Russian steel maker Severstal announced that its production and sales fell in the second quarter, reflecting repairs, lower demand and difficulties at accessing export markets. Severstal said “Its crude steel production fell 18% QoQ in April-June to 2.40 million tonnes due to repairs rescheduled to the period and narrowing demand for steel, while steel sales declined 17% QoQ to 2.27 million tonnes, with demand declining in the domestic market and due to issues exporting abroad.”Production of hot metal was flat YoY at 5.3 million tonnes while crude steel production decreased by 7% YoY to 5.32 million tonnes, as a result of converter repairs which was rescheduled to Q2 2022. Steel sales were down by 6% YoY to 5 million tonnes, due to limited access to export markets followed by a decrease in the domestic demand. Semis sales were 12% higher YoY due to strong sales of pig iron to the USA in Q1 2022. Commercial steel sales were lower by 9% YoY to 2 million tonnes as a result of import ban imposed by the European Union in March 2022. HVA sales reduced b 7% YoY to 2.35 million tonnes mainly due to decline in galvanized steel and metalware sales. Iron ore sales to third parties reduced by 57% YoY to 1 million tonnes, due to a redistribution of sales to Cherepovets steel mill.Severstal had to redirect sales to other markets after exports to the European Union were completely shut as a result of the war in Ukraine. Chief Executive Mr Alexander Shevelev said “The first half of 2022 was extremely challenging for Russian steelmakers and Severstal. Against the background of sanctions pressure, we were forced to take urgent steps to preserve the stability of the business. Thus, after the complete shutdown of exports to the EU countries, we had to redirect sales to other, less marginal markets, as well as rebuild our supply chain of inventory to ensure the operation of enterprises. The difficult access to exports followed by a decrease in the domestic demand, a sharp strengthening of the ruble and the decline in domestic prices altogether put a pressure on the company's results. The anti-crisis plan developed by the company's management, which is designed to ensure the company's stability even in the event of a negative development of the situation, involves a comprehensive audit of all the company's business processes and optimization of the least effective projects and initiatives in the medium term. By the end of this year, we aim to reduce administrative costs, personnel costs and outsourcing by a total of 10%. The management will make every effort to preserve the company's team, key competencies and expertise accumulated over the years. In addition, we will focus on improving the efficiency of procurement and maintenance programs, as well as continue to examine the investment program and to optimize it, primarily through initiatives with a long-term payback. We are confident that the well-coordinated work of the company's management and staff and the accumulated experience in improving the efficiency of processes will allow us to remain competitive in this difficult period.”
Russian steel maker Severstal announced that its production and sales fell in the second quarter, reflecting repairs, lower demand and difficulties at accessing export markets. Severstal said “Its crude steel production fell 18% QoQ in April-June to 2.40 million tonnes due to repairs rescheduled to the period and narrowing demand for steel, while steel sales declined 17% QoQ to 2.27 million tonnes, with demand declining in the domestic market and due to issues exporting abroad.”Production of hot metal was flat YoY at 5.3 million tonnes while crude steel production decreased by 7% YoY to 5.32 million tonnes, as a result of converter repairs which was rescheduled to Q2 2022. Steel sales were down by 6% YoY to 5 million tonnes, due to limited access to export markets followed by a decrease in the domestic demand. Semis sales were 12% higher YoY due to strong sales of pig iron to the USA in Q1 2022. Commercial steel sales were lower by 9% YoY to 2 million tonnes as a result of import ban imposed by the European Union in March 2022. HVA sales reduced b 7% YoY to 2.35 million tonnes mainly due to decline in galvanized steel and metalware sales. Iron ore sales to third parties reduced by 57% YoY to 1 million tonnes, due to a redistribution of sales to Cherepovets steel mill.Severstal had to redirect sales to other markets after exports to the European Union were completely shut as a result of the war in Ukraine. Chief Executive Mr Alexander Shevelev said “The first half of 2022 was extremely challenging for Russian steelmakers and Severstal. Against the background of sanctions pressure, we were forced to take urgent steps to preserve the stability of the business. Thus, after the complete shutdown of exports to the EU countries, we had to redirect sales to other, less marginal markets, as well as rebuild our supply chain of inventory to ensure the operation of enterprises. The difficult access to exports followed by a decrease in the domestic demand, a sharp strengthening of the ruble and the decline in domestic prices altogether put a pressure on the company's results. The anti-crisis plan developed by the company's management, which is designed to ensure the company's stability even in the event of a negative development of the situation, involves a comprehensive audit of all the company's business processes and optimization of the least effective projects and initiatives in the medium term. By the end of this year, we aim to reduce administrative costs, personnel costs and outsourcing by a total of 10%. The management will make every effort to preserve the company's team, key competencies and expertise accumulated over the years. In addition, we will focus on improving the efficiency of procurement and maintenance programs, as well as continue to examine the investment program and to optimize it, primarily through initiatives with a long-term payback. We are confident that the well-coordinated work of the company's management and staff and the accumulated experience in improving the efficiency of processes will allow us to remain competitive in this difficult period.”
