Source - RNS
RNS Number : 3182M
Public Joint Stock Co. Severstal
12 October 2016
 

 

Severstal reports Q3 & 9M 2016 operational results

 

Moscow, Russia - 12 October 2016 - 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 Q3 & 9M 2016.

 

Q3 2016 GROUP HIGHLIGHTS 

 

·      Hot metal output increased 8% to 2.39 mln tonnes (Q2 2016: 2.21 mln tonnes) against the previous quarter, during which steel production was impacted by short-term maintenance work at BF#5 at Cherepovets Steel Mill (CherMK).

 

·      Reflecting the above, crude steel production increased 6% to 2.98 mln tonnes (Q2 2016: 2.81 mln tonnes). Meanwhile, Balakovo mini-mill maintained relatively high production run rates during the period despite weaker domestic demand in Q3.

 

·      Despite increased crude steel output, consolidated steel product sales decreased 5% q/q to 2.65 mln tonnes compared to Q2 when the Company reached record level of sales volume (Q2 2016: 2.79 mln tonnes). Sales in Q3 were mainly impacted by reduced activity of local traders and domestic steel demand softening after a seasonal improvement in previous periods. Additionally, the Company increased its stock levels and built up steel inventories to standard levels (after minimisation by the end of Q2 during BOF#3 maintenance) and also to underpin rolling capacity utilisation rates during planned maintenance works.

 

·      As a result, the share of domestic steel products sales volumes in the sales mix decreased to 60% (Q2 2016: 64%).

 

·      The Company completed the refurbishment of the four-stand cold rolling mill at CherMK in May 2016. This resulted in mill capacity increase by 200,000 tonnes per annum. In the meantime cold-rolled coil sales volumes increased by 5% q/q.

 

·      Despite improved sales of cold rolled coil, the share of high value-added (HVA) products in the sales portfolio decreased marginally to 42% (Q2 2016: 43%).

 

·      The Severnaya mine, where operations remain suspended following the accident in February 2016, will be sealed off to avoid the risk of airflow causing further underground fire and explosions in the mine. The decision was made by the Technical Commission, comprising representatives of AO Vorkutaugol and the Russian authorities. Experts are now considering a safe method for sealing off the mine for the foreseeable future as well as the extraction of its resources through the adjacent Komsomolskaya mine, which is currently expected to start in 2020.

 

·      Chinese steel prices were supported by a number of production restrictions in China and relatively high raw material prices. Ongoing capacity cuts in China, consolidation plans and continued investment in infrastructure have improved the outlook for the steel supply-demand balance in China. Spot hard coking coal prices have increased more than two times on the back of Chinese output restrictions and temporary supply disruptions. Russian HRC export prices remain firm reflecting stable Chinese export prices and increasing European prices in September due to seasonal demand growth. Russian HRC domestic prices in ruble terms have decreased from peak levels in June, however, the domestic market, which typically offers higher sales margins, remains the priority for the Company.

 

 

 

SUMMARY OF KEY PRODUCTION, SALES VOLUMES AND SELLING PRICES DATA

Production, tonnes

Q3 2016

Q2 2016

Change, %

9M 2016

9M 2015

Change, %

Crude steel (Russian Steel)

2,984,625

2,813,020

6%

8,705,959

8,700,168

0%

Hot metal (Russian Steel)

2,393,896

2,211,183

8%

6,959,335

6,907,773

1%








Sales volumes, tonnes

Q3 2016

Q2 2016

Change, %

9M 2016

9M 2015

Change, %

Coking coal concentrate

909,474

1,076,786

(16%)

3,346,341

4,190,521

(20%)

Iron ore pellets

2,792,181

2,850,102

(2%)

8,049,469

7,906,080

2%

Iron ore concentrate

1,133,249

1,110,199

2%

3,181,220

3,183,011

(0%)

Total steel products (Consolidated)

2,651,729

2,790,121

(5%)

7,889,893

8,204,329

(4%)

Total steel products (Russian Steel)

2,661,342

2,798,443

(5%)

7,921,526

8,242,940

(4%)

 

High value added steel products, %

Q3 2016

Q2 2016

Change, %

9M 2016

9M 2015

Change, %

Severstal (Consolidated)

42%

43%

(1 ppts)

43%

47%

(4 ppts)

Severstal Russian Steel

42%

43%

(1 ppts)

42%

47%

(5 ppts)

 

 

 

SEVERSTAL'S CONSOLIDATED SALES (NET OF INTERCOMPANY SALES)

Sales volumes, tonnes

Q3 2016

Q2 2016

Change, %

9M 2016

9M 2015

Change, %

Coal:

505,881

696,862

(27%)

2,383,337

2,723,755

(12%)

Coking coal concentrate

130,286

225,802

(42%)

818,858

1,258,301

(35%)

Raw coking coal

-

-

n.a.

