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Russian steel could keep climbing at home and abroad

Russia’s largest steelmaker Severstal has announced its first half profits more than doubled year-on-year, on higher prices and domestic demand for the metal.

The net income has hit almost $US 1 BLN as sales revenue grew 30% to $US 7.7 BLN.

The news follows Severstal`s strategy in expanding abroad as demand for metal rises globally and construction and automobile production continues to grow domestically. 

Analysts expect the trend to continue for the next five to six years.

“Domestic demand for steel is expected to grow, according to our estimates at least at 7% per annum. Because the infrastructure boom is far from being over yet, the construction boom has not probably even started in certain regions. And actually, in certain regions of the former Soviet Union, or in certain regions of Russia proper, there is much infrastructure that needs replacing, and which has not been replaced over the last 20-30 years. According to some estimates, in certain cases up to 80% of the existing infrastructure, such as railroads, bridges, poles, have to be replaced. 80% – that is a staggering figure,” outlined Dmitry Kolomytsyn, metal analyst at Aton Capital.

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