New Materials research report from Business Monitor International is now available from Fast Market Research
Boston, MA -- (SBWIRE) -- 12/13/2012 -- BMI's Russia Metals Report for Q4 2012 evaluates the possible impact on Russia's metals sector if the eurozone crisis drags on and metals prices weaken. We expect production of key metals to remain modest with company investment plans focusing on improving processing plant efficiency and reducing costs rather than building new plants or expanding production capacity. Despite the weak growth, Russia will remain one of the world's largest producers of key base and industrial metals such as nickel, steel and aluminium.
The Russian steel industry has been grappling with high inflation, tight credit cycles and high interest rates. Opportunities may have beckoned in light of the huge drop in iron ore prices over the past year; however, steel prices have also dropped significantly as the global economic outlook remains bleak. The main drags on global economic growth include: the US, the world's largest economy, continuing to experience a sluggish recovery; China, the second largest economy in the world, experiencing a hard landing with GDP growth for 2012 expected to reach a mere 7.5% year-on-year, in comparison with its previous glory years of growth; and finally, the eurozone sovereign debt crisis and its protracted negotiations for reform and proposals for future growth remain uncertain and continue to keep businesses and investors wary.
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This has all resulted in an increased wariness in consumers of all kinds. Metals-consuming industries - most notably autos, infrastructure and construction - have been cautious about committing to new projects. With regards to car sales, however, Russia has continued to be Europe's regional outperformer, with the latest forecast from BMI's Autos desk for 2012 being a 12.2% y-o-y rise. This relatively robust growth, particularly when compared with the regional decline of 4.7% y-o-y in the core European market.
Although BMI has forecast slow growth in Russian primary aluminium production between 2012 and 2016, we still maintain that this will be steady due to Russia being unexposed to the Chinese economy's slowdown in 2012. The US economy's big appetite for metals, coupled with its sluggish recovery, would normally be a concern to any trade partner. The US is the world's largest importer of Russian aluminium; however, we forecast that vehicle sales in the US will have grown by 15% y-o-y in 2012, which will be added support to the Russian aluminium sector amid increasingly tougher operating conditions.
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