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Russia's biggest steelmaker NLMK can withstand anti-dumping duties

Published 06/03/2017, 15:41
Updated 06/03/2017, 15:50
© Reuters. Molten iron is loaded into ladle at NLMK Kaluga steel mill in Vorsino outside Kaluga
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By Peter Hobson and Barbara Lewis

LONDON (Reuters) - Russia's largest steelmaker NLMK (MM:NLMK) is well-placed to weather the impact of European Union and U.S. anti-dumping duties and may expand into new markets such as Turkey and Asia to secure greater profits, it said on Monday.

The steelmaker, which is Russia's largest by output, predicts prices will stay volatile as oversupply continues for the foreseeable future, but it said the markets where it is present -- the United States and Europe, including Russia -- would outperform.

Earlier on Monday it said its core earnings rose in the fourth quarter as steel prices recovered from a two-year slump.

NLMK sees 3 percent growth in the United States this year and 1.5 percent in Europe, compared with global growth of one percent for the next decade.

These markets have also been boosted by anti-dumping duties that make low-cost imports more expensive and less likely to take market share from domestic producers.

"We've positioned ourselves as a strong player in a weak industry," Grigory Fedorishin said in an interview. Previously, chief financial officer, Fedorishin was made senior vice president in charge of strategy on Monday.

The duties target major exporters, including China and Russia, following concerns they were exporting at unfairly low prices.

Because NLMK has operations in the United States and Belgium, for instance, it benefits from the duties alongside the domestic manufacturers.

"On the U.S. side, we benefit more than we lose," Fedorishin said.

NLMK has also sent exports formerly destined for Europe to other markets.

"That was one of the ideas behind this model to hedge steelmaking supply and to make sure we are close to final customers and the markets where our steel is consumed," he said.

"It's a more or less unique model. We don't know any other companies which have this sort of model on this sort of scale."

Russia has appealed to the World Trade Organization over EU anti-dumping duties, but NLMK said it had no update on the case.

Fedorishin said the prime target was China, the world's biggest steel exporter, and NLMK had been unfairly "bundled with the Chinese".

Although cautious about acquisitions, preferring organic growth, NLMK is considering both.

"We are in the market, put it that way, but we are not desperate for an acquisition," Fedorishin said.

© Reuters. Molten iron is loaded into ladle at NLMK Kaluga steel mill in Vorsino outside Kaluga

NLMK could expand in, for instance, Turkey, which is a major export market for the company, Fedorishin said, adding that North Africa, the Middle East and parts of Asia could also make sense.

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