1.

MARKET STUDY
1.1 INTRODUCTION
The following market t!"# wa $arrie" o!t with a %e$ifi$ $o%e& that i a
te$hni$al'e$onomi$ feai(ilit# anal#i $entere" on the eta(lihing of a Meltho%
an" a Rolling Mill %lant to %ro"!$e re'(ar from S$ra% a raw material for
"ometi$ market an" if an# for the international one. The etimate" ann!al
%ro"!$tion $a%a$it# i )*+,+++ t%# of re'(ar.
The main aim of thi t!"# i to ae the %at "e-elo%ment of re'(ar an" (illet
an" to fore$at their f!t!re tren"& motl# in term of relate" %ro"!$tion&
$on!m%tion an" %ri$e.

The %erio" taken into $oni"eration goe from .++/ to .+.+ an" tatiti$al "ata
anal#0e"& (oth re'(ar an" (illet& are the following1
R!ian %ro"!$tion of (illet an" long %ro"!$t 2of whi$h re'(ar3
intalle" $a%a$it#1
4illet an" re'(ar tra"ing market (etween R!ia an" it hitori$all#
mot im%ortant %artner $o!ntrie.
International an" lo$al (illet 5 re'(ar %ro$e.
A to f!t!re fore$at& the market t!"# tret$he to the .+.+ .
1.. RUSSIAN ECONOMY
BASIC FIGURES1
The tatiti$al fig!re for in R!ia in the #ear .++/& .++6 an" .+11 are a
follow :
7o%!lation1
.+1+ 1 181 mil
9D7 %er $a%ita1
.++/ 1 US: 1;,1;1
.++6 1 US: 18,6++
.+1+ 1 US: 1*,/++
Inflation rate1
.++6 1 /./ <
.+1+ 1 /./ <
.+11 1 =.6 <

Unem%lo#ment 1
.++/ 1 8.8=61 mil
.++6 1 ;.)=) mil
.+1+ 1 *.;); mil

Statistics forecast:
The tatiti$al fore$at for in R!ia in the #ear .+1.& .+1* an" .+.+ are a
follow :
7o%!lation1
.+1. 1 18. mil
.+1* 1 18) mil
.+.+ 1 18= mil
9D7 %er $a%ita1
.+1. 1 US: 1=,1++
.+1* 1 US: .1,+++
.+.+ 1 US: )+,+++
Inflation rate1
.+1. 1 =.; <
.+1* 1 ;.* <
.+.+ 1 8.6 <

Unem%lo#ment 1
.+1. 1 8./ mil
.+1* 1 8.1 mil
.+.+ 1 ).) mil

External Trade and Foreign Investment:
A$$or"ing to the tatiti$ of the Central 4ank of R!ia1
Total e>ternal tra"e -ol!me 1
.++/1 =;) 4ln :
.++61 86* 4ln :
.+1+1 ;86 4ln :
Dire$t ?oreign In-etment1
.++/1 1++ 4ln :
.++61 /1 4ln :
.+1+1 116 4ln :
The a(o-e Data in"i$ate that1
In .++6 R!ia e>%erien$e" a re"!$tion in the 9D7 (# / <. In #ear .+1+ there
wa a growth of ; <& thank mainl# to the man!fa$t!ring e$tor& whoe
$ontri(!tion to 9N7 ha rea$he" !% to1*,1++ US: in .++6.
R!ia ha en@o#e" a tea"# e$onomi$ growth of o-er lat #ear& for m!$h of the
.+1+ an" fore$at $ontin!ing 9D7 growth of US: .1,+++ a far a .+1* at
leat& an" inflation at aro!n" =.6 <& at %reent "a# & inflation rate i fore$ate"
to (e ;.* < in .+1*. Thi i a $oneA!en$e of a o!n" monetar# an" in-etment
%oli$#& whi$h t!rne" into %oiti-e effe$t alo on the !nem%lo#ment rate& whi$h
"ro%%e" in the $oni"ere" %erio" from *.;); mil to 8.1 mil ton.
Foreign Trade:
Dire$t ?oreign In-etment1
.++/1 1++ 4ln :
.++61 /1 4ln :
.+1+1 116 4ln :
?ore$at ?or ?oreign In-etment1
.+111 1.+ 4ln :
.+.+1 *++ 4ln :
Civil Constructions:
?rom R!ian 9o-ernment I!e" Data1
Ci-il Bork in Cat Year1
.++/1 8*./.1 (ln r!(
.++61 )/;6.1 (ln r!(
.+1+1 8.+;.1 (ln r!(
.+111 ).6*.; (ln r!( 2in 6 month %erio"3
The $i-il work %rogram fore$at e>%e$t an in$reae of =+ < in the -ol!me of
work o-er the %erio" from .+11 till .+.+.
