Moscow, Russia – 26 May 2020 – Mechel PAO (MOEX: MTLR, NYSE: MTL), one
of the leading Russian mining and metals companies, announces
1Q2020 operational results.
Production and sales (Unit in thousand tonnes)
Product Name |
1Q2020 |
1Q2019 |
% |
1Q2020 |
4Q2019 |
% |
Run-of-mine coal |
5,188 |
3,520 |
+47 |
5,188 |
5,420 |
-4 |
Sales (Unit in thousand tonnes)
Product Name |
1Q2020 |
1Q2019 |
% |
1Q2020 |
4Q2019 |
% |
Coking coal concentrate |
1,684 |
1,697 |
-1 |
1,684 |
1,830 |
-8 |
Including coking coal concentrate supplied to third parties |
1,048 |
1,023 |
2 |
1,048 |
994 |
5 |
PCI |
445 |
261 |
71 |
445 |
482 |
-8 |
Including PCI supplied to third parties |
445 |
261 |
71 |
445 |
482 |
-8 |
Anthracites |
268 |
158 |
69 |
268 |
235 |
14 |
Including anthracites supplied to third parties |
212 |
130 |
63 |
212 |
177 |
20 |
Thermal coal |
1,212 |
1,333 |
-9 |
1,212 |
1,174 |
3 |
Including thermal coal supplied to third parties |
947 |
1,187 |
-20 |
947 |
950 |
0 |
Coke |
623 |
652 |
-4 |
623 |
615 |
1 |
Including coke supplied to third parties |
198 |
231 |
-14 |
198 |
248 |
-20 |
Mechel PAO’s Chief Executive Officer Oleg Korzhov commented on 1Q2020
operational results.
“Mechel is on the federal list of Russia’s key systemic companies
because our facilities’ uninterrupted operations is critically important
to maintain stability in the regions where the Group is present as well
as the country’s economy as a whole. As such, our work continues during
the new coronavirus pandemic. All recommended safety measures are in
force at our production sites, while most of our office staff is working
from home.
“Today we can safely say that the spread of COVID-19 in 1Q2020 had no
significant impact on our production and sales. In the mining division
that was largely due to our proactive work on extending annual contracts
with our Asian customers throughout 2019. We also shifted supply
schedules for long-term contracts and redistributed sales geography for
certain products where needed. We shipped off volumes planned for 1Q2020
through our sales network. We expect that sales performance targets for
the second quarter will also be met. For several accounting periods,
prices have maintained fairly high volatility. At the same time, in May
we have noted a trend for stronger global prices for our key product —
coking coal concentrate — which we consider a positive market factor.
“Despite the pandemic, the steel division’s sales remained stable in
1Q2020. We foresee a negative impact on sales in 2Q2020. April-May is
the traditional time for a spike in demand from construction and steel
sales companies, but with ubiquitous restrictive measures in place, we
have seen no expected sales increase in early second quarter.
“The overall mining volumes (-4%) went down in 1Q2020 due to a temporary
halt in mining at Neryungrinsky Open Pit in January introduced to
decrease coal stocks that have accumulated due to conventions concerning
ports Posiet and Vanino.
“Coking coal concentrate sales to third parties went up by 5% primarily
due to increased shipments to Japan (+51% quarter-on-quarter) in order
to fulfill the company’s long-term contract obligations. Overall coking
coal concentrate sales went down by 8% as Mechel’s Chelyabinsk
facilities had less need for raw materials.
“In 1Q2020, Southern Kuzbass Coal Company increased output of both
anthracite and PCI. As a result, we increased anthracite sales by 14%,
with sales to third parties up by 20%, largely due to increased exports
to Asia. PCI sales went down by 8% due to accumulation of a large cargo
shipment at Ust-Luga port by early 4Q2019, which was then shipped to
European clients.
“Thermal coal sales to third parties remained at the previous quarter’s
level. We partially redirected sales from Asia (China and Vietnam) to
the domestic market due to a more favorable market situation.
“The 10-percent decrease in iron ore concentrate sales
quarter-on-quarter was due to technical difficulties with processing
Korshunov Mining Plant’s ore, as much of it came with extra humidity.
This problem was resolved in this accounting period.
“The increase in intra-Group demand for coke had an impact on coke sales
to third parties (-20% quarter-on-quarter). Following market trends, we
redirected coke sales from Asia Pacific to Turkey and Serbia.
“In this accounting period we increased output of pig iron and steel by
10% and 2% accordingly following completion of expansive repairs at
Chelyabinsk Metallurgical Plant’s blast-furnace and oxygen converter
workshops.
“Sales of long rolls went up overall by 5% quarter-on-quarter, with
priority given to manufacturing and sales of high-margin products. Thus,
sales of Chelyabinsk Metallurgical Plant’s rails went up by 34%
(doubling sales to Russian Railways), sales of Chelyabinsk Metallurgical
Plant’s sections — by 3%, while sales of long rolls made of Izhstal’s
stainless steel increased by 12%.
“Sales of rolled flats went up by 11% quarter-on-quarter. With stainless
steel flats the increase was 38% due to Mechel’s consistent strategy of
increasing the company’s share in this high-margin product segment.
“The 6-percent increase in hardware sales quarter-on-quarter was due to
a spike in sales of Mechel Nemunas’s wire, as well as expanding sales of
Beloretsk Metallurgical Plant’s wire ropes through Mechel Service’s
network.
“The 51-percent spike in sales of forged longs quarter-on-quarter was
due to both stable demand in Europe as well as the slump in Chinese
supplies to the European market due to quarantine measures in that
country. The minor slump in stampings sales (-2%) was due to a weaker
demand for railroad axles on the domestic market.
“The 19-percent slump in ferrosilicon sales quarter-on-quarter was due
to our forming a major export batch for our Asian partners, which was
shipped after this accounting period’s end. At the same time we
increased ferrosilicon sales on the domestic market as some of our
ferrosilicon was freed for sale by decreased needs at Chelyabinsk
Metallurgical Plant, which conducted an expansive repair program
mentioned earlier.
“Electricity generation in 1Q2020 generally remained the same
quarter-on-quarter and year-on-year. The 7-percent increase in heat
production quarter-on-quarter was due to lower temperatures in this
accounting period.”
Link: Official
Document |