OREANDA-NEWS. January 19, 2011. Industrial Union of Donbass (IUD), the owner of Alchevsk steelworks, has raised USD  500mn in emergency finance from the indirect shareholder Bastion LLC to cover the steelmaker’s operating costs, as noted by Metal Bulletin. This facility is to service other debts for raw materials and energy supplies.

The news is POSITIVE for ALMK. Working capital was an issue for Alchevsk for more than a year now. In 2010 Alchevsk Steelworks has decreased production by 20.4% yoy due to the working capital shortfalls. In our view, the new facility coupled with recent debt restructuring should significantly improve the company’s operational performance allowing for a sizeable production lift at the onset of the substantial steel price advances expected in 1H2011. We expected any news of this kind to be a catalyst for the stock and this one confirms our stance. ALMK has surged 9.59% on Jan 17 trading session following the publication of the news and we feel it is not a ceiling for the stock.