) declared that the hot testing that took place in its Universal
Rolling Mill at Chelyabinsk Metallurgical Plant was
The first batch of structural shaped steel products
(25SH1-type bar) was produced at the universal rolling mill
during the 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. As of now, steel is being tested.
At its launch, this will be the first type of steel products to
be produced by the universal rolling mill. The ground work for
the launch of the universal rolling mill is being completed at
rail processing equipment and the plant is getting ready for hot
testing of rail production. In addition, work line up also
includes mastering production of other rolled profiles. With the
launch, the mill is expected to create more than 1,000 employment
Mechel's prime focus lies in the construction of Chelyabinsk
Metallurgical Plant's universal rolling mill as it features as
the priority investment project for its steel division. The mill
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. It will also help in reducing dependence on imports.
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 as well as rails for use in low temperatures
at its full capacity. Mechel further expects annual production
capacity to be over 1 million tons of products from the mill.
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 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 steel producers that are worth considering include
Shiloh Industries Inc.
LB Foster Co.
). While Shiloh Industries retains a Zacks Rank #1 (Strong Buy),
both LB Foster and Ternium hold a Zacks Rank #2 (Buy).
FOSTER LB CO (FSTR): Free Stock Analysis
MECHEL OAO ADS (MTL): Free Stock Analysis
SHILOH INDS INC (SHLO): Get Free Report
TERNIUM SA-ADR (TX): Free Stock Analysis
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