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Russian Metal Shares Rise on Chance of Help: Moscow Mover

Shares of Russian metal producers rose as Prime Minister Dmitry Medvedev met executives to discuss support for an industry suffering a drop in demand and prices.

United Co. Rusal, the world’s largest aluminum producer, jumped as much as 8.7 percent in Moscow trading, while OAO Novolipetsk Steel climbed as high as 4.5 percent.

Medvedev called a meeting to discuss measures to bolster the metals and mining industry after a slump in global economic growth eroded consumption of commodities from nickel to coal. Participants due to attend today included Evraz Plc (EVR) Chairman Alexander Abramov, OAO Mechel (MTLR) owner Igor Zyuzin and Rusal chief Oleg Deripaska, according to the agenda seen by Bloomberg.

The government is ready to study compensation for interest-rate costs incurred in funding development projects, the agenda shows. It also may consider granting loan guarantees and ease rules on the central bank accepting company bonds as collateral.

Rusal traded up 8.1 percent at 99.44 rubles by the close in Moscow, the most since September 2012. Novolipetsk Steel, or NLMK, increased 2.7 percent to 54.48 rubles while OAO Magnitogorsk Iron & Steel advanced 1.8 percent to 8.098 rubles.

“We have a bit of help from sentiment that the meeting with Medvedev is going to yield some form of softening on covenants or interest holidays for metals and mining,” Kirill Yankovskiy, director for equity sales at UralSib Capital in London, said by e-mail.

Limit Exports

The government is looking at ways to stimulate the industry by helping to remove excess production capacity and potentially limiting imports of some products, the document shows.

“We do not think there will necessarily be any immediate drastic steps from the government, but having said that the attention is clearly positive and could eventually lead to longer-term support,” Igor Lebedinets, an analyst at VTB Capital, said in a report.

Lower commodity demand has dragged down metal prices. Hot-rolled steel coil from former Soviet states fell in July to the lowest price since 2009, and Russian coking-coal has dropped 20 percent this year. Aluminum sank to a four-year low in June, prompting output cuts. Nickel touched a four-year low in July.

One company bucking the trend today is Mechel, Russia’s largest producer of steelmaking coal and among the country’s most indebted mining companies. The shares slumped as much as 19 percent in Moscow before paring losses to 3.2 percent. On Nov. 13 they tumbled 41 percent on speculation the company may default on the $9.55 billion it owes.

Debt Relief

“Debt relief measures can be useful for Mechel and Rusal in their talks with lenders,” George Buzhenitsa, a Moscow-based analyst at Deutsche Bank AG, said by phone. Rusal had about $10 billion of net debt at the end of September and is holding talks with lenders on debt refinancing.

Other participants scheduled to attend today’s meeting include the owners of NLMK, OAO GMK Norilsk Nickel, OAO TMK, OAO Severstal and Magnitogorsk Iron & Steel.

Spokesmen for Mechel, Evraz, Rusal, TMK and Norilsk declined to comment. Natalya Timakova, a spokeswoman for Medvedev, also declined to comment. Vedomosti newspaper reported on the talks earlier.

To contact the reporters on this story: Yuliya Fedorinova in Moscow at yfedorinova@bloomberg.net; Ksenia Galouchko in Moscow at kgalouchko1@bloomberg.net

To contact the editor responsible for this story: John Viljoen at jviljoen@bloomberg.net

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