) announced that it will temporarily suspend mining at Mechel
Bluestone in the U.S., which is part of the Group's mining
division, due to unfavorable market conditions. The spot prices
for coking coal are at their lowest since 2007, which makes coal
production at Mechel Bluestone unprofitable.
Post-announcement, work will cease at the West Virginia mines and
open pits, although some washing facilities at the site will
continue operating due to contractual obligations. Mechel will
decide on resuming operations depending on market conditions.
Recently, Mechel's corporate family rating (CFR) was downgraded
by Moody's Investors Service - the rating unit of
) - to Caa1. The rating agency has also lowered its probability
of default rating (PDR) to Caa1-PD. Moody's downgraded the
company's rating based on weak coal market and poor
Mechel's current financial situation remains weak. The company's
maturity profile remains tight with 2015 and 2016 maturities of
$2.5 billion and $2.5 billion, respectively, as of Dec 6, 2013.
Moody stated that if Mechel fails to repay any of the upcoming
loan maturities, it might lead to cross-default provisions on the
company's loans with other banks.
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 mainly focusing on growth and
Mechel currently retains a Zacks Rank #4 (Sell).
Other players in the steel industry worth considering are
Companhia Siderurgica Nacional
). While Companhia Siderurgica carries a Zacks Rank #1 (Strong
Buy), Gerdau holds a Zacks Rank #2 (Buy).
GERDAU SA ADR (GGB): Free Stock Analysis
MOODYS CORP (MCO): Free Stock Analysis Report
MECHEL OAO ADS (MTL): Free Stock Analysis
CIA SIDERUR-ADR (SID): Free Stock Analysis
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