Fuel and energy complex, metallurgical production, production of chemicals and petrochemicals, machine-building industry, the military-industrial complex, wood production, light industry in January-July, 2006.

Fuel and Energy Complex

According to the updated information provided by Minpromenergo of Russia, the production of primary fuel and energy during January-July, 2006 came to 1024.3 million tons of oil equivalent, which is 2.6% up on the January-June, 2005 results.

The production of coal increased by 5.5%, of gas – by 26%, of oil – by 2.3% during the period under review. The production of electrical energy by nuclear plants went up by 5.9%. 

The production of oil containing gas condensate during January-July amounted to 276.7 million tons, which is 6.3 million tons higher than the results achieved in January-July, 2005. 40.92 million tons were produced in July (2.4% up on July, 2005 results), with the average daily production of up to 1320 thousand tons (June 2006 – 1317 thousand tons).

OAO LUKOIL, OAO Rosneft, TNK-BP, OAO Surgutneftegas and OAO Gasprom Neft were the leaders in the production of oil containing gas condensate. 

According to the updated information provided by CDD FEC, 123.9 million tons of oil were exported to the far-abroad and Baltic countries in January-July of 2006 (deliveries from oil processing plants taken into account), and 21.5 million tons were exported to the CIS countries. 18.34 million tons of oil were exported to the far-abroad countries in July, 2006, 2.8 million tons were delivered to the CIS countries, including 1.7 million tons to Belorussia, 0.9 million tons to Ukraine and 0.2 million tons to Kazakhstan.  

A stable tendency remains for the increase of oil deliveries to the internal market. The volume of the primary processing of oil stock came to 124.95 million tons in January-June, 2006, 5.8% up on the January-July level. 18.95 million tons were processed in July, 2006 (by 3.6% higher than in July of 2005). 45.2% of the produced oil and gas condensate were processed (43.7% in January-July of 2005).

The output of oil products increased due to the growth of oil processing volumes. Thus, the production of motor gasoline came to 19.27 million tons (5.8% up on the corresponding period of 2005), of the diesel fuel – to 36.48 million tons (7.5% up), of the fuel oil – to 33.76 million tons (3.9% up) during the last seven months of the current year.  3.18 million tons of motor gasoline, 5.58 million tons of diesel fuel and 4.62 million tons of fuel oil were produced in July, 2006. 

Gas production came to 383.05 bullion cubic meters in January-July, 2006 (2.6% higher than in January-July, 2005). OAO Gasprom produced 319.4 billion cubic meters (the same as in January-July, 2005). The share of Gasprom in the total volume of gas production amounted to 83%. Oil companies and other gas producers are ramping up production  (20.5% increase in comparison with 2005 results).

According to the updated information provided by CDD FEC, 234.8 billion cubic meters of gas were delivered to the Russian consumers in January-July, 2006 (3.6% up on January-July, 2005).

97.2 billion cubic meter of gas were exported to the far-abroad and Baltic countries in January-July of 2006,  23.4 billion cubic meters of gas were exported to the CIS countries (in July, 2006 – 11.8 and 2.8 billion cubic meters of gas respectively).

Coal mining in January-July, 2006 amounted to 174.73 million tons (5.5% up on the January-July, 2005 results), including 22.43 million tons in July (5.0% up). The growth of underground coal mining exceeded by twofold the open-cut mining growth rates (8% and 4% respectively).

Most of the coal (about 69%) was extracted from the Kuznetskiy and  the Kansko-Achinskiy coal mines. In January-July, 2006 the mining rates increased in these regions by 6.7% and 12.7% respectively in comparison with 2005 results. The mining grew by 1.8% in the Pechora basin, and it saw a 7% decrease in the Donetsk basin.

According to the updated information of the Central Dispatch Control of the Fuel and Energy Complex of the Russian Federation, 112.8 million tons of coal were delivered to the internal market during the first seven months of 2006 (including the coal for own needs), which amounts to 103.5% in comparison with the same year of 2005.  53.9 million tons were used for the needs of Power Plants (105.1%), 22.7 million tons – for coking needs (99.9%), for the needs of the population, on the utilities and for the agrarian needs – 13.5 million tons (90.4%). 45.2 million tons were exported abroad to outside of the CIS countries, and 4.8 million tons – to the CIS countries.

