Russia: Severstal's crude steel output up 4% q-o-q in Q3
Severstal, a leading steel company in Russia, posted a q-o-q increase in its crude steel production in Q3CY’21 (Jul-Sept’21). However, its steel products sale...
Severstal, a leading steel company in Russia, posted a q-o-q increase in its crude steel production in Q3CY'21 (Jul-Sept'21). However, its steel products sales were largely stable in the period under consideration.
1) Crude steel production: The company recorded crude steel production at 2.87 million tonnes (mn t) in Q3CY'21, an increase of 4% as compared to 2.77 mn t in the previous quarter. Production increased due to overhaul of the basic oxygen furnace (BOF) shop and casting machines. According to the company, this upgrade will help it in increasing its BOF's crude steel production capacity by 0.5 mn t per year.
In Jan-Sept'21, Severstal's crude steel output totalled 8.62 mn t, marginally up 1% y-o-y as against 8.55 mn t in the first nine months of CY'20.
2) Steel sales: Sales of steel products were recorded at 2.7 mn t in Q3CY'21, almost stable q-o-q, mainly due to rise in sales of pig iron and slabs.
Sales of high-value added steel products decreased by 12% q-o-q to 1.15 mn t on the back of market expectations of a further price decline. Sales of hot-rolled steel and plates increased by just 1% q-o-q to 1.12 mn t. The total share of export sales volume, including sales of pig iron increased to 51% (up 6 points q-o-q) due to dull steel demand in Russia.
In Jan-Sept'21, total steel product sales stood at 8 mn t, stable y-o-y. Sales of semi-finished products grew by four times y-o-y to 1.07 mn t following higher output of pig iron and crude steel, coupled with repairs in the hot-rolled shop. Sales of hot-rolled steel (including plates) decreased by 20% y-o-y mainly due to a large-scale upgrade of one of the continuous slab heating furnaces.
Financial results in Q3CY'21:
1) Revenue increased by 9% q-o-q to $3,206 million due to higher sales volumes and increase in weighted average steel prices. Sales growth was primarily driven by the export markets with an increase in revenue from the North America region (up 4 times q-o-q) as well as from the Middle East region (up 2 times q-o-q).
2) EBITDA increased by 5% q-o-q to $1,723 mn. Higher revenue was partially impacted by the additional export duties imposed by the Russian government.
The company's recent statement read that the Russian authorities have confirmed a new tax mechanism which will replace the export duty (a complex set of measures including introducing a new excise tax and changing the MET calculation methodology). In Russia, a temporary 15% export duty has caused domestic HRC prices to fall below the export parity net of duty. These changes will adversely affect the company's financial performance in CY'22.