Vladimír Urbánek (Kurzy.cz)
Czech markets  |  October 11, 2012 13:39:43

NWR: Evraz temporarily suspend the operation of its steelworks

Evraz Vitkovice Steel in Ostrava temporarily suspended since the beginning of October the operation of its steel mills. Reason for the suspension to be low demand in the market rolled products and the company's efforts to optimize feedstock supplies.

Evraz Vitkovice Steel Plant is a major customer of ArcelorMittal Ostrava (AMO), which in 2011 bought from the mining company NWR 34 percent of its coking coal.In this context, we see a risk that the AMO in 4Q12 may reduce their demand for coking coal, if the steel plant remains closed permanently or for a long time. Contracts of this type of coal NWR disputes with their customers on a quarterly basis.

On the other hand, the threat that Evraz Vitkovice closed its plant in the Czech Republic, it was speculated a few times this year, especially in the context of the imminent substantial increase in the cost of emission allowances from 2013. We also believe that the current difficulties the steel industry in Europe, investors are well-known and largely already included in the price of shares in NWR and therefore we expect a slightly negative reaction NWR to this message.

Thomas Sykora, Patria Direct

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