) has signed a memorandum of understanding with Baosteel
Resources Int. Co. wherein Mechel's subsidiary - Mechel Carbon
Singapore - will supply the latter with up to 960,000 tons of
coking coal annually.
The memorandum also entails implementation of joint projects in
mining resources on the territory of the Russian Federation,
People's Republic of China and countries.
Last month, Mechel Carbon (Singapore) signed a deal with Baosteel
Group Corporation's wholly-owned subsidiary - Baosteel Resources
- to supply coking coal. Mechel stated that the one-year contract
may be extended and the price will be adjusted on a monthly
basis. Both Mechel and Baosteel have agreed upon semi-annual
visits (including senior executives) where they will discuss
mutual interests and market trends.
With this deal in place, both Mechel and Baosteel plan to extend
their relationship in areas of raw materials and other related
areas, based on principles of joint coordination, close alliance
and common development. The deal also signifies a strategic way
of increasing their long-term relationship.
Recently, Mechel released its fourth-quarter 2012 results. It
posted consolidated net loss (attributable to shareholders) of
roughly $1.11 billion for the quarter compared with a profit of
$201.2 million a year ago. The results were hurt by weak demand.
Adjusted loss (excluding one-time items) was $160.9 million in
the reported quarter.
Mechel's revenues for the fourth quarter came in at roughly
$2.52 billion, down 13.9% from $2.9 billion in the year-ago
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 owns and controls essential infrastructure, including
ports, rolling stock and power plants, which provide access to
the export markets. However, Mechel could be handicapped because
of its high debt and interest burden, and might not be able to
keep up with its huge capital spending program. Moreover, Mechel,
like other top steel makers including
), is facing weak demand in Europe.
Mechel currently retains a Zacks Rank #4 (Sell).
Other companies in the steel industry with favorable Zacks
Gibraltar Industries Inc.
Shiloh Industries Inc.
). Both hold a Zacks Rank #1 (Strong Buy).
ARCELOR MITTAL (MT): Free Stock Analysis
MECHEL OAO ADS (MTL): Free Stock Analysis
GIBRALTAR INDUS (ROCK): Free Stock Analysis
SHILOH INDS INC (SHLO): Get Free Report
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