Severstal reports Q3 & 9M 2020 operational results

 

Moscow, Russia - 9 October 2020 - PAO Severstal (MOEX: 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 2020.

 

Q3 2020 GROUP HIGHLIGHTS

• Hot metal output increased 3% q/q in Q3 2020 to 2.40 mln tonnes (Q2 2020: 2.33 mln tonnes) following the completion of maintenance works at blast furnace facilities in the previous quarter. Crude steel production increased by 3% to 2.89 mln tonnes (Q2 2020: 2.81 mln tonnes), supported by growth in hot metal output.
• Consolidated sales of steel products increased 18% q/q to 3.01 mln tonnes in Q3 2020 (Q2 2020: 2.55 mln tonnes) reflecting production growth, a lower share of export shipments with a longer realisation period vs the previous quarter and finished goods stock reduction.
• The Company increased its share of domestic steel shipments to 63% (Q2 2020: 56%) in response to a demand recovery in Russia in Q3 2020.
• The share of high value-added (HVA) products within the sales portfolio amounted to 49% (Q2 2020: 43%) as a result of delayed demand for HVA products, and the Company reduced HVA finished goods stock levels q/q.
• Sales volumes of coking coal concentrate from Vorkutaugol declined 5% q/q to 1.22 mln tonnes as a result of lower concentrate output and a lower run-of-mine (ROM-rate) at the Zapolyarnaya mine.
• Sales volumes of iron ore pellets increased by 3% to 2.61 mln tonnes (Q2 2020: 2.53 mln tonnes) on the back of iron ore pellet production growth and inventory sell-off q/q.
• Sales volumes of iron ore concentrate grew by 3% to 1.96 mln tonnes (Q2 2020: 1.90 mln tonnes), primarily driven by higher output at Karelsky Okatysh and Olcon.

9M 2020 GROUP HIGHLIGHTS

 

• Hot metal output remained flat y/y in 9M 2020 at 7.14 mln tonnes (9M 2019: 7.13 mln tonnes). Production of crude steel decreased to 8.55 mln tonnes (9M 2019: 9.13 mln tonnes) due to lower production volumes of EAF steel following the disposal of Balakovo mini-mill in July 2019.
• The share of HVA products remained stable y/y at 45% in 9M 2020. The share of domestic shipments in 2020 was 58%, which is lower than in 2019 (9M 2019: 67%). This is a result of a deceleration in domestic demand in 2020 after achieving peak levels in the previous year and the disposal of the Balakovo mini-mill, which primarily served domestic markets.
• The average steel selling prices for 9M 2020 declined from 10% to 19% across the product range, as a result of adverse pricing dynamics of global benchmarks y/y.
• Iron ore concentrate sales volumes grew 14% y/y to 5.33 mln tonnes (9M 2019: 4.66 mln tonnes) driven by output growth at Karelsky Okatysh and the Yakovlevskiy mine y/y. The Company expects to achieve total production of around 2mt of iron ore concentrate at the Yakovlevskiy mine in FY2020.
• Coking coal concentrate sales volumes from Vorkutaugol increased 3% y/y.

 

SUMMARY OF KEY PRODUCTION, SALES VOLUMES

 

Production, thousands of tonnes	Q3 2020	Q2 2020	Change, %	9M 2020	9M 2019	Change, %
Crude Steel (Russian Steel)	2,890	2,807	3%	8,547	9,133	(6%)
Hot metal (Russian Steel)	2,402	2,331	3%	7,143	7,125	0%

 

 

 

Sales volumes, thousands of tonnes	Q3 2020	Q2 2020	Change, %	9M 2020	9M 2019	Change, %
Coking coal concentrate	1,218	1,276	(5%)	3,445	3,340	3%
Iron ore pellets	2,613	2,532	3%	8,112	8,192	(1%)
Iron ore concentrate	1,960	1,904	3%	5,333	4,660	14%
Total steel products (Consolidated)	3,006	2,551	18%	8,306	8,503	(2%)
Total steel products (Russian Steel)	3,020	2,561	18%	8,340	8,538	(2%)

 

 

High value added steel products, %	Q3 2020	Q2 2020	Change, %	9M 2020	9M 2019	Change, %
Severstal (Consolidated)	49%	43%	6 ppts	45%	45%	(0 ppts)
Severstal Russian Steel	49%	43%	6 ppts	45%	45%	(0 ppts)

 

 

 

 

SEVERSTAL'S CONSOLIDATED SALES (NET OF INTERCOMPANY SALES)

 

Sales volumes, thousands of tonnes	Q3 2020	Q2 2020	Change, %	9M 2020	9M 2019	Change, %
Coal:	344	370	(7%)	1,101	1,250	(12%)
Coking coal concentrate	46	104	(56%)	215	331	(35%)
Steam coal	298	266	12%	886	919	(4%)
Iron ore:	1,358	1,511	(10%)	4,530	4,785	(5%)
Iron ore pellets	1,355	1,461	(7%)	4,343	4,170	4%
Iron ore concentrate	3	50	(94%)	187	615	(70%)
Semi-finished products	97	100	(3%)	389	279	39%
Rolled products:	2,383	2,084	14%	6,637	6,916	(4%)
Hot - rolled coil	1,267	1,179	7%	3,643	3,310	10%
Hot - rolled plate	244	219	11%	715	702	2%
Cold - rolled coil	253	198	28%	661	743	(11%)
Galvanised and metallic coated coil	286	196	46%	701	729	(4%)
Colour coated coil	162	113	43%	373	365	2%
Long products	171	179	(4%)	544	1,067	(49%)
Downstream products:	526	367	43%	1,280	1,308	(2%)
Metalware products	145	135	7%	426	413	3%
Large diameter pipes	85	25	n/a	129	303	(57%)
Other tubes, pipes, formed shapes	296	207	43%	725	592	22%