Billet Production:
The 4illet 7ro"!$tion "!ring the lat #ear& from .++/ to .+111
.++/1 1/.+ mil ton
.++61 1;.1 mil ton
.+1+1 1=.; mil ton
.+111 16.8 mil ton
?ore$at of the 4illet 7ro"!$tion for the #ear from .+11 till .+.+ i
etimate" to (e 1++< growth 2i.e. 8+.+ mil ton (# the #ear .+.+3.
ReBar Production:
7ro"!$tion of finihe" %ro"!$t "!ring the lat #ear from .++/ till
.+111
.++/1 ;.18 mil ton
.++61 *.=+ mil ton
.+1+1 *.18 mil ton
.+111 *.61 mil ton
?ore$at for the finihe" %ro"!$t %ro"!$tion for the #ear from .+11
till .+.+ i etimate" to (e 1+6 D 11* < 2i.e. in the range of 1) mil ton
(# the #ear .+.+3.
1.)OEEREIEB O? TFE 7ROGECT
1.).1.7ro"!$t Mi>
Re'(ar main "etination are in the $ontr!$tion e$tor. Cow an" me"i!m i0e
largel# !e" in %ri-ate ho!ing a$ti-it# an" in reinfor$e" $on$rete from 1+ to 1/
mm. Con!m%tion e$tor for high i0e' in the.*'8+ mm range' i mainl# !e" for
$i-il an" in"!trial $ontr!$tion like in"!trial (!il"ing an" %lant& %ower
%lant& (ri"ge& roa"& "am an" t!nnel.
1.)...Marketing Strateg#
Thi anal#i ha (een $arrie" o!t on the (ai of the marketing trateg# of the
%ro@e$te" meltho% an" rolling mill fa$ilit#& whoe whole o!t%!t will (e
%otentiall# "eli-ere" to the lo$al market& e-ent!all# an# !r%l! A!antit# $o!l"
(e "eli-ere" to the foreign market.
The e$onomi$ an" finan$ial re!lt of thi trateg# ha-e (een anal#0e" in term
of eniti-it# anal#i 2ee $ha%ter ;3. thi mean& for ) an" 8
th
#ear re%e$ti-el#&
.*+&+++ an" )++&+++ t%# $al$!lating a reaona(le a-erage !tili0ation rate of the
)*+&+++ t%# intalle" nominal $a%a$it# .
1.8.?INAC MARKETS
1.8.1.Co$al Market
A to the "efinition of lo$al market& "ata an" information ha-e (een e>tra$te"
from %e$iali0e" o!r$e an" inter-iew with lo$al tra"er an" %ro"!$er.
?ore$at on f!t!re $on!m%tion ha-e (een worke" o!t thro!gh en"'!e anal#i
$riteria linke" to the $ontr!$tion 5 ho!ing e$tor& whoe "ata ha-e (een
"e"!$e" from offi$ial o!r$e.
The lo$al re'(ar %ro"!$tion in #ear .+11 ha rea$he" *.61 mil ton whi$h will (e
a!me" a the $on!m%tion of the lo$al market. The etimate" market "eman"
in the #ear .+.+ will (e from 1..* to 1*.+ mil ton5#ear.
On the other han"& re'(ar %ro"!$tion in R!ia ha to to rie from *.61 mil ton
in the #ear .+11 to the range of 1..* mil to 1*.+ mil ton in the #ear .+.+.
The following ta(le how the to"a# e>iting installed %ro"!$tion $a%a$it# of the
teel fa$ilitie in R!ia. The ta(le how that the intalle" $a%a$it# for Hmall,
%ro"!$t i 6.;) mil ton in the #ear .+11. Bhile %!(lihe" "ata gi-e a total
%ro"!$tion of *.61 mil ton in the ame #ear. Thi in"i$ate that there i a reer-e
$a%a$it# of ).=. mil ton5#ear in the e>iting lo$al teel fa$torie.
IJKLMNJ1
If we $oni"er the mot o%timiti$ $enario& $oni"ering thee mill will go into
f!ll %ro"!$tion "!ring the #ear .+11 till .+.+ 2%ro"!$ing a(o!t 6.;) mil ton3 &
an" ha-ing an ann!al "eman" of re'(ar in the #ear .+.+ of almot 1) mil ton&
the ga% in %ro"!$tion will (e in the range of ).+ to *.+ mil ton. Thi how that
the Eolo"ga %ro@e$t !n"er t!"# 2%ro"!$ing )*+,+++ t%#3 will ha-e a g!arantee"
hare in the market of re'(ar.
