Home / Press Releases / Mechel sums up production and sales results for the 3rd quarter and 9 months of 2020

Mechel sums up production and sales results for the 3rd quarter and 9 months of 2020

Press Releases
November 19, 2020

Mechel sums up production and sales results for the 3rd quarter and 9 months of 2020

Moscow, Russia - November 19, 2020 - Mechel PAO ( MOEX: MTLR, NYSE: MTL), a leading Russian mining and metals company, announces operating results for the 3rd quarter and 9 months of 2020.

CEO Oleg Korzhov comments on the results:

In the 3rd quarter, the coal market began a smooth recovery after the first wave of coronavirus infection, during which various restrictive measures were introduced in the main importing countries, and the customers of our products from the number of metallurgical corporations temporarily stopped capacity and adjusted annual steel production programs. Mechel's enterprises produced about 4.3 million tonnes of coal in the reporting period, a 7% decrease due to a planned decline in production due to the reassembly of the longwall at the mine named after IN AND. Lenin and major repairs at the processing plants. At the same time, for 9 months of 2020, the company demonstrated positive sales dynamics for all types of coal products.

The overall decrease in sales of coking coal concentrate (CCP) by 12% is explained by a decrease in shipments to the domestic market and a redistribution of volumes to more marginal Asian markets. In the 3rd quarter compared to the previous quarter, sales of CCU to the APR countries increased by 11%.

We almost doubled the supply of PCI coal to South Korean consumers, which allowed us to generally keep sales of this type of product at the level a quarter earlier on the back of lower demand in China and Japan. As for the index for 9 months, its growth by 58% is a consequence of an increase in the production of this grade of coal at Yuzhny Kuzbass and PCI sales in Asian directions.

The increase in anthracite production at Yuzhny Kuzbass also had a positive effect on the dynamics of sales in Europe and Asia. The main volumes were sold to Japan and South Korea - these are the main premium markets for this product. Sales increased by 9% qoq and by 72% in 9M terms.

In Q3, in order to meet contractual obligations, we partially redirected steam coal volumes from Asian markets to the domestic market. In addition, on the eve of the heating season, a long-term contract for the supply of thermal coal to Turkey was signed. Sales of these products grew by 2% qoq, growth over 9 months - 16%.

The increase in sales in the 3rd quarter of iron ore concentrate (iron ore concentrate) by 29% was achieved due to an increase in production at Korshunovsky GOK in the summer months. Iron ore concentrate is sent primarily to our Chelyabinsk Metallurgical Plant.

The growth in coke shipments for export affected the overall sales: + 6% qoq. Moreover, several shiploads of coke have accumulated in the port of Ust-Luga for delivery to customers in Central and Eastern Europe, which will improve sales dynamics in Q4.

Metallurgical division of Mechel Group in Q3 this year, reduced pig iron production by 5% and steel smelting by 8% in connection with equipment repairs at the Chelyabinsk Metallurgical Plant. At the same time, in finished products, the decline in steel production most affected the least marginal ordinary long products, while the most profitable product of the rail and structural mill - beam - on the contrary, increased in volumes.

The coronavirus pandemic has made its own adjustments to the work of Russian companies that, after the spring crisis, note the emergence of new opportunities for import substitution and the growing demand for specialized high-quality products from a number of sectors. Growth is also seen in infrastructure construction. All these projects support the domestic demand for metal products and provide good prospects for our enterprises, which are more focused on the domestic market. It should be noted that the export market also revived in the third quarter (Europe and the CIS). Nevertheless, the current situation due to the coronavirus remains uncertain, new factors may appear that will require adjustments to forecasts and estimates.

In the reporting period, we shipped the anniversary three millionth ton of rolled steel from the universal rail and structural mill (URBS) - this is there were 100-meter rails for Russian Railways. An active expansion of the mill's product line continues: about 80 new profile sizes have already been mastered and many of them have not been produced in our country before.

In the 3rd quarter, there was a revival of economic activity in Russia and abroad, which had a positive effect on the demand and sales of metal products. In general, sales of long products remained at the level of the previous quarter: sales of URBS for construction products increased by 28%, and sales of stainless steel long products - by 13%. The statistics are similar in the flat products segment. The overall level of sales did not change quarter-on-quarter, but the implementation of high margin

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