Billionaire Mordashov said about the possible wave of bankruptcies in metallurgy

Billionaire Mordashov said about the possible wave of bankruptcies in metallurgy

Alexey Mordashov
General Director of JSC “Severstal”

Co-owner of Severstal, billionaire Alexey Mordashov (5-e a place in list Forbes with a fortune of $13 billion) believes that the crash in commodity markets may prove to be long term and may lead to a wave of bankruptcies of loss making producers of iron ore and steel. He said this in an interview with Bloomberg.

However, the businessman notes that the industry may see some structural changes. According to him, in the next 15 years or sooner, China will actively begin to market scrap that “can lead to displacement of a large part of production in the direction of the steel” blast furnace Ironmaking.

Mordashov admitted that there are opportunities for consolidation in the Russian steel industry that would cut costs. However, according to the Chairman of the Board of Directors of Severstal, while “no practical steps” in this regard is not done.

Severstal, according to Alexey Mordashov, could further reduce the costs, but ultimately performance will depend on the stability of the economy. Even if she will start to recover in 2016, steel consumption this year will not increase after last year’s drop to 12 percent, he said.

The businessman also said that he was ready to invest personal funds in foreign assets, but also looks at the field of medicine and agriculture. “I prefer to invest in assets, which I understand and where I can add value. I’m a strategist, not a portfolio investor,” said co-owner of “Severstal”.

In early February, BCS analysts warned of the rising price of the metal. Despite falling demand in the steel industry, prices for hot-rolled steel in February in Russia will rise in February by 5%, analysts reported. About the upcoming price increase and warned steel companies themselves. Domestic prices follow export with a lag of two months, and in global markets continues to rebound, noted the experts of the BCS.