April 10, 2018

Severstal reports Q1 2018 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 Q1 2018.

Q1 2018 GROUP HIGHLIGHTS

  • Hot metal output remained almost unchanged at 2.35 mln tonnes (Q4 2017: 2.34 mln tonnes) compared with the previous quarter, and crude steel production marginally increased 1% to 3.03 mln tonnes (Q4 2017: 3.01 mln tonnes).
  • Consolidated steel product sales increased 3% to 2.86 mln tonnes compared with the previous quarter (Q4 2017: 2.78 mln tonnes). Meanwhile, the Company reduced steel product stock levels at its export subsidiaries in Q1 2018. Growth in semi-finished product volumes was driven by a change in the structure of product mix and increased demand for billets.
  • The Company increased export sales volumes to 48% (Q4 2017: 42%) due to increased profitability of export deliveries. The share of high value-added (HVA) products within the sales portfolio remained high at 45% (Q4 2017: 47%), declining only 2 ppts due to a seasonal change in product mix.
  • Coking coal concentrate sales volumes from Vorkutaugol declined 25% affected by the long-wall repositioning at the Vorgashorskaya mine impacting production of “GZHO” grade concentrate. Meanwhile the Company managed to keep production of “2ZH” grade coal stable, fully matching the production needs of CherMK. 
  • Iron ore pellet sales decreased 28% and totalled 2.38 mln tonnes (Q4 2017: 3.30 mln tonnes) after the realisation of a significant share of finished goods in transit in Q4, shifted from the previous quarter, and an increased share of goods in transit in Q1 2018, which will be realised in subsequent periods.
  • Iron ore concentrate sales were up 14% q/q to 1.29 mln tonnes (Q4 2017: 1.14 mln tonnes) despite the seasonal slowdown in production at Olkon. Iron ore concentrate sales improvement in Q1 2018 reflects the consolidation of the Yakovlevskiy mine and stock sell-off at Olkon.
  • In Q1 2018 steel and raw material demand remained high. Global steel prices were supported by winter restrictions in China and seasonal increased Chinese demand in March, which contributed towards higher prices of raw materials. Additionally, HCC prices were high due to various supply disruptions in Australia and iron ore prices were high as a result of higher steel margins in China and stronger demand for high quality iron ore. Russian export prices, which are currently exceeding Chinese export prices due to steady demand in most consuming regions, are expected to follow global trends in Q2 2018.
  • In 2018, Severstal Resources anticipates an increase in production volumes of 40kt of pellets at Karelsky Okatysh and 370kt of coking coal concentrate at Vorkutaugol. Yakovlevskiy mine’s 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 furnace (+75kt of crude steel) and a new HDG (+400kt) and colour-coating (+200kt) unit.

SUMMARY OF KEY PRODUCTION, SALES VOLUMES

Production, tonnes

Q1 2018

Q4 2017

Change, %

Q1 2018

Q1 2017

Change, %

Crude Steel (Russian Steel)

3,033,094

3,012,107

1%

3,033,094

2,863,947

6%

Hot metal (Russian Steel)

2,347,372

2,343,386

0%

2,347,372

2,341,719

0%

 

 

 

 

 

 

 

Sales volumes, tonnes

Q1 2018

Q4 2017

Change, %

Q1 2018

Q1 2017

Change, %

Coking coal concentrate

628,463

832,559

(25%)

628,463

710,622

(12%)

Iron ore pellets

2,376,920

3,297,251

(28%)

2,376,920

2,579,417

(8%)

Iron ore concentrate

1,291,529

1,136,650

14%

1,291,529

802,939

61%

Total steel products (Consolidated)

2,864,783

2,784,373

3%

2,864,783

2,530,181

13%

Total steel products (Russian Steel)

2,874,862

2,792,509

3%

2,874,862

2,540,351

13%

High value added steel products, %

Q1 2018

Q4 2017

Change, %

Q1 2018

Q1 2017

Change, %

Severstal (Consolidated)

45%

47%

(2 ppts)

45%

44%

1 ppts

Severstal Russian Steel

45%

47%

(2 ppts)

45%

44%

1 ppts

 

SEVERSTAL’S CONSOLIDATED SALES (NET OF INTERCOMPANY SALES)

Sales volumes, tonnes

Q1 2018

Q4 2017

Change, %

Q1 2018

Q1 2017

Change, %

Coal:

403,842

418,486

(3%)

403,842

473,233

(15%)

Coking coal concentrate

46,126

57,687

(20%)

46,126

7,677

501%

Steam coal

357,716

360,799

(1%)

357,716

465,556

(23%)

Iron ore:

1,441,068

2,239,773

(36%)

1,441,068

1,341,387

7%

Iron ore pellets

1,187,612

2,159,754

(45%)

1,187,612

1,341,387

(11%)

Iron ore concentrate

253,456

80,019

217%

253,456

0

n.a.

Semi-finished products

256,159

217,935

18%

256,159

117,042

119%

Rolled products:

2,166,456

2,073,440

4%

2,166,456

2,006,200

8%

Hot-rolled coil

963,107

905,081

6%

963,107

984,077

(2%)

Hot-rolled plate

198,205

239,361

(17%)

198,205

193,298

3%

Cold-rolled coil

388,586

306,426

27%

388,586

320,186

21%

Galvanised and metallic coated coil

198,400

176,104

13%

198,400

117,517

69%

Colour coated coil

67,294

84,791

(21%)

67,294

84,404

(20%)

Long products

350,864

361,677

(3%)

350,864

306,718

14%

Downstream products:

442,168

492,998

(10%)

442,168

406,939

9%

Metalware products

128,251

129,123

(1%)

128,251

144,429

(11%)

Large diameter pipes

118,910

166,189

(28%)

118,910

68,367

74%

Other tubes, pipes, formed shapes

195,007

197,686

(1%)

195,007

194,143

0%

 

Full version of the press release

 

Investor Relations:

Evgeny Belov +7 (495) 926-77-66 ext. 6445

evgenii.belov@severstal.com

Public Relations:

Anastasia Mishanina

+7 (495) 926-77-66 ext. 6457 anastasia.mishanina@severstal.com

Severstal’s financial communications agency:

Hudson Sandler Andrew Hayes / Emily Dillon / Dan de Belder +44 (0) 20 7796 4133