UPDATE 2-Severstal says global steel market improving

* Q1 net profit $427 million, vs forecast $318 mln

* Q1 EBITDA $562 million, vs forecast $630 mln

* Sees Q2 steel market improving despite volatility

* Shares close down 0.4 pct (Adds analyst comments, background)

By Alexei Anishchuk

MOSCOW, May 24 (Reuters) - Severstal, Russia's second-biggest steel producer, said it saw a slight improvement in the global steel market, echoing recent comments from peers as it reported a smaller-than-expected fall in first-quarter net profit.

The company said on Thursday steadier prices and firm domestic demand would help its core Russian steel business in the second quarter.

"Although visibility in the global economic environment remains limited, we see slightly improved fundamentals for the global steel market in Q2, compared to Q1," chief executive and majority-owned Alexei Mordashov said.

Earlier this month, market leader ArcelorMittal forecast higher second-quarter net profit on strong U.S. sales.

Last week, Novolipetsk Steel, the first Russian producer to post quarterly results, missed market estimates but said it expected sales and margins to increase in the second quarter.

Against that, Shanghai steel futures fell more than 2 percent to a seven-month low on Wednesday on concerns about a weakening Chinese property market.

The World Steel Association also said on Monday steel markets could get tougher as the year progresses amid weakening growth in China and recession in much of Europe.

Severstal shares closed down 0.4 pct, underperforming the broader MICEX index, which ended off 0.2 percent.

Uralsib Bank analyst Dmitry Smolin said investors were focusing on the uncertain future.

"Everyone is now looking at the second half of the year, and the results were not a driver for the stock (today)," he said.

STRONG BALANCE SHEET

Severstal posted a first-quarter net profit of $427 million, compared with a forecast for $318 million in a Reuters poll of analysts. That was down from $519 million a year ago and below the $463 million reported for the fourth quarter of 2011.

Profits were hit by lower steel prices than a year earlier, but supported by a stronger rouble and the impact of the company separating its Nord Gold unit, which it listed in London following a share swap.

Earnings before interest, tax, depreciation and amortisation (EBITDA) fell to $562 million, below a $630 million forecast and also less than $798 million the same time last year.

The group's EBITDA margin was 15.3 percent.

Revenue of $3.68 billion exactly matched forecasts and was above the $3.48 billion in the 2011 period. Severstal's net debt/EBITDA ratio stood at 1.1 at end-March.

Severstal, with debts of $6.04 billion as of March 31, is a favourite among analysts because of its strong balance sheet.

It must repay $1.7 billion to lenders in the next four quarters, but it has cash and cash equivalents of $2.24 billion along with $882 million in unused credit lines.

"When you have (over) $2 billion on your accounts and you only have to pay a small part of the debt, the situation is much better than (that of your competitors)," Aton bank analyst Dinnur Galikhanov said.

Several other Russian metal giants including Magnitogorsk Iron&Steel Works and Mechel have raised concern among investors over high debt levels amid weak steel markets.

During a conference call with analysts, chief financial officer Alexei Kulichenko said Severstal did not plan to take advantage of its strong finances to acquire weaker rivals.

"We do not have any money for that," he said. (Editing by Dan Lalor and Mark Potter)