Fitch: Russian steel companies more flexible in crisis.

By bne IntelliNews November 29, 2011
Fitch Ratings believes that Russian steel companies will be more flexible than foreign companies in the face of economic downturn. Agency attributes strong creditworthiness of Russian steel companies to self-sufficiency in terms of supplies of key input resources, and access to cheap energy, natural gas and labour resources. These factors allow the production of semi-finished steel products at a 25%-35% lower cost than global average, Fitch agency. At the same time competitive cost structure leads to higher capacity utilisation which amounts to about 90% for Russian companies vs. 75%-80% worldwide. Agency also notes that all Russian steel majors improved their operational portfolios in 2011. Namely, NLMK increased its steel production capacity by 40%, MMK strengthened its position in high-value added steel products for automotive industry, Severstal sold three out of five of its assets in North America with poor operating indicators and diversifies strongly with 25% of its EBITDA coming from gold mining segment, and Evraz Group remaining strong in terms of geographical diversification and resource self-sufficiency.

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