Global steel prices may have finally bottomed out, said Severstal CFO Alexey Kulichenko. Severstal sees a slow recovery in store for 2014 with steel prices similar to those in 2013.
“We don’t really believe there is more room for going down, so we think on average maybe we have reached the bottom,” said Kulichenko said in an interview on Thursday. “With overcapacity in place, and with the behaviour that we observe, we don’t believe there will be quick sustainable growth in the short term. We think it will be a slow, gradual movement from this level up.”
Over production has been a problem for the industry resulting in industry leaders like Severstal CEO Alexey Mordashov calling for capacity cuts.
When asked if the industry could comply given political pressures in Europe to keep workers employed and China’s increasing production and export levels, Kulichenko replied,” I don’t believe it could easily happen.”
Severstal has expressed no interest in expanding capacity next year and is cautious about consolidating, saying synergy is more important than size.
“We do not really believe today that investment in steelmaking is paying, and for us it means we are focused on internal efficiency and improvement rather than putting more volumes to the market in this environment,” said Kulichenko.
Severstal plans to cut expenditures from $1.3 billion to $1 billion in 2014, with more than half of that to be spent on maintenance. (Source: Reuters)
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