The production of electrical energy in January-July, 2006 came to 572.29 billion kWthr (4.7% up on January-July, 2005 results). In July the electrical energy output was 70.5 billion kWthr (5.5% up  the July of 2005 results).  

Power Plants produced 382.52 billion kWthr (7.5% up on the same period of 2005), Hydro Stations generated 99.55 billion kWthr (94.4%), Nuclear Plants produced 89.98 billion kWthr (105.9%).

In January-July of 2006 was observed the following energy production ratio structure: Power Plants – 66.8%, Hydro Stations – 17.4%, Nuclear Plants – 15.7% (in the same period of 2005 these numbers were  65.1%, 19.3% and 15,5% respectively).

The coal and fuel oil storage at RAO EES’s Power Stations, as of August 1, exceeded the required levels, by 18.8% and 13.8% respectively.

The consumption of electrical energy in January-July 2006, according to the preliminary data available, came to 563.9 billion kWthr (4.7% up on the results of the same period of 2005).

The average electrical energy tariff paid by the Russian consumers in July, 2006 was 95.61 kop./kWthr (5.3% up on the December, 2005 figures). Industrial consumers paid 89.48 kop./kWthr (4.9% up), city population paid 136.99 kop./kWthr (16.6% up), rural population paid 95.99 kop./kWthr (20.7% up). 

According to the preliminary information from CDD FEC, 15.8 million tons of motor gasoline (82% of the total production volume), 16.5 million tons of diesel fuel (45%) and 12 million tons of fuel oil (36%) were delivered to the internal market from the oil processing plants of oil companies during the first seven months of 2006. In comparison with the equivalent period of 2005, the volumes of all oil products’ deliveries to the internal market saw an increase. The motor gasoline deliveries went up by 3.9%, the diesel fuel and the fuel oil deliveries saw a 5.2% and 19.9% rise respectively. In July of 2006 the deliveries for these three types of fuel amounted to 2.63 million tons, 2.51 million tons and 1.2 million tons pro tanto.  

In January-July, 2006 major consumers of the Russian Federation were supplied with oil products on the basis of signed contracts.

The following types and quantities of oil products were delivered to the Russian Federation Ministry of Defense during the first months of 2006: motor gasoline – 69.3 thousand tons (60% to the volume of deliveries made in the respective period of 2005), diesel fuel – 223.9 thousand tons (77%), aviation kerosene – 446.4 thousand tons (114%), oil-fuel – 536.7 thousand tons (92%).

The following deliveries of oil products were made by oil companies to OAO RZhD during January-July of 2006:  diesel fuel – 1725.5 thousand tons (98% to the deliveries effected in the equivalent period of 2005), fuel oil – 394.2 thousand tons (105%).

The deliveries of fuel oil made by oil companies to AO-Energo and to power stations of RAO EES Russia in January-July, 2006 came to 3760 thousand tons (49% up on the scope of deliveries effected during the same period of 2005). 

The deliveries of motor gasoline and diesel fuel effected by oil companies to agricultural producers in January-July, 2006 amounted to the following: motor gasoline – 323.7 thousand tons (84% to the scope of deliveries made in the respective period of 2005), diesel fuel – 862.9 thousand tons (79%).

The deliveries of oil products made by oil companies to the Far North regions and to the regions with restricted cargo delivery schedules, assimilated to them, came to the following in January-July, 2006: motor gasoline – 41.6 thousand tons (48% to the scope of deliveries effected in the same period of 2005), diesel fuel – 372.4 thousand tons (80%), aviation kerosene – 91.7 thousand tons (81%), fuel oil – 92.9 thousand tons (29%). 

Metallurgical production

The growth of metallurgical production and prefabricated metal products was 11.4% in January-July, 2006, as compared with the equivalent period of 2005. The metallurgical production saw an 8.6% increase.

The production of ferrous metal finished rolled steel came to 33.7% million tons in the first seven months of 2006 – 7.9% up on the results of the equivalent period of 2005. At that, the production of assorted rolled steel increased by 9.4%, and of flat sheet metal – by 6.3%.

