Bloomberg News

Mechel Plunge Ends on Forecast Steel Demand May Jump 56%

June 26, 2012

OAO Mechel (MTLR) climbed, ending the worst two-day decline in seven months, after a trade association representing the largest steelmakers forecast a surge in domestic demand.

Mechel, Russia’s biggest producer of coking-coal, added 0.3 percent to 190.60 rubles by the close in Moscow after slumping 12 percent in the previous two days. OAO Severstal, the country’s second-largest steelmaker, advanced 0.6 percent to 377.80 rubles.

Russian Steel, which represents companies including Severstal and OAO Novolipetsk, estimated the country’s demand for steel products will rise to 64 million tons by 2020 from 41 million tons in 2011 at a presentation today.

Output in Russia will increase to 80 million tons in 2020 from 69 million tons in 2011, Russian Steel said. The construction industry will remain the largest consumer, while the most growth in demand will come from automakers, it said. Russian sales accounted for 54 percent of Mechel’s annual revenue in 2008. Coking coal is used in the production of steel.

To contact the reporters on this story: Ksenia Galouchko in Moscow at kgalouchko1@bloomberg.net; Ilya Khrennikov in Moscow at ikhrennikov@bloomberg.net

To contact the editor responsible for this story: Gavin Serkin at gserkin@bloomberg.net


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