...Weak Domestic Demand Russian domestic steel consumption in 1H15 declined by 12% yoy, which was more than Fitch expected. At the same time, Russian steel production remained resilient (only 1% decline yoy), suggesting that domestic steel companies managed to maintain high capacity utilisation by raising export volumes (8% yoy) and replacing import volumes which declined by 40%. Consumption in long steel products declined by 16% yoy, reflecting weakness in Russian construction. Evraz, as a large long steel producer, reported a 6% yoy decline in sales volumes. MMK has also underperformed due to its high exposure to the automotive market, which declined by almost 40% yoy. In contrast, Severstal's sales remained solid in 1H15, supported by strong demand for large-diameter pipes. NLMK's sales also were strong, driven by higher sales of slabs to the European market. The sharp fall in the rouble against the US dollar in 4Q14 and 1Q15 compensated for lower prices, allowing for an improvement in...
