January 19, 2018

Severstal reports Q4 & FY 2017 operational results

PAO Severstal (MICEX-RTS: CHMF; LSE: SVST), one of the world’s leading vertically integrated steel and steel-related mining companies, today announces its operational results for Q4 2017 & FY 2017.

Q4 2017 GROUP HIGHLIGHTS

• Hot metal output increased 5% to 2.34 mln tonnes (Q3 2017: 2.23 mln tonnes) compared with the previous quarter, and crude steel production was up 2% at 3.01 mln tonnes (Q3 2017: 2.94 mln tonnes).

• Consolidated steel product sales declined 2% to 2.78 mln tonnes compared with the previous quarter (Q3 2017: 2.86 mln tonnes) after significant stock sell-off in Q3. Meanwhile, the Company replenished stocks of steel products at its export subsidiaries in Q4. Semi-finished product volumes growth was driven by Mill-2000 maintenance works and increased demand for billets in Q4.

• The Company increased export sales volumes to 42% (Q3 2017: 35%). The share of high value-added (HVA) products within the sales portfolio remained high at 47% (Q3 2017: 49%) driven by the continued destocking of large diameter pipes (LDP).

• Coking coal concentrate sales volumes from Vorkutaugol declined 10% impacted by the long-wall repositioning at the Komsomolskaya mine and the normalisation of production volumes of “Concentrate K” coal after an uptick in Q3.

• Iron ore pellet sales increased 39% and totalled 3.30 mln tonnes (Q3 2017: 2.38 mln tonnes) due to the realisation of a significant share of finished goods in transit in Q4, shifted from the previous quarter. Iron ore concentrate sales increased 6% q/q to 1.14 mln tonnes (Q3 2017: 1.08 mln tonnes). Iron ore concentrate sales improvement in Q4 reflects the consolidation of the Yakovlevskiy mine.

• In Q4 2017 raw material prices were high: HCC prices were mainly supported by supply disruptions at Dalrymple Bay (Australia) and Chinese restocking ahead of the heating season. Iron ore prices recovered as a result of higher steel margins in China and improved demand for higher quality iron ore. Global export steel prices remained high on the back of Chinese production restrictions in the November-March heating season and decreased exports. Though Russian steel demand softened due to seasonal factors, Russian export prices followed global trends and are expected to increase in Q1 2018. Industry experts anticipate Russian steel demand to continue growing in 2018 by 3-4%.

• In 2018, Severstal Resources anticipates an increase in production volumes of additional 40kt of pellets at Karelsky Okatysh and additional 370kt of coking coal concentrate at Vorkutaugol. Yakovlevskiy mine iron ore output is estimated to be c.1.3 million tonnes for 2018. Severstal Russian Steel production volumes growth will be positively impacted by a new ladle furnance (+75kt of crude steel) and a new HDG (+400kt) and colour-coating (+200kt) unit.  

SUMMARY OF KEY PRODUCTION, SALES VOLUMES AND SELLING PRICES DATA

Production, tonnes

Q4 2017

Q3 2017

Change, %

2017

2016

Change, %

Crude Steel (Russian Steel)

3,012,107

2,943,903

2%

11,651,166

11,630,333

0%

Hot metal (Russian Steel)

2,343,386

2,231,663

5%

9,157,526

9,317,516

(2%)

Sales volumes, tonnes

Q4 2017

Q3 2017

Change, %

2017

2016

Change, %

Coking coal concentrate

827,609

914,737

(10%)

3,280,122

4,146,803

(21%)

Iron ore pellets

3,297,251

2,376,621

39%

11,133,219

10,842,369

3%

Iron ore concentrate

1,136,650

1,075,091

6%

4,251,044

4,103,389

4%

Total steel products (Consolidated)

2,784,373

2,855,071

(2%)

10,919,346

10,671,897

2%

Total steel products (Russian Steel)

2,792,509

2,867,465

(3%)

10,959,216

10,714,890

2%

 

High value added steel products, %

Q4 2017

Q3 2017

Change, %

2017

2016

Change, %

Severstal (Consolidated)

47%

49%

(2 ppts)

46%

42%

4 ppts

Severstal Russian Steel

47%

49%

(2 ppts)

46%

42%

4 ppts

 

SEVERSTAL’S CONSOLIDATED SALES (NET OF INTERCOMPANY SALES)

Sales volumes, tonnes

Q4 2017

Q3 2017

Change, %

2017

2016

Change, %

Coal:

418,486

371,465

13%

1,699,729

2,939,565

(42%)

Coking coal concentrate

57,687

49,801

16%

126,637

899,542

(86%)

Steam coal

360,799

321,664

12%

1,573,092

2,040,023

(23%)

Iron ore:

2,239,773

1,362,572

64%

6,644,519

6,098,502

9%

Iron ore pellets

2,159,754

1,342,593

61%

6,513,605

5,978,222

9%

Iron ore concentrate

80,019

19,979

301%

130,914

120,280

9%

Semi-finished products

217,935

72,769

199%

518,522

724,155

(28%)

Rolled products:

2,073,440

2,261,672

(8%)

8,540,320

8,081,276

6%

Hot-rolled coil

905,081

1,001,739

(10%)

3,949,003

4,079,627

(3%)

Hot-rolled plate

239,361

187,292

28%

804,487

691,269

16%

Cold-rolled coil

306,426

352,617

(13%)

1,324,399

963,575

37%

Galvanised and metallic coated coil

176,104

210,697

(16%)

653,821

560,123

17%

Colour coated coil

84,791

133,579

(37%)

402,980

386,016

4%

Long products

361,677

375,748

(4%)

1,405,630

1,400,666

0%

Downstream products:

492,998

520,630

(5%)

1,860,504

1,866,466

(0%)

Metalware products

129,123

170,749

(24%)

614,657

639,132

(4%)

Large diameter pipes

166,189

122,794

35%

415,520

388,854

7%

Other tubes, pipes, formed shapes

197,686

227,087

(13%)

830,327

838,480

(1%)

 

Contacts

Investor Relations

Evgeny Belov

T: +7 (495) 926-77-66 ext. 6445

evgenii.belov@severstal.com

 

Public Relations

Anastasia Mishanina

T: +7 (495) 926-77-66 ext. 6457

anastasia.mishanina@severstal.com

 

Severstal’s financial communications agency - Hudson Sandler

Andrew Hayes / Emily Dillon / Fern Duncan

T: +44 (0) 20 7796 4133