-

8,719

n.a.

Steam coal

375,595

471,060

(20%)

1,564,479

1,456,735

7%

Iron ore:

1,667,170

1,731,970

(4%)

4,553,401

4,664,112

(2%)

Iron ore pellets

1,617,016

1,661,844

(3%)

4,433,121

4,308,129

3%

Iron ore concentrate

50,154

70,126

(28%)

120,280

355,983

(66%)

Semi-finished products

189,693

142,081

34%

463,176

297,091

56%

Rolled products:

2,003,966

2,143,380

(7%)

5,996,338

6,383,722

(6%)

Hot-rolled coil

999,986

1,057,244

(5%)

3,023,710

3,054,582

(1%)

Hot-rolled plate

147,188

190,761

(23%)

501,497

518,998

(3%)

Cold-rolled coil

244,898

233,133

5%

682,003

1,006,531

(32%)

Galvanised and metallic coated coil

156,023

163,627

(5%)

437,591

476,396

(8%)

Color coated coil

108,136

115,926

(7%)

306,424

316,703

(3%)

Long products

347,735

382,689

(9%)

1,045,113

1,010,512

3%

Downstream products:

458,070

504,660

(9%)

1,430,379

1,523,516

(6%)

Metalware products

167,359

173,956

(4%)

488,653

461,970

6%

Large diameter pipes

96,833

115,576

(16%)

325,574

418,264

(22%)

Other tubes, pipes, formed shapes

193,878

215,128

(10%)

616,152

643,282

(4%)

 

 

 

SEVERSTAL RESOURCES

 

·      The Severnaya mine will be sealed off to avoid the risk of further underground fire and explosions, following a decision by the Technical Commission. The extraction of Severnaya mine resources through the adjacent Komsomolskaya mine is currently expected to start in 2020. In 2015 the Severnaya mine produced approximately 1.5 mln tonnes of coking coal concentrate, which is approximately 26% of Vorkutaugol's overall production of coking coal concentrate in 2015 (5.7 mln tonnes).

 

·      Accordingly, coking coal concentrate sales at Vorkutaugol declined further, by 16% q/q to 0.91 mln tonnes (Q2 2016: 1.08 mln tonnes). Internal coking coal concentrate procurement was not significantly impacted. As anticipated, external sales volumes decreased by 42% q/q.

 

·      Steam coal sales at Vorkutaugol decreased 20% q/q, driven by scheduled long-wall repositioning at the Vorgashorskaya mine during the period.

 

·      Short-term maintenance works at BF#5 in the previous quarter allowed Olkon to continue reallocating extra volumes of iron ore concentrate to external markets. This was a key factor behind a further 2% q/q increase in sales volumes, started in the previous quarter.

 

·      While internal procurement of iron ore pellets remained relatively flat, the Сompany continued to sell iron ore pellets to the export markets, responding to seasonally high demand. Iron ore pellet sales remained largely the same, decreasing by only 2% q/q to 2.79 mln tonnes (Q2 2016: 2.85 mln tonnes).

 

Sales volumes, tonnes

Q3 2016

Q2 2016

Change, %

9M 2016

9M 2015

Change, %

 

Coal:

1,285,069

1,547,846

(17%)

4,910,820

5,655,975

(13%)

Coking coal concentrate

909,474

1,076,786

(16%)

3,346,341

4,190,521

(20%)

Raw coking coal

-

-

n.a.

-

8,719

n.a.

Steam coal

375,595

471,060

(20%)

1,564,479

1,456,735

7%

Iron ore:

3,925,430

3,960,301

(1%)

11,230,689

11,089,091

1%

Iron ore pellets

2,792,181

2,850,102

(2%)

8,049,469

7,906,080

2%

Iron ore concentrate

1,133,249

1,110,199

2%

3,181,220

3,183,011

(0%)

 

 

 

SEVERSTAL RUSSIAN STEEL ('RSD')

 

·      RSD steel product sales decreased 5% q/q to 2.66 mln tonnes due to reduced trader activity as well as weaker domestic steel demand. The Company increased its stock levels during the quarter and reserved some steel inventories to adjust them to standard levels and to underpin rolling capacity utilisation rates during planned maintenance works.

 

·      These factors resulted in a decrease in domestic deliveries within the sales-mix to 60% in Q3 2016 (Q2 2016: 64%).

