Daily analyst comments

According to the Interfax agency, the Mechel steel company may give up an IPO of its preferred shares or bring down its price range for the placement of the shares. The lack of clarity as to how the company intends to use its proceeds from the IPO is among the negative factors making potential investments in the company less appealing. According to unconfirmed information, the average price investors are prepared to pay for the shares does not exceed USD 34-35 per share.

We believe that the information released confirms the correctness of our estimate of the company's fair value. Our estimate puts the fair price in the neighborhood of USD 30 per preferred share, depending on the required rate of return. With required annual returns at 12%, the fair price of the company's preferred shares should stand at USD 29.7 per share as of late July, 2008. Interfax said the bid book for the shares would be closed on July 22 and the placement price was to be finalized on July 23.