Mechel Announces Opening of New Warehouses by Mechel-Service

Mechel ОАО announced that its trading company, Mechel-Service OOO, opened new warehouses in July and plans to further expand its distribution network.

The Company opened a total of 5 new units in Moscow, Yekaterinburg, Sochi, St.-Petersburg, in addition to those it had had in these cities, as well as an initial unit in Voronezh. The new facilities will be utilized for the storage and transshipment of a broad range of metal products. Mechel-Service opened its new units to meet high demand for construction rolled products. The new, well-equipped warehouses are well-situated in proximity to transportation routes and large customers and staffed with regular personnel.

In total, the new warehouses can handle approximately 15,000 to 20,000 tonns of metal products every month. Also, with the new warehouse facilities, Mechel-Service can reduce its costs of freight transportation and expand into new markets.

Mechel-Service, which sells Mechel’s metal products on the domestic market, is a metal trading company with a wide network of branches in major Russian regions and is focused on servicing the end user. In contrast to sales units of other industrial holding companies, Mechel-Service offers both Mechel’s and other steelmakers’ products to its customers. Its warehouses sell rebar, wire rod, high-quality rolled products, structural shapes, regular grades, and stainless long and flat products and pipes, which allows the Company to expand its presence in the end user markets. Mechel-Service has warehouse capacities in two dozen of Russia’s most developed cities, including Moscow, St.-Petersburg, Ufa, Chelyabinsk, Yekaterinburg, Novosibirsk, Rostov-on-Don, Samara and Nizhni Novgorod. With new sales units in place, Mechel-Service can expand sales of products from Mechel’s metal and hardware subsidiaries and improve the trading company’s profits from selling non-Mechel products. With a great deal of construction underway in Moscow, Moscow Region, other regions and in Sochi, the capital of the 2014 Olympics, the Company will be able to ensure stable operation of its new units.

In August and September Mechel-Service plans to open a number of remote warehouses and units in the following cities: Cheboksary, Ryazan, Barnaul, Krasnoyarsk, Kemerovo, Tomsk, Irkutsk, Volgograd, Astrakhan, Orenburg and Surgut.

“Today Mechel-Service is expanding due to a growth of sales volumes at existing units; an active expansion of sales geography; and the opening of new warehouses to increase sales. We also rely on the expansion of our services, including the creation of efficient logistic delivery patterns, the acquisition of our own truck fleet, the provision of metal working services and the production of structural shapes made to order to suit buyers’ needs to further drive our growth. With a developed unit network and good inventory, Mechel-Service is well-positioned to meet the needs of end users for metal products without any intermediaries,” Mechel-Service’s Chief Executive Officer Andrey Ponomaryov commented.