Severstal CEO Alexander Shevelev comments on the company's operating results: “Our company continues to demonstrate stable growth and successfully overcomes all the challenges we face. In Q2, steel production increased by 9% qoq to 2.95 mt. In just 6 months of 2023, we increased steel production by 6% to 5.65 million tons, while sales of steel products increased by 9% to 5.47 million tons. At the same time, the share of finished metal products increased to 89% (+2 p.p. y/y). sales of high value-added products increased by 7% to 2.5 million tons (y/y).
Q1 2023 results:
- Steel sales decreased to 2.78 mln tonnes (-1% qoq). Semi sales grew to 0.3 mln tonnes (+4% qoq). Commercial steel sales fell by 5% qoq to 1.29 mln tonnes due to seasonally lower demand for hot-rolled steel. HVA product sales recovered to 1.19 mln tonnes (+3% qoq) due to strong sales of HDG steel and construction tubes.
- Iron ore sales contracted to 4.06 mln tonnes (-6% qoq). Pellet sales were down by 3% qoq and amounted to 2.59 mln tonnes, while iron ore concentrate sales fell by 12% qoq to 1.47 mln tonnes on the back of a decrease in seasonal demand in the Russian market.
The first quarter of 2023 was a period of demand and price recovery in global steel markets as covid restrictions were lifted in China. The HRC index in Turkey increased by about 20% to $763/tonne from the beginning of the year to mid-March. In China, prices for similar products rose about 11% and reached the level of $675/tonne. However, by the beginning of April, in response to a growing steel supply and increasing fears of an economic recession around the world, steel prices declined slightly.
In the domestic market, HRC prices increased by 8.3% during the first quarter while decreasing in dollar terms due to the devaluation of the rouble. The demand for steel products in Russia in Q1 2023 increased by 6% from Q4 2022. In annual terms, the demand for steel in the first three months of 2023 was 3% lower than the same period last year.
Due to planned repairs on blast furnaces and steelmaking equipment, hot metal production decreased by 4% qoq, and crude steel production was only 1% lower qoq. As a result, sales of steel products also decreased by 1% to 2.77 million tonnes. However, sales of HVA products increased by 3% qoq to 1.19 mln tonnes, and the share of such products in the sales portfolio increased to 43% (+2 p.p. qoq).
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