18 October 2011
Industrial production growth decelerated to 6.4% y-o-y in September vs. 9.6% y-o-y in August, the State Statistics Committee reported yesterday. In m-o-m terms, industrial output declined by 0.3% vs. 2.2% in August. Svetlana Rekrut: In September, chemicals and metallurgy were most responsible for the slowdown in output: chemicals production growth declined from 21.4% y-o-y in August to 9.4% y-o-y in September. We attribute chemicals output deceleration to a high base effect from the previous year (i.e. ammonium output in September 2010 increased by 24% m-o-m, 9M10 growth reached 40% y-o-y) while global prices remain relatively stable. Deceleration in metallurgy is related to a decline in external market demand, which is reflected in steel price performance (CIS Steel FOB dropped by 13% over the last four weeks). We expect industrial production to decline in the coming month due to a higher base effect and deteriorating global markets conditions. We see industrial output growth at ~6.5-8.0% y-o-y at yearend.