Putin promises to help Russia's steelmakers

Putin promises to help Russia's struggling steel makers by stimulating demand. Prime Minister Vladimir Putin told Russian steel executives gathered Friday at a giant Stalin-era plant that he would help their struggling industry cope with the economic downturn. "We will try our best to stimulate demand for metals," he told the executives. "We will place orders with construction companies, auto makers and other traditional (steel) consumers." Putin added, however, that the industry will not be saved "at the expense of the budget" or "at the expense of auto makers or construction companies." The steel makers were hoping to win the powerful prime minister's support for tax breaks. Putin offered tax breaks to the coal industry on Thursday, giving shares in coal companies a strong boost. Before chairing the meeting, Putin toured the sprawling Magnitogorsk Iron & Steel Works, Russia's third largest steel producer, which began production in 1932 as a showpiece of the Soviet Union's industrial achievement under Josef Stalin. Putin visited the construction site of a $1 billion cold-rolling workshop scheduled to go into operation in 2011 and a nearly 2 kilometer-long (1.2 mile-long) hot-rolling workshop, where slabs of burning-hot metal roll out on the production floor, heating the workshop to sweltering temperatures. At a similar meeting with steel executives a year ago, Putin lashed out at the head of major coking coal producer Mechel for what he described as Mechel's scandalously high prices. His remarks caused the company's ADRs to plummet, cutting their value in half. Mechel's shares, which still trade far below last year's levels, rose nearly 13 percent in the U.S. on Thursday following Putin's promises of tax breaks. Russian steel demand will decline by 22 percent this year, according to the latest report by the World Steel Organization. Steel output in Russia — the world's fourth largest steel producer — dropped 33 percent in June year-on-year.