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Mechel sums up the results of production and sales of products for the 1st quarter of 2021

Press Releases
May 20, 2021

Mechel sums up production and sales results for Q1 2021

Moscow, Russia - May 20, 2021 - Mechel PAO (MOEX: MTLR, NYSE : MTL), a leading Russian mining and metals company, announces operating results for 1Q2021.

CEO Oleg Korzhov comments on 1Q08 results:

The dynamics of operating indicators for the first quarter of 2021 was largely a consequence of the conditions in which the company operated last year, they were caused by both external and internal factors. Against the background of a positive factor - a reduction in the financial burden due to restructuring and the repayment of part of its loan obligations - starting from April-May last year, Mechel experienced a lack of cash flow to finance its operating activities in the required amount. This was due to a significant drop in coal and metals prices due to the pandemic. Underfinancing of production in the second half of last year led to a significant decrease in the volume of stripping work and, accordingly, negative dynamics of indicators for coal production and sales in the 1st quarter of this year. A similar situation was observed in the metallurgical division.

I would like to note that this year, thanks to a significant improvement in the market situation, we were able to adequately finance repair programs, which had a positive effect. Already in April, sales of most of our products showed results that were almost equal to half of the volumes for the entire first quarter. In particular, last month we sold about 500 thousand tonnes of coking coal concentrate, which is 53% of the reporting period.

The decline in sales of coking coal concentrate by 23% quarter-on-quarter was due to a decrease in the production of this type of coal due to insufficient stripping work in Q4 2020 at our enterprises in Yakutia and Kuzbass. The same reason was decisive for the negative dynamics of sales of PCI coal (-33%) and anthracite (-4%). At the same time, we tried to fulfill our contractual obligations as much as possible. Taking this opportunity, I would like to express my deep gratitude to our partners for their understanding and constructive approach.

The sale of thermal coal was lined up in accordance with contractual obligations to the Far Eastern generating company and housing and communal services enterprises of the Republic of Sakha (Yakutia). Free volumes of steam coal were exported, mainly to China.

Sales of iron ore concentrate (iron ore concentrate) decreased by 36% due to the technical condition of mining equipment at Korshunovsky GOK. At the same time, the situation was rectified in the first quarter, and in April the shipment of iron ore concentrate amounted to 42% of the volume sold for the entire reporting period.

In the fourth quarter of last year, the sales company Mechel Carbon sent to one of its key customers two shiploads of coke with a total volume of 100 thousand tons from the accumulated warehouse stocks. This fact was reflected in the dynamics of sales of coke products in the next quarter (-19%).

Against the background of a decrease in intra-group supplies of raw materials for metallurgy, pig iron production lost 13% quarter-on-quarter, and steel smelting - 15%. The reporting period was characterized by a steady increase in the average market prices for metallurgical products, which neutralized the downward dynamics of sales.

The total sales of long products decreased by 7% compared to the previous quarter. As for the products of the rail and structural steel mill, sales of rails decreased by 31% due to the early shipment in the 4th quarter of 2020 of the remaining volume under the contract for the construction of new stations of the Moscow Metro. Sales of shaped steel URBS decreased by 16% due to a seasonal drop in demand for beam products. The mill has formed an additional warehouse stock of construction assortment, which will increase sales in the next reporting period. We pay special attention to the activation of sales of stainless steel long products - this indicator showed an increase of 22% qoq.

Sales of flat products decreased by 8% due to ongoing repairs at Chelyabinsk Metallurgical Plant.

Sales of hardware products decreased by 17%, as the traditional weakening of demand for wire and other hardware was observed in the first quarter. We have started preparations for the new construction season well in advance by providing an expanded range of hardware products at the warehouse sites of the Mechel-Service distribution network.

Sales of forged products increased by 3% due to the actual shipment of part of Q4 volumes in the reporting period. Sales of stampings increased by 87% due to the revival of demand from car-building enterprises.

The enterprises of the energy division in the 1st quarter produced 3% less electricity compared to the same period last year due to an increase in the volume of repairs. Production growth

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