The share of assorted rolled steel in the aggregate production of the ferrous metal finished rolled steel went down to 55.5% in January-July, 2006 (against 56.0% in January-July of 2005), the share of flat sheet metal went up a notch and amounted to 43.3% (against 43% in the first seven months of 2005). 

The production of cold-rolled sheet metal went up by 8% in January-July, 2006.

The production of sheet metal, including tin-plates, was up by 19.1% in the first seven months of 2006.

According to the updated information on the operation of iron and steel foundries, the dynamics of the production of ferrous metal finished rolled steel in July, 2006, in comparison with July, 2005, amounted to the following: OAO Magnitogorskiy Metallurgucal Mill – 102.1%, OAO Severstal – 93.8%, OAO Mechel – 138.1%, OAO Novolipetskiy Metallurgical Mill – 105.4%.

According to the available estimates, the growth of the ferrous metal finished rolled steel production can be over 5% in 2006 (in comparison with 2005).

The production of tubes and pipes during the first seven months of 2006 came to 4312 thousand tons, 17.3% up on the results of the equivalent period of 2005. The growth in the production of tubes and pipes at the leading tube and pipe producing enterprises amounted to the following: OAO Vyksunskiy Mettalurgical Plant – 60.5%, OAO Cheliabinskiy Pipe-Rolling Plant – 19.6%, OAO Severskiy Tube and Pipe Plant – 12.5%, OAO Taganrog Metallurgical Plant – 13.2%.

The production dynamics at OAO Volzhskiy Tube and Pipe Plant, OAO Pervouralsk Novotrubniy Plant and OAO Sinarskiy Tube and Pipe Plant remained on the level reached in 2005.

The growth in the production of main types of tubes and pipes (in comparison with January-July, 2005) came to the following: seamless pipes – 3.4%, welded pipes – 12.2%, electric-welded pipes – 129.2%, welded pipes of big diameters – 34.9%, casing pipes – 24.5%, pump and compressor pipes – 18.9%, oil electric-welded pipes –26%, carbon steel seamless thin-walled pipes – 60%, electric-welded thin-walled pipes – 24%, water and gas pipes – 11%.  The production of drilling pipes saw a 6.8% decrease.

According to the available estimates, the production of tubes and pipes can amount to 7200 thousand tons in 2006, which is 7.5% up on the 2005 level.

In January-July, 2006 the growth in the production of primary aluminum (including silumin) came to 2.1% in comparison with the 2005 respective period results. This production growth was mainly determined by the expansion of the production of alloys. The production growth of the leading aluminum producers in January-July, 2006 (in comparison with January-July, 2005) amounted to the following: OAO Krasnoyarsk Aluminum Plant – 1.8%, OAO Bratskiy Aluminum Plant – 0.9%, OAO Sayanogorsk Aluminum Plant – 5.1%, Uralsk Aluminum Plant – 4.0%. 

The tendency to deliver the primary aluminum mainly to the external market was maintained in 2006. According to the updated information, the enterprises incorporated with the RUSAL GROUP exported about 75% of their products in January-July, 2006.

The primary aluminum production was 2.0% higher in January-July, 2006 than in the same period of 2005.

The refined copper production in January-July, 2006 saw a 0.1% increase in comparison with the same period of 2005.

At that OAO GMK Norilskiy Nikel decreased its copper production by 4.3%. It was determined by a decrease in the production of refined copper extracted from secondary raw materials at OAO Kolskaya GMK. 

The growth of refined copper production at Ural plants constituted 3.3% in January-July, 2006 in comparison with the same period of 2005. However, the production of copper went up by 27.4% at ZAO Kishtimskiy Copper and Electrolyte Plant and decreased by 2.2% at OAO Uralelectromed. 

The production of refined copper was restored at OAO Sukholozhskiy Plant of Secondary Nonferrous Metals in June, 2006. The copper growth dynamics constituted 69.1% during the first seven months of 2006 in comparison with the same period of 2005.

The production of copper went up by 25.3% at ZAO Novgorodskiy Metallurgical Plant.

