) declared that hot testing of rail rolls production has started
at Chelyabinsk Metallurgical Plant's universal rolling mill. With
the launch of hot testing, the company has commenced the second
stage of preparation for the launch of universal rolling
The first rolling of R-65 100-meter rails was successfully
executed at the universal rolling mill during the hot testing. It
represented the maiden sample of rail rolls that universal
rolling mill produced. Hereafter, mastering production of rail
steel products, both structural shapes and high-quality rails, is
expected to go on as scheduled.
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Mechel expects the mill to annually supply up to 400,000 tons of
high resistance to wear and contact endurance rails for
high-speed running and also rails for use in low temperatures.
Mechel further expects annual production capacity to be over 1
million tons of structural shapes and rails products from the
The universal rolling mill's new production is expected to build
economies of scale for steel related industries in Russia. The
mill is anticipated to supply high-quality steel products for
Russian Railways and construction companies. This will also aid
the mill in reducing its dependency on imports and resolve
various social issues on regional level by creating more than
1,000 employment opportunities.
Mechel, on May 6, produced the first batch of structural shaped
steel products (25SH1-type bar) at the universal rolling mill
during its hot testing. The total chain of structural shape
production process was hot tested consecutively starting from
billet heating and hot rolling to correcting, cutting into
measured sizes and packaging. Mechel's prime focus lies on the
construction of Chelyabinsk Metallurgical Plant's universal
rolling mill, as it features as the priority investment project
for its steel division.
Mechel tuned to a loss in the fourth quarter of 2012, hurt by
weak demand. Revenues fell by double digits due to sustained
weakness in the core mining segment. The company saw weak pricing
for mining products in the quarter due to challenging economic
Mechel's high debt and substantial interest burden are matters of
concern. The company is also faced with weak demand from Europe.
However, we are encouraged by the incremental opportunities
stemming from the Elga mine, which is expected to reinforce the
company's position as a metallurgical coal producer through
Mechel, which currently retains a short-term Zacks Rank #3
(Hold), will release its first-quarter 2013 results on Jun 18.
Other companies in the steel industry with favorable Zacks Rank
Kobe Steel Ltd.
Shiloh Industries Inc.
Angang Steel Company Ltd
). While both Kobe Steel and Shiloh Industries hold a Zacks Rank
#1 (Strong Buy), Angang Steel retains a Zacks Rank #2 (Buy).