It is reported that one of the world’s biggest steel firms, Russia OAO Severstal is ready for a euro zone collapse and a return to the bleak conditions that faced the steel sector as a result of the economic downturn in 2008.

Mr Alexei Mordashov CEO of Severstal says the company has already carried out internal stress tests to allow it to deal with the possibility of the failure of the euro, and is much better prepared for the turmoil another severe downturn would bring.

He said that “We have conducted a strategic analysis and modelling for the collapse of the euro. But if Europe falls apart, there will be a lot of negative consequences which are very difficult to estimate, because in the short-term there will be a big shock to the world economy.”

He added that “We are very much exposed to the world economy, so the effect would be drastic you’d see a significant contraction of the steel market which means restructuring would be likely. But I believe we’re much better prepared than we were in 2008 for the possibility of events like this, should they happen.”

The company only exports between 30% and 40% of its products, concentrating instead on Russia’s domestic market, but Mr Mordashov says the health of the euro zone is extremely important for the stabilization of the world economy including for Russia.

“Europe is Russia’s number one trade market, so you can imagine therefore how much of a risk it’d be for Russia if a negative scenario occurs in the euro zone, not only for us, but for all world economies. We all wish that the euro zone will survive.”

Mr Mordashov says he’d like to see more confidence and trust after the World Economic Forum at Davos. He said that “Clearly Europe has significant structural issues. But I believe there are glimmers of hope and light at the end of the tunnel and it’s up to the policymakers to assert more energy, dedication and leadership based on this trust and commitment.”

(Sourced from wsj.com)