On the whole, the production of refined copper is expected to see a 0.2% rise in comparison with 2005 results.

The production of nickel grew by 7.4% in January-July, 2006.

At that, the production of nickel in January-July, 2006 went up by 38.2% at the enterprises located in the Privolzhsk-Uralsk region (in comparison with the results achieved in the same period of 2005). OAO GMK Norilskiy Nikel increased the nickel production by 2.5% in January-July, 2006.

On the whole, the nickel production in 2006 is expected to be 2.5% higher than in 2005.

Production of Chemicals and Petrochemicals

Chemical production grew by 2% in January-July, 2006 in comparison with the same period of 2005. The production of general mechanical rubber and plastic goods increased by 10.6% during this period. At that, the production of chemical crop protecting agents, polystyrene, coloring agents, plastic goods, sodium carbonate, synthetic ammonia, nitrogen fertilizers and synthetic rubber decreased at outrunning rates.  

However, the overall production of mineral fertilizer went down by 4.4% in January-July, 2006, which is determined by the significant decrease of  potash fertilizer production due to the changes in the internal market of the raw materials needed for potash fertilizer production.  

An 8.9% decrease in the production of chemical fibers and threads is mainly determined by low competitiveness of domestic products against imported counterparts.

Decreased polyethylene (0.4%) and polypropylene (9.3%) production is determined by the lack of raw materials at a number of the industry enterprises (including the lack of ethylene at OOO Stavrolen (the town of Budennovsk) and at OOO Tomskneftechim).

Polyvinyl production grew up in January-July, 2006 by 1.3%. Alongside with that, the production of polyvinyl went down due to major overhauls at a number of enterprises.

Polystyrene production increase in January-July, 2006 was the highest in the production of basic polymers and amounted to 18.7% in comparison with the January-July, 2006 levels.

6.03 million truck tires were produced in January-July, 2006, which is 12.2% lower than the results achieved in January-July, 2006. The production of passenger car tires saw a 2% increase. 

The production of truck tires decreased due to restructuring and assortment changes at OAO Jaroslavskiy Tire Plant, OAO Omskshina, OAO Voltair and OAO Uralshina.

Synthetic rubber plants produced 689 thousand tons of synthetic rubber, 3% up on the results of the same period of 2005. The production growth was determined by the expansion of export deliveries of the synthetic rubber due to the growth of world prices.

According to the available estimates, 6.2 billion dollars worth of chemical and petrochemical products were exported in the first half of 2006.

Significant increase of synthetic ammonium export continued in 2006 (in cost and physical terms), which was mainly determined by the global growth of prices. Methanol export also saw a rise.

The quantities of synthetic rubber export deliveries grew by 12%, its deliveries calculated in cost terms increased by 17% in comparison with January-June of 2005).

The external market competitive environment for the market of mineral fertilizer remained rather favorable in January-June, 2006.

The growth of import of some chemicals without which it is not possible to produce crucial chemical goods was mainly determined by the lack of domestic production capacities.

Мachine-Building Industry

The dynamics of the machine and equipment production came to 92.1% in January-July of 2006 in comparison with the respective period of 2005.

At that, the growth in the production of tractors was 21% in January-July of 2005 in comparison with the respective period of 2005. The production of wheel-type tractors came up by 38.8%, and the production of track-type tractors grew up by 5.5%. This production growth was mainly determined by the enhanced effectiveness in the strategic planning for the development of industry-related enterprises. One of the factors of this planning was the consolidation of assets of a group of agricultural machinery producers on the basis of the Traktorniye Zavodi concern.

The production of grain harvesters is gradually becoming more stable. The production growth dynamics came to 95.5% (-4.5%) in January-July, 2006, with 91.4% for the first half of 2006. Thus, OAO PO Krasnoyarskiy Grain Harvester Plant plans to attain positive production rates by the end of the year, though the plant has experienced financial difficulties and the production was virtually stalled during the first quarter of 2006. 

Positive production dynamics are in progress at the machine tool building enterprises. Some growth was ensured in the production of metal-cutting machines in January-July, 2006 (0.1%). Alongside with that, the tendency prevails in this industry at a decrease in the production of new types of high-capacity competitive equipment, mainly due to the lack of investment policies aimed at the development of domestic machine tool building enterprises.  

