) has signed a memorandum of understanding with Baosteel
Resources Int. Co. wherein Mechel's subsidiary - Mechel Carbon
Singapore - will supply the Baosteel with up to 1.2 million tons
of coking coal, thereby increasing its coal supplies.
The one-year contract will be valid from Apr 2014 to Mar 2015 and
it may be extended further. Prices will be adjusted on a monthly
basis. With this new contract, Baosteel will account for up to
10% of Mechel's coal exports to Asia Pacific.
The newly signed agreement follows the successful delegation of
its previous agreement inked on Mar 21, 2013, wherein Mechel
Carbon Singapore was obliged to supply a total of 960,000 tons of
coking coal annually to Baosteel enterprises in China's eastern
and southern provinces. Mechel Carbon Singapore also made test
shipments of PCI coals along with steam coal from the Elga
deposit per its last year's contract.
Baosteel has been a strategic fit for Mechel and this deal
testifies their long-term cooperation based on mutual profit and
transparency. This agreement is in sync with Russia's new program
of developing its coal industry until 2030 by increasing exports
to promising Asian markets.
Mechel is a leading domestic steel and coal producer with a
strong position in key businesses, including production of
specialty steel and alloys. The company has the largest coal
reserve base in Russia and is presently focused on growth and
Mechel owns and controls essential infrastructure, including
ports, rolling stock and power plants, which provide access to
export markets. However, Mechel could be hindered because of its
high debt and interest burden, and might not be able to keep up
with its huge capital spending program. Moreover, the company is
facing weak demand in Europe.
Mechel currently retains a Zacks Rank #4 (Sell).
Other companies in the steel and related industries with a
favorable Zacks Rank are
Century Aluminum Co.
Norsk Hydro ASA
). While NN retains a Zacks Rank #1 (Strong Buy), both Century
Aluminum and Norsk Hydro carry a Zacks Rank #2 (Buy).
CENTURY ALUM CO (CENX): Free Stock Analysis
MECHEL OAO ADS (MTL): Free Stock Analysis
NORSK HYDRO ADR (NHYDY): Get Free Report
NN INC (NNBR): Free Stock Analysis Report
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