Russian steelmaker and miner Severstal says it expects domestic demand for steel to fall further due to a decline in Russian economic growth and tightening of measures to counter Covid-19.
The anticipation of an economic slowdown and weaker steel demand led to a negative steel price dynamic starting from March, although prices are still significantly higher than costs, the company says in a report seen by Kallanish.
The rouble devaluation and seasonal slowdown in Russian demand led to the redirection of part of Severstal’s first-quarter sales to the export market.
“The company managed to take advantage of the flexibility of its sales channels and increased the share of steel products exports in Q1 2020 to 45%,” comments Severstal chief executive Alexander Shevelev.
Severstal’s revenue in Q1 decreased by -12.5% on-year to $1.78 billion. Ebitda decreased by -16.3% to $555 million.
Severstal expects that, despite a number of potential headwinds in both the export and domestic markets, its low-cost position will allow the company to remain competitive in the market.
The company’s output of crude steel and steel products increased on-quarter in Q1 (see Kallanish passim). Severstal produced 2.85 million tonnes of crude steel in Q1, 5% up on-quarter but -6% down on-year. Hot metal output increased by 2% each on-quarter and on-year to 2.41mt, following the completion of short-term blast furnace maintenance in Q4 2019.