The production of forge-and-press machines continues to grow (34.6% up on the January-July, 2005 results), which is mainly determined by an increase in orders for the upgrade restructuring procuring production areas, including at the machine tool building enterprises, as well as by the development of new types of high-capacity competitive equipment required by credit worthy customers.

The production of electrical, electronic and optical equipment went up by 3.0% in January-July, 2006. However, the production of AC motors with the rotation axis height of 53-355 mm increased by 24.1% during the first seven months of 2006. This production growth was mainly determined by the beginning of the production of new energy-effective competitive electrical motors in demand by solvent customers. 

The growth in the production of transportation vehicles and related equipment came to 3.3% in January-July, 2006 in comparison with the results achieved in the equivalent period of 2005.

The production of main-line cargo cars decreased by 7.2% during the first seven months of 2006, which was mainly determined by the restructuring and upgrade of the industry that was carried out due to an increased demand for innovative railway products (open-top cars, silo-type cars, fitting platforms).

The production of passenger cars increased by 31.9% in January-July, 2006. At that, the production grew at almost all enterprises of the industry (OAO Tverskoy Wagon-Building Plant, OAO Demikhovskiy Machine Tool Building Plant, ZAO Vagonmash, OAO Torzhokskiy Wagon-Building Plant).

Truck manufacturing grew by 18.4% in comparison with the same period of 2005. The enterprises that have organized the assembly of foreign truck brands provide a significant input into the development of the Russian truck manufacturing segment.  The production growth mainly takes place due to the increased production of light commercial vehicles at OAO GAZ, OAO UAZ, OOO TAGAZ.

The production of passenger cars came to 646 thousand vehicles during  January-July, 2006, which is 9.5% up on the results of the same period of 2005. The production growth was mainly determined by an advanced pace of passenger cars’ manufacturing at OAO Avtoframos, ZAO Ford Motor Company, OAO IzhAvto, OOO TAGAZ, ZAO GM-AvtoVAZ, OAO Severstal-avto and ZAO Avtotor. At that, the import of new foreign-made cars continues to grow faster than the domestic production.

The Military-Industrial Complex

The Military-Industrial Complex (MIC) production has been on a rise since March, 2006 (in July the growth was 7.8% in comparison with July, 2005).

According to the available updates estimates, the growth of  the overall MIC production during the first seven months of 2006 was 2.6% in comparison with the equivalent period of 2005. At that, the production of military goods increased by 6.9%, and the production of civil goods went down by 1.6%.

MIC production grew in all its industries, except for the production of conventional arms and ship-building (4.5% and 6.2% production decrease, respectively).

The most significant growth was achieved in the aircraft-building industry (10.1%) and in the radio and electronics sector (8.5%).

The production of civil products in MIC continues to see an unstable development. In January-July, 2006 its production growth (compared with the respective period of 2005) was the following: aircraft building industry – 1.1%, ammunition and special-purpose chemicals – 2.5%, radio and electronics industry – 4.5%. The production of civil products in other MIC industries saw a decrease. Conventional arms production and the ship-building industry saw the most significant decrease (7.0% and 5.8% respectively). These two industries produce over 40% of all civil products of the MIC.    

The production of railway technique and equipment (including the main-line cargo cars) decreased in the conventional arms industry. The production of metallurgical products and of the process equipment for the light industry also saw a decrease, the production of transportation vehicles and equipment was virtually stopped.

Decrease in the production of railway cars, that constitute about 30% of the overall civil industry production output, was mainly determined by contractual terms agreed upon with customers.

Decrease in the production of other types of the civil industry products was mainly determined by a decrease in demand due to the hard competition with imported counterparts. 

Decrease of production in the ship-building segment of the civil industry was mainly determined by the diminished volumes in the civil ship-building.

11 vessels were built in January-July of 2006 (a sea tanker, 2 river bulk-carriers, 8 service boats, including 6 sea and 2 river vessels), against 14 ships built during the same period of 2005.

