Severstal, the second largest steel producer in Russia, announced on Thursday that it saw a small improvement in the global steel market as indicated by a smaller-than-anticipated drop in its first quarter net profit.
The company said that firm domestic demand and steadier prices would aid its Russian steel business during the second quarter. Other steel companies, including ArcelorMittal and Novolipetsk Steel, echoed the sentiment that the steel market is improving, Reuters reports.
“Although visibility in the global economic environment remains limited, we see slightly improved fundamentals for the global steel market in Q2, compared to Q1,” Alexei Mordashov, the chief executive and majority owner of Severstal, said, according to Reuters.
ArcelorMittal forecast improved Q2 net profit due to strong U.S. sales earlier in May and Novolipetsk Steel noted last week that it anticipated increased sales and margins in the second quarter. In contrast, steel futures in Shanghai dropped more than two percent to a seven month low on Wednesday and the World Steel Association predicted on Monday that markets could get more difficult as the year goes on due to weakening growth in China and a European recession.
Severstal had a net profit of $427 million in Q1, compared with a $318 million forecast. The company had a net profit of $519 million in the first quarter of 2011 and a profit of $463 million in Q4 2011. Profits dropped because of lower steel prices but were supported by a stronger ruble and the company separating its Nord Gold unit.