Russia Metals Report Q1 2015
Moscow-Russia (Jan 4) The Russian metals sector will post weak growth over the remainder of 2014 as the aluminium sector returns to modest growth after extensive cuts and weak prices plague the steel sector . Beyond 2015, growth will pick up as we see higher prices for aluminium and global demand growth for steel improves. Still, we expect companies' investment plans to focus on improving plant efficiency and reducing costs rather than building new plants or expanding production capacity. Despite only modest growth, Russia will remain one of the world's largest producers of base and industrial metals including nickel, steel and aluminium.
Oligopolies To Remain In Place
Russia's metals output is highly consolidated within each metal segment, as restrictive foreign ownership rights and established oligopolies prevent foreign competition. Within nickel production, Norilsk Nickel is the primary producer and also a major mining company. Its vertical integration across mining and refining capacity will allow it to remain the largest nickel producer in Russia for the foreseeable future. Similarly, steel and aluminium production are consolidated among just a few producers including RUSAL and Severstal. We do not expect the metals sector to diversify over our forecast period to 2018.