FOREX and Financial Crisis

expected negative reporting

By Friday the Russian court came up with a negative external background. For example, the U.S. site went for long weekends with the reduction. In particular, DowJ and the Nasdaq Composite lost 2.6%, while the S P500 fell 2.9%. On the other hand, Asian area today showed a small increase of less than one percent. The main negative for the domestic steel market, as yesterday, the long-awaited correction in the oil market. As a result of yesterday's session, Brent had lost about three percent, the MICEX index dropped by 3.5% and the RTS, closed earlier, reduced by 1%.

Today, crude oil continued to decline, though much slower, and with the closure of the Russian market has shown decline at 0.5% on brand Brent. Of the notable statistics, published today, are the only retail sales in the euro, which had worse predictive value, negative 3.3% while analysts were expecting decline to 2.7%. Although, it is worth noting that the market is, as expected, did not react to that statistics and have an hour began to grow. At the end of the day the RTS has lost 1% and the MICEX fell by less than 0.4%.

Of the notable events in the second level of accountability it is desirable to note AtoVAZa. In general, we appreciate the statements on the basis of AvtoVAZ in 2008 as expected negative. Due to rising prices for steel and components, production costs rose faster than revenues. As a result, gross profit decreased by 39% to $ 699 million other negative developments in 2008 was the lack of control over the increase in administrative costs, resulting in an increase of 25.3%. Among the positive side, we note the increase in the average value of the car, which according to our estimates, was 11.9%, which increased revenue in the 5.2% while reducing sales by 6%. In addition, we draw attention to the fact that 10.7 billion rubles (about $ 430 million) loss on account of fixed assets revaluation, which is based on a model of discounted cash flows. According to our estimates, in 2009 at AvtoVAZ is likely to get a loss. Despite this, according to our estimates, the fair value of 1 ordinary share of OJSC AvtoVAZ is $ 0.47, growth potential - 13%. which corresponds to the recommendation of Hold. Fair value of 1 preferred share is $ 0.19, which implies upside potential of 97% and is consistent with the recommendations of buy.

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finished the share

seems, the crisis helped to consolidate and strengthen the finished specialist mining and metallurgical complex of Ukraine on the world market. Ukrainian experts say the following: the domestic steel industry is a prerequisite to be competitive only in segments with low and medium value-added, because of the existence of the country's natural resources, as well as physically and morally obsolete iron assets. Ukrainian metallurgists confirm this thesis into practice.

For January - May 2009 the share of products (billets and slabs) in Ukrainian exports of steel products rose to 55%, while during the same period of 2008 it was 46%. Accordingly, for the same period the proportion of flat-rolled products in the export of Ukrainian metal products declined from 31% to 25%, and long - from 23% to 20%. Where to look dismal data on volume of Ukrainian metallurgical exports. If the export products during the five months of 2009 decreased by only 12% (up to 5.1 million tons), the flat-rolled products - 40% (up to 2.3 million tonnes), as long - 39% (up to 2, 3 million tons). And it is really funny is the situation with export of steel products of the lowest conversion - iron (experts even believe he was not metproduktsiey and raw materials for its production). In January - April 2009, the export of iron recycling increased by 14.6% over the same period in 2008, up to 405.561 tons However, in May, the crisis has its, and as a result of five months of 2009, compared to the same period in 2008, exports of iron have shown negative dynamics.

However, blaming the crisis exclusively in the commodity orientation of Ukraine's steel industry is not quite correct: in an extremely favorable for the steel industry during the country gradually to fall into the role of raw materials appendage metallorynka world. For five months, already mentioned in 2008 the proportion of semis in the structure of the Ukrainian metalloeksporta was 46%, while for the whole 2007, it would not exceed 43%, and in 2008 had risen to 48%.

specialists still believe that it is not necessary to downplay the role of global economic негараздіÐ². A significant shift in export structure occurred in the second half of 2008, during a catastrophic reduction in demand for domestic metproduktsiyu. Then the Ukrainian metallurgists have been pleased by any orders, which helped to keep capacity utilization. As expected, demand for products of Ukrainian origin is not dropped as rapidly as in the finished product. And given the extremely limited domestic market, finished the capacity of the Ukrainian steel industry faces a crisis helps metalloproizvoditelyam with relatively small losses , - said Yury Ryzhkov, a senior financial analyst company Astrum Investment Management.

For comparison, the analyst brings the results of the steel industry of the States, where the steel industry is aimed at vysokoperedelnoe production. It is through semi-finished - said Rizhkov - the decline in domestic steel production for the five months of 2009 was lower (-39%) than in the larger countries - producers of the metal as the United States (-53%), Japan (-42 %) and Germany (-44%). However, analysts do not risk to make predictions about what will happen in the world market, when the crisis ends and the demand for vysokoperedelnuyu metproduktsiyu increase. Then Ukraine invested in rolling power of a few pennies, even before it began (in the crisis almost freezing in the high re-attachment), will generally form the export of the full slab, billet and pig iron …

finished market

Meanwhile, metallurgists and analysts are happy that the Ukrainian steel industry has been able to stabilize production volumes of metal and even to enter new markets. For January - May 2009 delivery of Ukrainian steel products in Asia grew by 58% (up to 1.517 million tonnes), Africa - 49% (up to 737 tons), the Middle East - 35% (up to 1.594 million tonnes ). However, EU exports of semi-fallen by 53% (up to 705 tons), while in the CIS - 77% (up to 600 tons), - said Sergey Gajda, an analyst company, Dragon Capital. The new key buyers of Ukrainian steel products in 2009 were China, Lebanon and Egypt. In the face of shortages of working capital from consumers question the quality, which in Ukrainian products is slightly lower than the average of the competitors, it becomes less relevant. Due to the low price Ukraine has been able to enter new markets, - comments on competitive advantage of Ukrainian steel, Alexander Makarov, the acting Head of investment consulting department of JSC Altana Capital. Read the rest of this entry »