Russian steel majors slash investment plans

A trio of Russia’s largest steelmakers have slashed spending plans in the face of stuttering world steel demand, company sources have told MB.

Russia’s largest steelmaker, Severstal, has put plans for two 1 million tpy Russian mini-mill projects on the back burner as demand for constructional long products dips in the domestic market, sources say.

“I think there will be no hurry with these projects,” said a company source. “There may be some delays with the mills.”

The company also plans to cut capital expenditures and suspend acquisitions in the fourth quarter, sources confirm.

“The company is considering options for optimizing its investments in different projects,” a Severstal spokesman told MB, although he was unable to comment on specific projects.

And Evraz vice president Pavel Tatyanin told a conference last week that the company will cut production at its Russian and Ukrainian plants by 25% next month.

He added that capital expenditures in 2008 would be cut by about a third from earlier forecasts.

A spokesman for Mechel told MB the company is reconsidering all investments except core projects.

The company will go ahead with a joint project with China’s Minmetals to construct a rail and structural steel mill in Chelyabinsk and continue with the development of the Elga coal deposit. All other projects are under consideration, the spokesman said.

“We are considering cuts in 2009 and probably some of the less important programmes will be revised,” he said.