Russian steel demand to fall in H1 '09 - Severstal

PARIS Dec 2 (Reuters) - Russian steel demand could fall by up to 10 percent in the first half of 2009 due to a global slowdown, but may see a "significant recovery" in the second half, Russia's biggest steelmaker Severstal (CHMF.MM) said.

"In the first half, we could see a big decline; in excess of 5-10 percent, maybe more (in consumption)," said Andrey Laptev, head of strategic department at Severstal told a Metal Bulletin steel conference in Paris on Tuesday.

"My guess is that there will be a very big difference in the first and second half of 2009...In the second half we could see a significant recovery in consumption," Laptev said.

Steel demand and prices have collapsed in the last four months, due to deteriorating demand from major steel consuming industries such as the construction, automotive and white goods.

"The worst of the mess was November and the worst quarter is fourth quarter," Laptev said. "We are facing a combination of sharply reduced demand and destocking," he said.

"All this stimulus packages do not seem to have had enough time to make it into the market."

China in November has announced a massive 4 trillion yuan economic stimulus plan, involving infrastructure projects to boost spending and domestic demand.

But Laptev said Severstal's balance sheet was well-placed to weather the storm in financial markets. "At the moment Severstal has cash in excess of $2 billion," he said.

In terms of demand, the outlook for Russia remained strong for the long-term, Laptev said, due to the country's "huge need" for new construction and infrastructure.

"The estimates show we will need at least $600 billion in the next 20-25 years to maintain the level of infrastructure," he said, adding the country also needed more railways and airports. "These are very steel intensive," he said.

Apart from shrinking demand, tighter credit markets is another factor which slashes consumption in the steel sector.

But Laptev said Russian consumers retained purchasing power despite the crisis as their level of personal debt was at much lower levels compared to Europe and the United States.

(Reporting by Humeyra Pamuk; editing by Nigel Hunt)