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Mechel Announces Operational Results for Nine Months of 2019

Source: Mechel, November 25, 2019

Leading Russian mining and metals companies Mechel PAO announced operational results for nine months of 2019. Mechel CEO Mr Oleg Korzhov said “In 3Q2019, due to our upgrade of mining equipment as well as fruitful cooperation with contractors, all our mining facilities boosted stripping and mining volumes. In this accounting period we mined a total of 5.3 million tonnes of coal, which is 15% more than in the previous quarter. Stripping volumes went up by 17% quarter-on-quarter. This is an important result for us, as these works ensure a future increase in our mining facilities’ output.”

He said “As for prices for our key product coking coal concentrate as well as other metallurgical coals, starting in 3Q2019 our key markets were highly volatile and demonstrated a major slump in prices, down 20% on average and occasionally dropping by 30% compared to the beginning of the quarter. However, in our opinion which coincides with consensus forecasts of leading international investment banks demand and price indicators in the next few years will remain fairly stable due to customers in Asia Pacific.”

The 10-percent decrease in coking coal concentrate quarter-on-quarter was due to necessary planned repairs at Neryungrinskaya Washing Plant as well as a temporary decrease in sales to South Korea, as we ship coal to this country according to a schedule set by an annual contract with a major client. At the same time, we increased output at Southern Kuzbass Coal Company, with PCI and anthracite sales up 37% and 51% accordingly.

Iron ore mining and concentrate output at Korshunov Mining Plant are growing steadily, with sales up 23% in 3Q2019. This product is mostly shipped to Chelyabinsk Metallurgical Plant, with some of it sold to third parties.

Overall coke sales went up by 6%, with sales to third parties up by 52% due to sales of released output on the domestic market.

In this accounting period we began large-scale repairs of Chelyabinsk Metallurgical Plant’s blast furnace #4, which reflected on our pig iron (down 8%) and steel production (down 5%) quarter-on-quarter. In July-September we boosted rail sales by 75% to fulfill our contractual obligations to Russian Railways, Moscow Metro and Mosinzhproekt, as well as increased sales of various sections produced by the plant’s universal rolling mill by 5%. Sales of Izhstal’s long rolls went up by 7% primarily due to increased demand from military and automobile industries. The overall four-percent slump in long roll sales was due to a decrease in rebar output at Chelyabinsk Metallurgical Plant as the blast furnace underwent repairs. The same also caused a five-percent decrease in sales of flat rolls. At the same time, we continued to implement our strategy of expanding Mechel’s share of the domestic stainless market, increasing sales of our stainless flats by 15% quarter-on-quarter.

News Source: STEEL GURU