The main "ri-er of teel "eman" will in$l!"e the A7EC Ela"i-otok S!mmit in
.+1.& the St!"ent 9ame in Ka0an in .+1) an" the Ol#m%i$ 9ame in So$hi in
.+18. 7re%aration for the worl" foot(all $ham%ionhi% in .+1/ will !n"er%in
!(eA!ent "eman"1 ?I?A .+1/ in R!ia i etimate" to reA!ire ome ) mt teel
%ro"!$t for ta"i!m $ontr!$tion alone.
It ho!l" (e note" that there are %ro@e$t for re'(ar %ro"!$tion !n"er
$ontr!$tion 2one of them i new an" the other i e>tenion3& a in"i$ate" later in
thi t!"#.
A$$or"ing to "ata i!e" (# HMetals Consulting International MCIO the
alrea"# $ontra$te"'for %ro@e$t in the teel in"!tr#& for either mo"erni0ation or
$a%a$it# in$reae& in R!ia& till en" of the #ear .+11 are a follow1
!odernisation and ca"acit# ex"ansion "ro$ects %&''
In RUSSIA (source: MCI)
Russia( Estar( U)*norussi+i# Steel ,or+s( EAF - CC - .eav# sections(
/eams( angles and c*annels0 Su""lier is S!S Grou"1s C23CAST
Russia( Evra) - 4S!5 $v( Si/irs+# Electrometallurgical Plant( EAF - CC -
Bar !ill( ne6 mill in Ir+uts+ region for "roduction *ig* 7ualit# long
"roducts
Russia( Evra) .oldings( 3i)*n# Tagil !etallurgical 5om/inat( 8adle
furnace( 8F9:0 Construction to start end%&'& or earl# %&''
Russia( !ec*el( I)*stal( 4ar mill( reconstruction of !ill %;&
Russia( !ec*el( C*el#a/ins+ !etallurgical Plant( Casting /illet - /loom(
/loom caster 9;0 Investment includes vacuum degasser and ladle furnace
Russia( !ec*el( C*el#a/ins+ !etallurgical Plant( Co+e ovens(
reconstruction of co+e /atter# 9<
Russia( !ec*el( C*el#a/ins+ !etallurgical Plant( .eav# section and rail
mill( =anieli to su""l# Universal mill for "roduction of *ig*s"eed rail and
./eams
Russia( 38!5( 3ovoli"ets+ !etallurgical ,or+s( Cold rolling mill
reversing( onestand cold rolling reversing mill for *ig* strengt* car/on
steel stri"s
Russia( 38!5( 3ovoli"ets+ !etallurgical ,or+s( 2rganic coating line(
color coating line 3o0 > for cold rolled galvani)ed steel
Russia( 38!5( 3ovoli"ets+ !etallurgical ,or+s( Po6er "lant( ne6 ';&
!, "o6er "lant? 6ill ma+e use of /last furnace offgas
Russia( 2!5( 4#+sa Steel ,or+s( Plate mill( "late mill for "roduction of
large diameter "i"e
The !r-e# a(o-e how that Me$hel& I0htal& i the onl# $om%an# in R!ia
foreeen to tart in-eting in 4ar mill %ro"!$tion.
Other o!r$e of information in"i$ate that there are ome %ro@e$t !n"er
$ontr!$tion1 E-ra0 a%%ro-e to (!il" a new rolling mill for R!ia & $loe to Ut'
Donetk %ort& in o!thern Roto- region.
The mill will (e o%erational (# mi"'.+1).
Another new )++&+++ mt $a%a$it# %lant for the %ro"!$tion of rolle" teel
%ro"!$t !e" in the $ontr!$tion in"!tr#& Eolga Ele$trometall!rgi$al 7lant
2EEMP3& i $!rrentl# !n"er $ontr!$tion in R!iaQ I-ano-o region& northeat of
Mo$ow.
The firt %hae of the %lant& with an ann!al $a%a$it# of onl# ;*&+++ ton of mall
"iameter re(ar 2/'1; mm3 wa $he"!le" to (e $ommiione" in Mar$h .+11.
The a(o-e anal#i how that the %ro@e$t !n"er t!"# will %arti$i%ate in filling
the ga% (etween "eman" an" %ro"!$tion "!ring ne>t #ear.
