstal's mission to maximize shareholder returns.

He added that Whilst market conditions in 2015 will continue to be challenging both on global and domestic markets, we remain as rigorously focused as ever on delivering further progress and value to our shareholders by continuing to execute our strategy to be the most efficient steel maker globally. We are confident that Severstal, with its highly efficient operations, vertical integration and customer focuswill be able to deliver a further year of progress.

Source – Strategic Research Institute

voda 20 februari 2015 13:37

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Metinvest launches new cold rolled hardened coil from Ilyich Iron

Ilyich Iron & Steel Works of Mariupol produced a trial lot of cold rolled hardened coil with minimum tensile strength of at 800 N/mm2.

This product is in demand in Turkey, North Africa and Europe for the production of welded pipes, profiles and steel strap. The trial lot was shipped to a Metinvest Group client in Turkey as a semi finished product for manufacturing steel strap used for fixing and packing various steel products.

Metinvest met with key customers to refine the technical requirements for the new cold rolled hardened coil. As a result, the group developed and launched production of the 2sp coil via hot rolling at the 1700 Mill, pickling treatment at a continuous pickling line, and cold rolling at a four-stand mill, before rewinding, cutting and packing the coils.

Metinvest will deliver these products to its customers abroad.

Source – Strategic Research Institute

voda 20 februari 2015 13:38

0

Arrium blasts steel dumping after posting AUD 1.5 billion loss on iron ore collapse

Mr Andrew Roberts CEO of Arrium as saying that inaction by Australia's Anti Dumping Commission is damaging his steel business after the company reported AUD 1.5 billion loss driven by huge impairments on its iron ore assets.

Last month the mining, steel and mining consumables group announced the AUD 1.3 billion of impairments alongside plans to shutter its higher cost Southern Iron mine and shed up to 580 job cuts. Excluding the impairments, the company reported an underlying loss of AUD 22 million.

Mr Roberts said that "It is fair to say it was a very challenging half for the business. We saw iron ore prices fall 40 per cent compared to last year. The mothballing of Southern Iron is intended to make a big dent in Arrium's cash costs so that the iron ore business can be cash positive by next year following the collapse in the iron ore price.”

Operating earnings in the mining business plunged to AUD 77 million in the six months ended December 31 from AUD 423 million in the year prior period.

Mr Roberts said that he was watching to see if higher cost Chinese iron ore mines reopen after seasonal shutdowns for the winter. We are waiting to see whether mines do recommence with iron ore sitting around the USD 60 to USD 65 mark. Anecdotally we are hearing of mines closing.

He said that "With the lower price for iron ore many companies around the world are looking at their cost base and taking actions to mitigate costs and determining whether they will mine going forward."

Mr Roberts said that he was confident the company's remaining 9 million tonnes of iron ore would be cost competitive and had a long term future despite low cost majors such as BHP Billiton and Rio Tinto flooding the market with new supply. We are confident about our position. Our customers do want viable, quality suppliers as alternatives to the majors.

He hit out at the slow pace of action by government on anti dumping claims. The company needed interim import duties places on dumped steel as soon as possible rather than waiting for the outcome of a lengthy investigation.

He said that "We are suffering material injury and we want that to be rectified through duties. We are well behind other countries like Canada the Anti Dumping Commission has been slow and disappointing.”

Source – SMH

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