Moody’s sees low internal demand for Russian steel in 2017

MOSCOW, Dec 8 (PRIME) -- The forecast for the Russian steel sector in 2017 is negative due to weak domestic demand, international rating agency Moody’s said in a research note on Thursday.

The outlook for the European steel sector is also negative due to risks of “price falls and profitability pressures on the back of competition from cheap imports,” the agency said.

“Steel imports to Europe will continue to grow next year, despite anti-dumping duties, placing pressure on prices and the profits of European steelmakers. In Russia, we expect domestic steel demand to remain weak until the economy, consumer confidence and purchasing power stabilizes,” Moody’s cited Vice President and Senior Analyst Hubert Allemani as saying.

“In Russia, contributors to Moody's negative outlook on the country's steel sector include the bleak prospects for a recovery in the country's manufacturing PMI to sustainably above 50 until the economy stabilizes, which will depend largely on oil prices,” the research note read.

“Trade protection measures in export markets will also increasingly pose a risk to Russian steelmakers. That said, steel companies' profitability will remain high even at low prices thanks to low costs as a result of the weak ruble and operating efficiencies achieved over the last few years.”

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