) mining unit's trading subsidiary - Mechel Carbon (Singapore)
Pte. Ltd. - has signed a three-year coking coal supply agreement
with South Korean steel maker
Under the contract, Mechel Carbon will be supplying 500,000
tons of coking coal per year to POSCO for three years. Mechel
Carbon has also signed another one-year contract with POSCO,
wherein, it will supply 200,000 tons of PCI coal in 2013.
However, the prices of these contracts are not determined at the
moment. They shall be adjusted mutually on a quarterly basis.
The agreement is a testimony of Mechel strategy of
establishing relationships with the world's largest steel
producers and positioning itself in diversified markets. A
long-term, stable partnership with POSCO and other major
companies will enhance Mechel's position in the global
metallurgical coal market by providing its coal mining
enterprises with stable orders.
Mechel recently signed several loan agreements worth $1
billion with Gazprombank OAO, an important strategic partner.
Mechel's largest enterprises acted as borrowers for the deal.
Beloretsk Metallurgical Plant and Urals Stampings Plant in the
steel section of Mechel signed a loan agreement for 1.7 billion
rubles (roughly $54 million) and 1.6 billion rubles (roughly $50
million), respectively. The credit lines can be utilized with a
potential of drawing down funds over a three-year period.
Mechel posted disappointing fourth-quarter 2012 results last
month. The company incurred a consolidated net loss (attributable
to shareholders) of roughly $1.11 billion for the quarter
compared to 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. Revenues for
the fourth quarter came in at roughly $2.52 billion, down 13.9%
from $2.9 billion in the year-ago period.
MECHEL OAO ADS (MTL): Free Stock Analysis
POSCO-ADR (PKX): Free Stock Analysis Report
GIBRALTAR INDUS (ROCK): Free Stock Analysis
SHILOH INDS INC (SHLO): Get Free Report
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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
is facing weak demand in Europe.
Mechel currently retains a short-term Zacks Rank #2 (Buy).
Other companies in the steel industry with favorable Zacks Rank
Gibraltar Industries Inc.
Shiloh Industries Inc.
). Both hold a Zacks Rank #1 (Strong Buy).