Russian Steel Industry

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Russian Steel Industry Review

August 2008


RUSSIAN STEEL INDUSTRYAGENDA

• Steel demand volume• Flat product demand• Flat product supply• Oligarch involvement• More CIS steel information• Opportunities …


STEEL DEMAND VOLUME

• Russian steel market in 2007 amounted to ~39.9mt demand

• Flat : long : tube mix was 48:29:23

• Russian crude steel production was ~72mt [around 5.4% of world output]

Source: MCI assessments. Figures are for finished steel.

Product 000s t

Flat 19145

Long 11690

Tube 9085

Total 39920

Russian steel consumption 2007


FLAT PRODUCT DEMAND†

Figures are Russian finished steel demand estimates for 2007. Source: MCI assessments.

2007 data 000's t

Production 25416

Import 3507

Export 9778

Demand 19145

Product 000's t

Plate 3063

Hot rolled 8615

Cold rolled 4212

Galvanised 2106

Tin 383

Other coated 766

Total 19145

Source: MCI assessments.

†: For corresponding Russian or other CIS steel long product figures, please contact MCI.


FLAT PRODUCT SUPPLY

Supplier Plate HRC CR/Coated Total

MMK 1200 5189 2969 9358

Severstal 1000 4474 2707 8181

NLMK 0 1549 3069 4618

Urals Steel 937 0 0 937

Asha 500 0 200 700

Others 869 821 -68 1622

Total 4506 12033 8877 25416

Source: MCI estimates. NLMK data exclude semis for sale, and their cold rolled steel production figures include electrical steel. Plate is >10mm gauge. Figures are for 2007 net Russian supply only [i.e. with downstream production stripped out].


OLIGARCH INVOLVEMENT (1)

First name

Surname Company Principal steel industry / related assets

Alexander Abramov EvrazHolding NTMK, Zapsib, NKMK, Palini e Bertoli, Vitkovice Steel, Oregon Steel, Claymont Steel, Dneprovsk I&S, Ipsco Canada. Stakes in Evrazruda, Kachkanarsky (KGOK) and Vysokogorsky (VGOK) ore mines and in Dniprkoks; Raspadskaya, Yuzhkuzbassugol and Mezhdurechenskaya coal and in Highveld Steel & Vanadium in South Africa

Rinat Akhmetov System Capital Management

Azovstal, Yenakiyevski I&S, Khartsyzk T&P, Zaporizhkoks, Donetskkoks, Italy's Ferriera Valsider; Severny GOK and CGOK ore mines. SCM also acquired the Smart Group (see below) end-2007

Vladimir Lisin Novolipetsk DanSteel, VIZ-Stal, Stoilensky GOK iron ore mine, Altai Koks

Iskander Makhmudov UGMK Serov Iron & Steel Works; stake in Kuzbassrazrezugol coal mine; Bogoslovsk Iron Ore Mine; JSC Metmash bearings / wheel plant; historic involvement with Trans-World Group

Alexei Mordashov Severstal Dzerzhynsky Electric Steel Works, Izhorsk, Orlovsky Rolling Mill, Rouge Industries, Lucchini, Sparrows Point, Vorkutaugol, Vorgashorskaya Coal Mine, Kuzbassugol, Olkon Iron Ore, Karelskiy Okatysh, Vtorchermet

Dmitriy Pumpyanskiy TMK Tagmet, Seversky, Sinarsky, Volzhsky pipe plants

Viktor Rashnikov Magnitogorsk Iron & Steel

Cold rolling joint venture with Atakas in Turkey; stake in Fortescue Metals Group; Kazankovskaya coal mine; Bakal Ore, Belon Coal


OLIGARCH INVOLVEMENT (2)

First name

Surname Company Principal steel industry / related assets

Anatoly Sedykh UMC [OMK] Vyksa Steel Works, Chusovoy, Almetyevsk Steel Works, Trubodetal, Shchelkovo Metallurgical Works, Troitckaya coal mine, Gubakha Coke

Andrei Skotch Metalloinvest 30% ownership stake with Usmanov (50%) and Anisimov (20%)

Alisher Usmanov Metalloinvest / Gazmetal

Oskol, Urals Steel (formerly Nosta); Ribnita Steel Works in Moldova; Lebedinsk & Mikhailovsky ore mines, UralMetCom, Hamriyah Steel

Vadim Varshavsky Mirinvest Russky Ugol (Russian Coal), Estar Holding, Istil (acquired Jan 2008)

Sergey Veremeenko Estar Holding Zlatoust Metallurgical Works, Novosibirsk Metallurgical Works, Engels Pipe, Gurievsky Metallurgical Plant, Rostovsky Electric Metallurgical Plant, Nytva Metallurgical Plant, Volgograd Small Diameter Pipe Works

Vladimir Yorikh Mechel Former large shareholder of Mechel [together with Igor Zyuzin]

Boris Zubitski KOKS Group Industrial Metallurgical Holding, Tulachermet, Uchastok Koksovy coal mine, Berezovskaya coal enrichment plant, Kruglogorsky ore mine

Igor Zyuzin Mechel Beloretsky Steel, Vyartsilya Steel, Bratskiy Ferroalloy Works, Izhstal; Southern Kuzbass and Razrez Tomusinsky / Olzherassky / Krasnogorsky Coal; Yakutugol and Elgaugol coal mines


MORE CIS STEEL INFORMATION

• MCI website http://www.steelonthenet.com runs a free CIS news page at http://www.steelonthenet.com/feeds/russia.php

• We also publish a monthly report called ‘Memo from Moscow’ which covers topical CIS steel industry issues. This can be accessed free at http://www.steelonthenet.com/moscow.html

• Our representative in Moscow is also available for iron

and steel sector research support†

†: A daily fee rate applies - please contact MCI.

http://www.steelonthenet.com/



http://www.steelonthenet.com/feeds/russia.php



http://www.steelonthenet.com/moscow.html




OPPORTUNITIES …

• Can MCI help you develop your presence in the Russian steel sector, or elsewhere in the CIS steel industry?

• Can we help you with a steel feasibility study?• Or perhaps assist you with a due diligence appraisal?• If so please call us for a no obligation discussion …

Please contact: Andrzej Kotas, Managing Director, MCI

Website: http://www.steelonthenet.com

Email: [email protected]

Mobile: +44 (0) 775 149 0885





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