At present 3 icebreakers, 13 tankers for different applications, 14 bulk-carriers, 2 drilling platforms for the Arctic shelf plate, seismic exploration vessels and a seine vessel are built. On the whole, 125 ships are built at present, including export orders.

Growth in the production of civil products in the aircraft-building industry is mainly ensured by the production of civil aircraft and equipment, including helicopters, airplane engines and equipment for civil planes.

In January-July the production of 10 airplanes (one IL 96-300, one TU-154, 6 Gzhel planes, 2 SM-92 planes) and 37 helicopters (including 7 MI-17-B5, 12 MI-8, 5 МI-17-1V, 5 МI-172, 4 КА-32, «Ansat) was ensured.

The growth of aircraft production at such enterprises as the state unitary enterprise Salut, OAO NPK Irkut, OAO Ulan-Ude aircraft-building plant, OAO Rostvertol, OAO Vertoletniy Zavod (Kazan) mainly resulted from the implementation of larger (in comparison with the same period of 2005) export contracts.

Alongside with that, the production of the most important civil products also increased, including the medical equipment, the process equipment for processing segments of the Agrarian Complex and spare parts for the automobile industry.

The growth in the production of civil products of the radio and electronics complex was achieved as the result of the production expansion for microelectronics products, resistors, semiconductor devices, electric vacuum devices, commutation and installation devices, electronic chips, radio components, UHV devices and medical equipment.

If the current development tendencies remain unchanged, the growth in the industrial production of MIC can constitute 4.6% for 2006, including 3.0% for the civil application products.

Wood Production

Timber processing and production of goods from wood went up by 2.1% in January-July, 2006 in comparison with the same period of 2005, the pulp and paper production increased by 4.8%.

Timber-harvesting operations dynamics constituted 92.0%, including the 93.4% in the commercial timber dynamics (6.6% below the results achieved in the equivalent period of 2005). 

Production of the main types of the Wood Complex products in January-July, 2006.

The growth of unprocessed timber export stopped (in June, 2006 – 92.7% of June, 2005 results) after the enactment (effective June, 1, 2006) of the order of the Russian Federation government # 158, dated March 24, 2006, which increased to round timber export taxes.

The production of plank timber (there was a significant decrease in January, 2006 – 89.8% to January, 2005 results) is gradually becoming more stable, approaching the last year level.

The production of wood-fiber board increased by 12.4% in June, 2006 in comparison with June, 2006. The development of capacities for the production of wood chipboards MDF continues at the enterprises of the Kostroma region and of the Komi republic that were commissioned in 2005. A decrease in the production of hard wood-fiber boards is determined, among other factors, by a worsened competitive environment on the external market (about 20% of the overall volume of produced boards were exported in 2005).   

The increase in the volume of pulp and paper production in January-July, 2006 (4.8% up on the results achieved in the same period of 2005) is mainly determined by an increase in the paperboard and paperboard packaging production (9.9% and 9% respectively).

Light Industry

The growth of production in the light industry in January-July, 2006 (broken up into types of economic activity) amounted to the following: textile and clothing manufacture – 9.1%, leather, leather goods and footwear manufacture – 12.4%).

The growth in textiles production amounted to 2.9% (cotton goods– 2.3%, silk goods – linen goods – 13.1%) , the production of bed-clothes increased by 13.5%, of hosiery – by 10.2%. The production of carpets went up threefold.

The production of clothes increased by 3.4% in January-June. Outrunning growth was achieved in the production of raincoats and suits (14.3% and 16.6%), as well as in the production of ladies’ fur coats (26.4%).  

The production of almost all types of leather and footwear saw an increase.  Thus, the production of chrome-tanned leather goods went up by 20.8%, of the Russian leather goods – by 6.4%, of coarse-leather goods – by 31.3%. The production of footwear saw a 9.3% increase.

Alongside with that, a decrease in the production of leather goods came to 14% in January-July, 2006, which is mainly determined by an increased competitive edge of imported goods on the domestic market.

In July, 2006 (in comparison with the June, 2006 results) the production of many types of the light industry products saw a decrease, which was mainly determined by seasonal factors, such as congregate vacations of employees and simultaneous shut-downs of a number of enterprises for routine inspections and repairs.