RTS Futures Rise on U.S. Data as Mechel Sinks: Russia Overnight

RTS stock futures gained after U.S. consumer confidence and manufacturing data surpassed estimates, improving the outlook for Russian exports. OAO Mechel posted a sixth week of declines.

Futures on the RTS Index expiring this month advanced 0.6 percent to 151,520 on March 1 in U.S. hours. American depositary receipts of Mechel, Russia’s biggest maker of steelmaking coal, dropped 5.2 percent in the week, extending its 2013 loss to 22 percent, as the price of the metal tumbled. The Bloomberg Russia-US Equity Index of the most traded Russian companies completed its worst week since the five days ended Jan. 11 after a monthlong slump in commodities.

American factories expanded in February at the fastest pace in almost two years while consumer spending increased in January, bolstering prospects that demand for Russia’s energy exports will rise even as oil fell for a second week. Crude, together with natural gas, account for about half of the nation’s budget revenue.

“There is hope,” Mark Rubinstein, the head of research at IFC Metropol in Moscow, said by phone on March 1. “Investors look for indications on potential demand for Russian exports and as the U.S. economy looks promising, it gives some optimism.”

The Bloomberg Russia-US Equity Index has risen 0.8 percent this year, while the nation’s 50-stock Micex Index has dropped less than 0.1 percent. The Standard & Poor’s 500 Index has rallied 6.5 percent so far in 2013.

ETF Slides

The Market Vectors Russia ETF, the largest dedicated Russian exchange-traded fund, fell 1.9 percent last week to $28.81. The RTS Volatility Index, which measures expected swings in the stock futures, fell 3.5 percent to 21.56 in U.S. hours March 1.

Mechel has led the declines in the Micex this year, tumbling 18 percent, amid a drop in commodity prices. The S&P GSCI Spot Index of 24 raw materials has slipped 0.6 percent in 2013. The gauge completed a fourth weekly slump. U.S. shares of OAO GMK Norilsk Nickel, the world’s largest producer of nickel, and OAO Gazprom, Russia’s biggest company, have fallen at least 7.7 percent in 2013.

Oil slipped as two manufacturing indexes in China, the world’s biggest consuming country of the commodity after the U.S., showed a slower-than-estimated pace of expansion.

The price of metallurgical coal at the port of Queensland in Australia was unchanged at $171 a ton on Feb. 22, according to data compiled by Bloomberg from Energy Publishing Inc., a trade publication. The steelmaking raw material has tumbled 17 percent as global production of the metal has slumped. Globally steelmakers used 71 percent of their capacity on Jan. 13, compared with 75.3 percent a year earlier, according to the most recent data provided by the World Steel Association.

Most Indebted

With net debt of $9.3 billion as of Dec. 1, according to its website, Mechel is the most indebted Russian mining company after the world’s biggest aluminum producer United Co. Rusal.

“Mechel and the entire mining industry suffer from a decline in commodities prices,” Valentina Bogomolova, an analyst at UralSib Financial Corp., said by phone from Moscow on March 1. “Mechel depends on steel and coal prices even more than peers, because of its debt burden.”

OAO Mobile TeleSystems, Russia’s biggest mobile phone operator, rose 1.4 percent to $20.98 on March 1, the highest level since May 2011. The stock had the biggest advance on the Bloomberg Russia-U.S. Index last week, adding 2 percent.

Crude oil for April delivery slid 1.5 percent to $90.68 a barrel on the New York Mercantile Exchange, the lowest settlement since Dec. 24. Prices fell 2.6 percent last week. Brent crude for April settlement on the ICE Futures Europe exchange declined 0.9 percent to $110.40 a barrel. Urals crude slid 0.4 percent to $107.32, to cap a 4.2 percent decline last week.

Russia’s ruble declined 0.5 percent to 30.6990 per dollar on March 1. The currency lost 0.1 percent to 34.8743 against the dollar-euro basket used by Russia’s central bank to manage swings that erode exporter competitiveness.

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