Fitch expects to increase steel production in Russia

International rating agency Fitch expects that in 2011 steel production in Russia increased by 7.5% to 69,5-70 million tons compared to 2010, according to the materials in its conference. In 2010, steel production in Russia increased by 11.3% to 66.2 million tonnes compared with 2009. During the past year continued to increase steel production in Russia, which started in 1 st quarter of 2009. As a result, the absolute volume of steel production in 2010 reached the 2005 level, says Fitch. Level of capacity utilization in industry leaders reached 90-100%, higher than the European steel producers. The structure of steel production in Russia is different from the world - still a significant proportion of steel produced in open hearth furnaces. In 2009, the proportion of oxygen-converter steel in total production amounted to 64% of electric - 27%, martin - 9%. However, the crisis of 2008 - 2009's helped to accelerate the transition to modern methods of steel production. Fitch expects that by 2020 Russia will be closed the last open-hearth furnace. The high degree of self-reliance key raw materials is the competitive advantage of Russian metallurgical companies, according to Fitch. Thus, NLMK provided iron ore to 100%, scrap metal - 80% CMI - 30% in ore, 50% for coal and 100% in Lome; Evraz - 95% of the ore by 75% in coal and 30% in scrap; Severstal - 80% in ore, 70% for coal and 30% in Lome. Fitch also expects that in 2011 the position of companies within the metals and mining industry in Russia will continue to improve. Domestic demand for steel will reach crisis level not before 2012. Russian steel and mining companies will remain in 2011, higher profitability due to low production costs. However, relatively high inflation rate, which is projected for 2011 at 7.7% per annum, will boost production costs. In 2011, the metallurgical and mining companies remain generally conservative financial policy, having a satisfactory liquidity. Ministry of Industry