OREANDA-NEWS. March 01, 2010. In January-February, Russian steel producers fulfilled 18% of the annual quota for flat-rolled steel shipments to the EU. In our view, the news will largely be shrugged off by Russian steel-making companies. Firstly, the two-month quota was insignificantly exceeded. To add to this, we expect the gradual revival of internal demand for steel products throughout 2010, as the Russian economy recovers.

Metal Courier reported on March 1 that Russian steel producers fulfilled 18% of the annual quota for flat-rolled steel deliveries to the European Union.

If steel deliveries are to be distributed evenly throughout the year, then 16.5% of the annual quota would have to be filled in the first two months of 2009. We put down the more active supplies early in 2009 to a relatively weak demand at home. Another possible explanation could be better price conditions in the EU.

In general, we see this as neutral for Russian steel-making companies. Firstly, the two-month quota was marginally exceeded. To add to this, we expect the gradual revival of domestic demand for steel products in 2010, as the Russian economy recovers.

In the Russian steel sector, we recommend buying MMK and Severstal shares, with the target prices of USD 1.28 and USD 14.3 per share, respectively.