Severstal remained hot metal output unchanged

Crude steel production declined 2% to 2.86 mln tonnes (Q4 2016: 2.92 mln tonnes). Crude steel output at CherMK was impacted by planned maintenance works at converters #2 and #3.

Consolidated steel product sales declined 9% q/q to 2.53 mln tonnes compared with the previous quarter (Q4 2016: 2.78 mln tonnes). During Q1 2017, following record sales volumes achieved in previous quarter, the Company replenished inventories to normal levels and accumulated finished good stocks for subsequent realisation during 2017 as well as increased export sales in response to weaker domestic demand and lower activity from local traders.

The proximity of key assets to the border also enabled the Company to shift sales to export, accordingly steel product export sales volumes grew to 42% (Q4 2016: 38%) of the sales mix.

Following the refurbishment of the four-stand cold rolling mill at CherMK and the increase in production volumes, cold-rolled coil sales volumes continued to increase, and were up 14% q/q, following the increase of 15% q/q achieved in Q4 2016.

Increased cold-rolled, large diameter pipes and colour-coated sales led to the share of high value-added (HVA) products within the sales portfolio increasing to 44% (Q4 2016: 40%).

Supply disruptions in Australia boosted spot hard coking coal prices at the beginning of April 2017, after tropical cyclone Debbie led to closures of the main railway lines. Industry experts estimate it will take up to five weeks before normal operations are restored.

Meanwhile the seaborne HCC market is experiencing a shortage thus boosting the spot price of coking coal. Whilst iron ore prices were supported by significant restocking in Q1 2017 they are now softening as port inventories have reached high levels.