Russian steel makers Severstal and MMK Group may lose $80 million and $60 million on EBIDTA margin respectively because of the EU duties on steel products, according to an analytical review by Aton.
These losses account for about 5% of consensus-forecast on EBITDA for Severstal in 2016 and up to 4% for MMK, analysts said.
“The domestic market still remains the key one for MMK. The company supplies metal products to the EU at market prices strictly complying with international requirements. MMK plans to use all legal means to dispute the decision on introduction of duties”, an official with MMK said.
“Considering harsh violations of the legislation by the European Commission when calculating dumping margin in the current investigation on hot-rolled products, Severstal together with its clients in EU countries will take all efforts to ensure the objectiveness of the investigation to ensure that it was not politically engaged”, an official with Severstal said.
The EU launched an anti-dumping investigation with regard to Russian hot-rolled steel products. It will last for 15 months.
The European Steel Association (Eurofer) complained that five countries, including Russia, had increased supply of hot-rolled steel products to the EU. Russia annually supplies about 2 million tons of hot-rolled steel to the EU.
In the first quarter of 2016 the EU already introduced duties of 20-26% for cold-rolled steel from Russia and increased them to 19-36% in May.
Severstal is the largest supplier (about 700 thousand tons of hot-rolled steel and 200 thousand tons of steel plates), MMK ranks second (about 650 thousand tons of hot-rolled steel).
“Duties can lead to redistribution of volumes and increased competition on the domestic market (which will have a negative impact on prices), as well as to changes in the range of products, that is why it is quite difficult to estimate the financial impact”, according to the review by Aton.
Analysts said that another metal producer – NLMK, which supplied 120 thousand tons – would apparently suffer the least, and its rolled steel production business in Europe with capacity of 1.7 million tons a year in the long run might even take advantage of the situation.
An official with NLMK said that its capacities for production of hot-rolled coil in Belgium amounted to 2.2 million tons, and so far they were not fully loaded. (TASS/Ukrainian metal)