According to International ratings agency Moody, investors despite posting a relatively solid performance since the economic turmoil of 2009, the slow recovery of domestic demand continues to limit the growth prospects of the Russian steel industry, adding that export sales of predominately semi finished steel products expose Russian producers to more price volatility.

Accordingly, after the significant increase in steel prices in Q2, prices leveled off in Q3. During the next two quarters, Moody believes that steel prices will most likely remain relatively stable. Russian steel producers are to a large extent immune from recent price hikes in key raw materials due to their high degree of vertical integration.

Moody states that "We expect that the export sales of semi-finished steel goods will continue to support current production and high capacity utilization rates if domestic demand remains sluggish."

In addition, Moody considers that the recent move to a short term pricing mechanism for key raw materials, such as coal and iron ore will have little impact on the performance of Russian steel producers due to their high level of self-sufficiency in raw materials.

(Sourced from Steelorbis.com)
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