1.*.STEEC 7RODUCT 7RICES
Referen$e market $o!l" (e "i-i"e" into three main area whi$h are %ri$e
lea"er for the %ro"!$t $oni"ere"1 R!ia an" Bet E!ro%e an" T!rke#.
Taking into a$$o!nt hitori$al erie for (illet an" re'(ar %ri$e "!ring the lat
#ear .++/ till .+11& the# (oth t!rn o!t to (e almot i"enti$al in their tren"& with
ome %e$!liaritie a$$or"ing to the area5$o!ntr# $oni"ere".
The following ta(le gi-e the hitor# of re'(ar %ri$e for the lat 8 #ear 2EAT
in$l!"e"31
RSTUN5VWX
Month5#ear
.++/V.
re(ar
.++6V.
re(ar
.+1+
re(ar
.+11
re(ar
2010
($) -
CIS-bie! i"
2010
2010
#$%&''
(%)$%
($)- *eb+r-
,ur-e.
YZ[J\]'@an .+*++ 16*++ 1/*++ .8+++ 8.* 86+
^S[\JL]'
fe(.
.8*++ 16*++ 16+++ .8*++ 8=+ *.*
RJ\_'mar$h .;*++ 16*++ 16*++ .**++ 8*+ *1+
`a\SL]'a%ril ./*++ 1=*++ .*+++ .=+++ ;1+ =1+
RJb'ma# ).*++ 1=*++ .**++ .=*++ */+ ;.+
cdZ] '@!ne )8*++ 1=*++ .8*++ ./*++ 86+ *;+
cdL]'@!l# )**++ 1/+++ .8+++ .6*++ 8)+ *1+
`[VeT_'
a!g!t
)8*++ 16*++ .**++ )++++ *++ *8+
fSZ_UK\]'
e%.
)1+++ .+*++ .**++ .6*++ **+ ;1+
gh_UK\]'
o$t.
.8*++ .++++ .*+++ .6+++ *.* *6+
iWUK\]'no-. 16*++ 16+++ .8*++ .=*++ No "ata No "ata
jShJK\]"e$. 18*++ 1/*++ .8+++ .=*++ No "ata No "ata
/rices o0 reb+rs i" ce"!r+ re1io" o0 *ussi+ i"c23+! 0or !r+4ers i" rubes
The a(o-e ta(le how the lo$al elling %ri$e of teel re'(ar in
R!ia. The %ri$e in$l!"e 1/ < EAT. In thi t!"# we hall !e
-al!e witho!t EAT
The ?inan$ial St!"#& Se$tion )& will a!me an a-erage $!rrent %ri$e
of re'(ar eA!al .*,+++ r!(5ton &EAT not in$l!"e".
The following gra%h how the hitor# of the re(ar %ri$e o-er the lat #ear for
Bet E!ro%ean an" Mi""le Eat1
Reinforcing re-bar prices
In %arti$!lar& a to e>'work re'(ar %ri$e in R!ia & a higher %eak wa
regitere" in G!l# .+11 2.6,*++ r!(5ton& eA!al to /8+ US:5ton3 an" wa almot
maintaine" !ntil 2O$to(er .+113. ?or Bet E!ro%e an" T!rke# fo( %ri$e were
in the range of =*+ to /++ US:5ton "!ring the ame %erio" of time.
Re%e$ti-el#& a-erage %ri$e 2min'ma>3 in the %eak %erio" were1
- /*+ ' //+ US:5 ton for R!ia
- =*+ D /++ US: 5 ton for Betern E!ro%e an" T!rke#
4ottom %ri$e in R!ia wa rea$he" in 2A%ril to Ma# &Year .++63 & when
a-erage %ri$e l!m%e" to *1* US:5ton& T!rke# an" Betern E!ro%e fo( %ri$e
went to omething le than *++ US:5ton "!ring the ame %erio" of time.
It eem that& after a trong re"!$tion in re(ar %ri$e& "ifferen$e in ale %ri$e
ten" to re"!$e to a nearl# referen$e %ri$e& whilt after a trong in$reae
"ifferen$e ten" to grow.
A e>tra referen$e& the following gra%h how the tren" of re(ar %ri$e in the
USA& %ri$e i :5C4 1
Re(ar USA Steel 7ri$e 1 Year
Re(ar USA Steel 7ri$e ) Year Re(ar USA Steel 7ri$e * Year
1 :5C4 k ..1 :5kg a%%ro>.
Ma>. 7ri$e in .+11 k /.+ :5ton
Min. 7ri$e in .++6 k *+* :5ton