Big steel deals no longer goal for Severstal in U.S. -new CEO
* U.S. steel demand is good, but prices low
* Key issues for are oversupply, imports
By Silvia Antonioli
LONDON, Oct 3 (Reuters) - The time of big acquisitions and expensive projects at Severstal North America is over and the steelmaker will now focus on improving returns, the new chief executive said on Thursday.
Recently appointed CEO Saikat Dey, 38, said he and his new team will try to make sure they get the best return in an industry suffering from extensive over capacity and slower growth in demand.
Talking about the previous management, Dey, who joined Severstal in 2011 from McKinsey and Company, said it was "probably the right team for what was required at that point in time. The big merger and acquisition deals that we did and the divestment.
"Now we face different challenges altogether. We built the car, now we are going to drive it," he told reporters during a conference call.
Severstal North America - a wholly owned subsidiary of Russia's second largest steel producer, Severstal - has the capacity to produce a total of about 3.4 million tonnes at its U.S. plants in Dearborn, Michigan, and Columbus, Mississippi.
It is currently running near full capacity, at a 3.0 million tonnes a year, as demand for the flat steel it produces is good, especially from the growing U.S. automotive market.
The problem is that prices are "down the toilet," Dey said.
Although prices in the United States rose about 15 percent during the summer, they remain almost 30 percent below a 2011 peak, and 40 percent below their pre-crises levels.
Increasing competition from alternative materials such as plastic, aluminium and carbon, and imports from cheaper producers in areas such as Asia are now the biggest issues.
"At this point, whether we like it or not, that 300-400 million tonnes of overhang is not going anywhere and, until that goes somewhere, fundamentally speaking, you have got an issue," Dey said.
"Consolidation, rationalization, better behavior of people taking out capacity will bring a better margin environment in the future.
"We had fairly good results. Not as good as we would like them to be, but I don't think the group is thinking of us as the black sheep," he added.
The unit's parent company in Russia posted a net loss of $44 million in the second quarter of 2013 from a $155 million profit the year ago quarter.
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