As steel mills across Europe lose money and shed workers, business is booming in Russia.
The ruble’s plunge to a record low this year has helped alter the economics of making the alloy in Russia. The country exports about half its output for euros or dollars, which reduce the cost of labor and materials paid for with the weaker currency. At a time when the world has a surplus of cheap steel, Russian companies like Severstal PJSC remain profitable because they spend about 50 percent less than rivals in Europe and China to produce every ton.
Russian steelmakers also got a boost from stronger domestic demand and an unexpected rebound in export prices, which are having the best start to a year since at least 1994. Since the end of December, shares of Severstal, Novolipetsk Steel PJSC and Magnitogorsk Iron & Steel Works OJSC rallied at least three times as much as the Micex Index of 50 Russian companies. On April 20, Morgan Stanley labeled the industry a core holding, citing increased cash flows and dividends .... http://www.bloomberg.com
