Mechel announces 2017 operational results

Time:Mon, 09 Apr 2018 06:26:57 +0800

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Mechel PAO one of the leading Russian mining and metals companies, announces 2017 operational results.

Production and sales
Production:

Product Name	2017	2016	%	4Q2017	3Q 2017	%
Run-of-Mine Coal	20638	22683	-9	4944	5363	-8
Pig Iron	4029	4053	-1	981	1010	-3
Steel	4274	4252	1	1057	1000	+6
Electric power generation	3427430	3378220	1	928618	820430	+13
Heat power generation (Gcal)	5581204	5730268	-3	1810894	679181	+167

In '000 tonnes
Sales:

Product Name	2017	2016	%	4Q2017	3Q 2017	%
Coking coal concentrate	7942	8664	-8	1972	1898	4
Including coking coal concentrate supplied to third parties	4797	5784	-17	1128	1198	-6
PCI	1465	1620	-10	459	324	42
Including PCI supplied to third parties	1465	1620	-10	459	324	42
Anthracites	1613	1771	-9	394	409	-4
Including anthracites supplied to third parties	1400	1519	-8	343	362	-5
Steam coal	6141	6997	-12	1499	1478	1
Including steam coal supplied to third parties	5404	5927	-9	1294	1297	0
Iron ore concentrate	2510	2744	-9	473	637	-26
Including iron ore concentrate supplied to third parties	30	26	15	7	12	-39
Coke	2686	2839	-5	648	656	-1
Including coke supplied to third parties	771	894	-14	177	180	-2
Ferrosilicon	67	79	-15	19	17	12
Long rolls	2919	2990	-2	705	747	-6
Flat rolls	581	496	17	128	149	-14
Hardware	651	665	-2	148	172	-14
Forgings	45	38	18	10	8	30
Stampings	96	75	28	27	22	26

In '000 tonnes

Key investment projects progress
Universal rolling mill:

Product Name	2017	2016	%	4Q2017	3Q 2017	%
Rails, beams and shapes	636	517	+23	152	170	-11

In '000 tonnes

Elga coal complex:

Product Name	2017	2016	%	4Q2017	3Q 2017	%
Run of mine coal	4,154	3,726	+11	1,105	1,116	-1

In '000 tonnes

Mechel PAO’s Chief Executive Officer Oleg Korzhov commented on the 2017 operational results that “We may note with satisfaction that despite the commodity market volatility, which was primarily due to weather in Australia, prices for our key product, coking coal concentrate, remained at a favorable level. Japan and China were chief coking coal importers in 2017, and China continues to boost its presence on the market by increasing coking coal imports by over 10 million tonnes. At the same time, infrastructure limitations in the Far East and lack of railway cars that were keenly felt in the second half of last year, did not allow us to export to Asia Pacific as much coal as we had originally planned. In 2017, the company paid maximum attention to a technical revamping of its mining fleet and equipment renovation in order to restore its mining volumes in 2018. As a result, overburden mining in Yakutia and Kuzbass went up, which enabled us to increase the amount of developed coal for future mining. We have seen the revamping’s positive effect in Elga Coal Complex’s 2017 results, as mining went up by 11%. Sales of Elga’s coking coal concentrate have nearly doubled year-on-year, which is partly due to the decrease of steam coal’s share in the coal mined at the deposit.

“The overall slump in coal mining as well as the lack of wagons in the Russian Railways network in the second half of the year had their impact on the sales of our mining division’s products. Sales of coking coal concentrate went down by 8%. Nearly 40% of our total coking coal concentrate sales to third parties were exported to China. PCI sales went down by 10% in 2017, but in the fourth quarter we managed to increase production and ensure a 42-percent rise in sales quarter-on-quarter, while sales to Asia Pacific in 4Q2017 went up by 32%.”

“Iron ore mining at Korshunov Mining Plant in 2017 was aggravated by difficult subsurface conditions, with a lower iron content and a higher humidity in the ore, which led to a nine-percent decrease in iron ore concentrate sales. Nearly all finished products are shipped to Chelyabinsk Metallurgical Plant for further use as raw materials for steelmaking.”

“The five-percent decrease in coke sales was due to instability in the domestic market. In 2018, we are expanding into new markets in Eastern Europe and, as a whole, plan to increase sales of our coke products.”

“In the group’s steel division, we have significantly increased output of high-margin products at our key facilities Chelyabinsk Metallurgical Plant, Beloretsk Metallurgical Plant and Izhstal by decreasing the share of less profitable products. This strategy enabled us to improve our facilities’ earning capacity. We are constantly increasing the load of Chelyabinsk Metallurgical Plant’s universal rolling mill, mastering new beam sizes as well as supplying more rails to Russian Railways. Over the past two years, we have supplied approximately 600,000 tonnes of rails for railroad reconstruction in our country. As of now, we have mastered production of some 60 profiles of beams and rails at our universal rolling mill. Also, Chelyabinsk Metallurgical Plant mastered production of SIN beams at a new automated production line installed in one of the plant’s rolling workshops. With the SIN beam technology in hand, the plant’s product range now includes all kinds of beam profiles existing on the domestic market. As Chinese producers’ activity slumped, 2017 became a year for a growth in prices for flat rolls. We took advantage of this favorable situation and increased sales of flat rolls by 17%. An improvement in prices on the European market had a positive impact on the dynamics of our stampings sales (+18%). Demand for stampings both in Russia and the CIS remains high and stable, which enabled us to increase sales by 28% in 2017. We signed contracts with all major wagonbuilders who are primary customers of Urals Stampings Plant’s stamped products. In 2017, electricity generation remained at the same level. The three-percent decrease in heat generation was due to an actual decrease in heat consumption by the housing and utilities sector and industrial facilities.”