 

 

SEVERSTAL RESOURCES

• Sales volumes of coking coal concentrate from Vorkutaugol declined 5% q/q to 1.22 mln tonnes as a result of lower concentrate output and a lower run-of-mine (ROM-rate) at the Zapolyarnaya mine.
• ROM coal production at Vorkutaugol decreased by 7% in Q3 2020 vs Q2 2020.
• Iron ore pellet sales increased by 3% to 2.61 mln tonnes (Q2 2020: 2.53 mln tonnes) as a result of higher production levels of iron ore pellets and inventory sell-off q/q.
• Iron ore concentrate sales volumes grew by 3% to 1.96 mln tonnes (Q2 2020: 1.90 mln tonnes) mainly driven by higher output at Karelsky Okatysh and Olcon.

 

Sales volumes, thousands tonnes	Q3 2020	Q2 2020	Change, %	9M 2020	9M 2019	Change, %
Coal:	1,516	1,542	(2%)	4,331	4,260	2%
Coking coal concentrate	1,218	1,276	(5%)	3,445	3,340	3%
Steam coal	298	266	12%	886	920	(4%)
Iron ore:	4,573	4,436	3%	13,445	12,852	5%
Iron ore pellets	2,613	2,532	3%	8,112	8,192	(1%)
Iron ore concentrate	1,960	1,904	3%	5,333	4,660	14%

 

 

SEVERSTAL RUSSIAN STEEL ('RSD')

• RSD steel product sales of steel products increased 18% q/q to 3.02 mln tonnes in Q3 2020 (Q2 2020: 2.56 mln tonnes) reflecting production growth, a lower share of export shipments with a longer realisation period vs the previous quarter and finished goods stock reduction.
• The Company increased its share of domestic steel shipments to 63% (Q2 2020: 56%) in response to demand recovery in Russia in Q3 2020.
• The share of high value-added (HVA) products within the sales portfolio amounted to 49% (Q2 2020: 43%) as a result of delayed demand for HVA products, and the Company reduced HVA finished goods stock levels q/q.
• LDP sales volumes increased to 85,000 tonnes in Q3 2020, due to reduced stock levels at the Izhora Pipe Mill (ITZ). In response to a contraction in domestic demand, the Company reallocated a portion of its sales volumes to export destinations in Q3 2020.
• The weighted average selling price for the whole range of steel products in Q3 2020 increased by 2%, due to positive steel pricing dynamics at export destinations and a higher share of HVA products in the sales mix q/q. Severstal successfully maintained higher average selling prices throughout the period, as a result of its customer-focused approach, the flexibility of its distribution channels and the high proportion of HVA products within its portfolio.

 

Sales volumes, thousands of tonnes	Q3 2020	Q2 2020	Change, %	9M 2020	9M 2019	Change, %
Total steel products	3,020	2,561	18%	8,340	8,538	(2%)
Semi-finished products	98	100	(2%)	390	279	40%
Rolled products:	2,395	2,093	14%	6,667	6,949	(4%)
Hot - rolled coil	1,268	1,178	8%	3,644	3,311	10%
Hot - rolled plate	244	219	11%	715	703	2%
Cold - rolled coil	253	198	28%	661	743	(11%)
Galvanised and metallic coated coil	286	196	46%	701	729	(4%)
Colour coated coil	162	113	43%	373	365	2%
Long products	182	189	(4%)	573	1,098	(48%)
Downstream products:	527	368	43%	1,283	1,310	(2%)
Metalware products	147	135	9%	429	416	3%
Large diameter pipes	85	25	n/a	129	303	(57%)
Other tubes, pipes, formed shapes	295	208	42%	725	591	23%

 

Sales price, $/tonne	Q3 2020	Q2 2020	Change, %	9M 2020	9M 2019	Change, %
Semi-finished products	376	388	(3%)	385	427	(10%)
Hot - rolled coil	416	417	0%	423	506	(16%)
Hot-rolled plate	517	545	(5%)	558	660	(15%)
Cold - rolled coil	504	528	(5%)	536	621	(14%)
Galvanised and metallic coated coil	639	643	(1%)	638	724	(12%)
Colour coated coil	797	790	1%	789	894	(12%)
Long products	411	417	(1%)	419	476	(12%)
Metalware products	832	837	(1%)	852	965	(12%)
Large diameter pipes	825	778	6%	811	996	(19%)
Other tubes, pipes, formed shapes	480	477	1%	492	578	(15%)

 

Sales price, $/tonne	Q3 2020	Q2 2020	Change, %	9M 2020	9M 2019	Change, %
Weighted average steel selling price	510	500	2%	510	602	(15%)

 

 

Notes:

 

1) Sales prices are stated on EXW basis;

2) Segmental data includes intercompany sales;

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

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

 

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 Leach / Emily Dillon

T: +44 (0) 20 7796 4133

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PАО Severstal is one of the world's leading vertically integrated steel and steel related mining companies, with assets in Russia, Latvia and Poland. Severstal is listed on MOEX and the company's GDRs are traded on the LSE. Severstal reported revenue of $8,157 million and EBITDA of $2,805 million in 2019. Severstal's crude steel production in 2019 reached 11.8 million tonnes. www.severstal.com