OREANDA-NEWS. 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 Q2 2015 and H1 2015.

Q2 2015 GROUP HIGHLIGHTS

In Q2 hot metal production decreased 1% q/q to 2.29 mln tonnes (Q1 2015: 2.31 mln tonnes). At the same time, crude steel production decreased 4% q/q to 2.85 mln tonnes (Q1 2015: 2.96 mln tonnes). While this suggests lower consumption of scrap material in steelmaking process, it also reflects an impact of scheduled maintenance at the BOF#3 and continuous caster #2 and #4.

Consolidated sales of steel products increased 4% q/q partially due to seasonal increase in demand, despite anticipated weaker steel consumption domestically. Moreover, Severstal’s proximity to export markets allowed the Company the flexibility to allocate additional volumes for export.

The share of high value-added (HVA) products in the sales portfolio improved 1 ppt to 47% (Q1 2015: 46%) largely due to a 13% q/q increase in downstream products sales and a reduction in long products sales q/q. These have partially offset a 10% q/q increase in hot-rolled coil sales.

Coking coal concentrate sales increased 15% q/q in spite of a decrease in ROM-coal output volumes in Q2 at Vorkutaugol on the back of scheduled long-walls repositioning activity in June 2015. The former is largely a low-base effect with washing plant operations being negatively impacted by severe weather conditions in Q1.

Specifically, after catching up with the USD-nominated parity, domestic prices reached an unusual premium vs. export prices. We would expect a gradual normalization of this premium later in the year.

SUMMARY OF KEY PRODUCTION, SALES VOLUMES AND SELLING PRICES DATA

Production, tonnes

Q2 2015

Q1 2015

Change, %

H1 2015

H1 2014

Change, %

Crude steel (Russian Steel)

2,847,753

2,959,389

(4%)

5,807,142

5,548,036

5%

Hot metal (Russian Steel)

2,289,358

2,305,312

(1%)

4,594,670

4,472,728

3%

Sales volumes, tonnes

Q2 2015

Q1 2015

Change, %

H1 2015

H1 2014

Change, %

Coking coal concentrate

1,458,915

1,272,642

15%

2,731,557

2,611,921

5%

Iron ore pellets

2,600,490

2,576,453

1%

5,176,943

5,122,128

1%

Iron ore concentrate

1,072,732

984,272

9%

2,057,004

2,310,441

(11%)

Total steel products (Consolidated)

2,658,122

2,544,868

4%

5,202,990

5,103,883

2%

Total steel products (Russian Steel)

2,671,598

2,558,524

4%

5,230,122

5,193,032

1%

Average price, \\$/tonne

Q2 2015

Q1 2015

Change, %

H1 2015

H1 2014

Change, %

Coking coal concentrate, Vorkutaugol

91

64

42%

78

95

(18%)

Iron ore pellets, Karelsky Okatysh

52

53

(2%)

52

98

(47%)

Iron ore concentrate, Olkon

35

32

9%

34

66

(48%)

Hot-rolled coil (RSD)

405

394

3%

400

485

(18%)

 

High value added steel products, %

Q2 2015

Q1 2015

Change, %

H1 2015

H1 2014

Change, %

Severstal (Consolidated)

47%

46%

1 ppts

47%

48%

(1 ppts)

Severstal Russian Steel

47%

46%

1 ppts

46%

47%

(1 ppts)