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Today is Oct. 17, 2008 1:13 PM (GMT +0400) Moscow
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One of the country’s giants, Magnitogorsk Iron & Steel Works is lowering production by 15 percent and reducing the number of employees by 10 percent starting from October.
Photo: Dmitry Lebedev
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Oct. 08, 2008
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Iron Industry Reduces Output
The financial crisis has hit the metal market of Russia. One of the country’s giants, Magnitogorsk Iron & Steel Works is lowering production by 15 percent and reducing the number of employees by 10 percent starting from October. Although other metal blockbusters have acknowledged neither production decline nor reduction of staff for the record, all of them (except Mechel) don’t cross out the possibility.
First of all Russia’s metal makers, Magnitogorsk Iron & Steel Works acknowledged yesterday the effect of the global financial crisis on its business. “In the wake of abrupt decline in global markets’ prices for ferrous and nonferrous metals, exporting metal doesn’t yield profit today,” said Vladimir Shmakov, vice president of MMK Asset Management Company. So, the plant lowers production by 15 percent, while the order volume has dropped 40 percent. As a result, up to 3,000 employees of MMK (of 30,000 employed overall) will be left without any work and the management is looking for the opportunities to employ them.

Other metal makers are more cautions in statements. Novolipetsk Iron and Steel Works (NLMK) has confirmed that demand for the semi-finished products abruptly declined in late September, mostly because of the lower demand from Europe and the United States. Severstal is analyzing the situation and Evraz Group speaks of the need to optimize production plans for October and November in view of tough conditions on domestic and foreign markets.

The analysts don’t foresee any improvement before year-end. “We will probably witness production reduction of 20 percent to 25 percent at Russia’s biggest metal companies,” says Olga Okuneva from Deutsche Bank, while Dmitry Parfenov from Prospect predicts the metal industry’s turmoil to continue for a year and a half or two years.

But nonferrous-metal producers are still optimistic the poor market opportunities of a few recent months notwithstanding. RUSAL said they had launched optimization efforts in early 2008 and were able to operate up to the business plan, and Norilsk Nickel didn’t intent to revise the production schedule yet.
www.kommersant.com

All the Article in Russian as of Oct. 08, 2008

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