Severstal announced its operational results for Q3 and the 9 months of 2017.
Hot metal output remained almost unchanged at 2.23 million tons (Q2 – 2.24 million tons) compared with the previous quarter, whereas crude steel production was up by 4% at 2.94 million tons (2.83 million tons). Crude steel output at CherMK in Q2 was lower due to planned maintenance works at converter No. 1.
Consolidated steel product sales continued to grow in Q3, up by 4% QoQ, to 2.86 million tons, following a 9% QoQ growth in the previous quarter (2.75 million tons). During Q3, the company continued selling stocks of HVA products accumulated in previous periods in response to increased demand and the ongoing construction season in Russia. Semi-finished product sales were influenced by inventory level normalization following maintenance works at converter No. 1 in Q2.
The share of domestic sales volumes within the sales mix increased to 65% (60%). Improved domestic demand in Q3 was driven by the ongoing construction season. The share of high value-added (HVA) products within the sales portfolio increased significantly, to 49% (44%), driven by a destocking of large diameter pipes, cold-rolled, HDG and color-coated products.
Coking coal concentrate sales volumes from Vorkutaugol increased by 11% driven by an increase in production volumes following the planned long-wall repositioning at the Vorkutinskaya and Komsomolskaya mines in H1.
Iron ore pellet sales decreased by 17% and totaled 2.38 million tons (2.88 million tons) despite the increase in production volumes QoQ. This was due to higher share of finished goods in transit and accumulation of stocks at the end of Q3, following Q2 sell-off. The company expects an uptick in pellet sales volumes in subsequent periods.
Raw material prices were supported by strong steel demand in China during Q3. Export steel prices started to recover, and Russian domestic steel prices followed global trends, but with a time lag. Industry experts anticipate Russian domestic steel demand to increase by 5% in 2017.
On October 6 the EU Commission imposed definitive antidumping duties against Russian, Ukrainian, Iranian and Brazilian steelmakers. As a result of Severstal’s track record of balanced and cautious European sales, the company got the lowest duty rate among all exporting companies under the investigation, which is even lower than 5.3% for the current price level. The ruling has some slight negative financial effects, which are estimated to be immaterial versus the annual earnings and which are fully offset by the ability to continue serving the company’s European customers. (MetalInfo/Ukrainian metal)
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