 

·      Cold-rolled coil sales improved by 5% q/q following completion of the refurbishment of the four-stand cold rolling mill at CherMK in May 2016.

 

·      Lower demand in the domestic market impacted sales volumes of hot-rolled coil which went down 5% q/q.

 

·      The share of HVA products within the sales mix slightly decreased to 42% (Q2 2016: 43%), despite an increase in cold rolled coil sales volumes q/q. Long product sales compressed 9% q/q following weaker domestic demand, however, the Balakovo mini-mill maintained a relatively high production run rate during the period.

 

·      Large diameter pipes (LDP) sales volumes decreased 16% q/q mainly reflecting lower LDP sales by Izhora Pipe Mill for the Gazprom maintenance projects. Meanwhile, Severstal continues supplying LDPs for the Power of Siberia and Ukhta-Torzhok-2 projects.

 

·      Average selling prices for steel products increased 2-15% q/q, depending on the specific product, reflecting the upward adjustment in global steel prices, which continued in Q3. Meanwhile, long product selling prices saw a 6% decrease q/q after the end of the restocking period.

 

Sales volumes, tonnes

Q3 2016

Q2 2016

Change, %

9M 2016

9M 2015

Change, %

Total steel products

2,661,342

2,798,443

(5%)

7,921,526

8,242,940

(4%)

Semi-finished products

189,692

142,083

34%

463,177

297,091

56%

Rolled products:

2,012,976

2,150,772

(6%)

6,024,867

6,419,219

(6%)

Hot-rolled coil

1,000,058

1,057,412

(5%)

3,024,242

3,055,942

(1%)

Hot-rolled plate

147,188

190,843

(23%)

501,734

519,595

(3%)

Cold-rolled coil

244,897

233,134

5%

682,003

1,006,532

(32%)

Galvanised and metallic coated coil

156,024

163,627

(5%)

437,592

476,405

(8%)

Color coated coil

108,136

115,926

(7%)

306,424

316,703

(3%)

Long products

356,673

389,830

(9%)

1,072,872

1,044,042

3%

Downstream products:

458,674

505,588

(9%)

1,433,482

1,526,630

(6%)

Metalware products

167,923

174,411

(4%)

490,394

464,027

6%

Large diameter pipes

96,832

115,577

(16%)

326,209

418,680

(22%)

Other tubes, pipes, formed shapes

193,919

215,600

(10%)

616,879

643,923

(4%)

 

 

Sales price, $/tonne

Q3 2016

Q2 2016

Change, %

9M 2016

9M 2015

Change, %

Semi-finished products

306

276

11%

273

325

(16%)

Hot-rolled coil

396

358

11%

338

384

(12%)

Hot-rolled plate

509

456

12%

438

509

(14%)

Cold-rolled coil

514

448

15%

447

456

(2%)

Galvanised and metallic coated coil

645

561

15%

558

570

(2%)

Color coated coil

861

775

11%

756

762

(1%)

Long products

353

376

(6%)

327

360

(9%)

Metalware products

792

777

2%

742

828

(10%)

Large diameter pipes

1,289

1,203

7%

1,176

1,303

(10%)

Other tubes, pipes, formed shapes

474

463

2%

432

481

(10%)

Notes

 

1) All production data is reported in metric tonnes;

2) Sales prices are stated on EXW basis;

3) Segmental data includes intercompany sales;

4) Semi-finished products include pig iron, slabs, billets, ingots, steel casting and forgings;

5) Metalware sales volumes and metalware average selling prices include Severstal Metiz, Severstal Distribution LLC and AO Severstal Distribution data;

6) Large diameter pipes include all pipes with a diameter between 820 and 1420 mm.

 

 

Please view an additional presentation on the operational results at our website:

http://www.severstal.com/eng/ir/results_and_reports/operational_results/index.phtml 

 

Contacts

 

Investor Relations

Evgeny Belov

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

[email protected]

Vladimir Zaluzhsky

T: +7 (495) 926-77-66 ext. 6375

[email protected]

 

Public Relations

Anastasia Mishanina

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

[email protected]

 

Severstal's financial communications agent - Hudson Sandler

Andrew Hayes / Elena Garside / Alex Brennan

T: +44 (0) 20 7796 4133

 

PАО Severstal is one of the world's leading vertically integrated steel and steel related mining companies, with assets in Russia, Ukraine, Latvia, Poland and Italy. Severstal is listed on RTS and MICEX and the company's GDRs are traded on the LSE. Severstal reported revenue of $6,396 million and EBITDA of $2,096 million in 2015. Severstal's crude steel production in 2015 reached 11.5 million tonnes. www.severstal.com

 

 

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
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