The United States imposed additional sanctions against Russia, affecting the main shareholder and chairman of the Russian metallurgical company Severstal, Alexei Mordashov. Almost immediately after the announcement of the sanctions, Severstal was disconnected from American software, including the software necessary for the operation of its production.
According to Mordashov, Severstal has "two or three years" to prepare new software. Some market participants said the impact was partly mitigated as Severstal moved some of its software earlier this year to another platform that is expected to run for another five to nine years.
In March of this year, Alexei Mordashov was included in EU sanctions, causing Severstal to leave the EU markets and European buyers to replace normal supply volumes from Russia with alternative sources such as Turkey and Asia, as well as from Ukraine.
Severstal has been forced to redirect its steel exports, namely hot-rolled products and slabs, to Asian markets, although the Middle East and Turkey are still the focus of the manufacturer.
Under Mordashov, Severstal became one of the most profitable steelmakers in the world, with an EBITDA margin of an impressive 50% last year. Today, the company is reducing production and has work orders at about 70% capacity. Severstal also became the first Russian company to default on corporate bonds in March as Citigroup Inc. refused to process interest payments.
Analysts predict a double-digit decline in Russia's GDP in 2022, with Russian inflation expected to be around 20 percent in 2022, and war is projected to wipe out Russia's economic gains over the past 15 years.
