Moscow, Russia– May 24, 2018 – Mechel PAO (MOEX: MTLR, NYSE: MTL), one of the leading Russian mining and metals companies, announces 1Q2018 operational results.

Production and sales for 1Q2018

Production:

Sales:

Key investment projects progress

Universal rolling mill: 

Elga coal complex:

Mechel PAO’s Chief Executive Officer Oleg Korzhov commented on the 1Q2018 operational results:

“The Group’s coal facilities during this accounting period have been operating steadily, maintaining mining volumes at the previous quarter’s level. Elga Coal Complex reached a record quarterly mining volume at its deposit. At the same time, our sales dynamics suffered negative impact from several factors, including persistent shortage of railway gondola cars in the Kemerovo Region and infrastructure limitations in Russia’s Far East on the way to ports.

“As we have already reported, we are implementing a major technical revamping program and plan to gradually increase coal mining volumes to reach 2015-2016 levels. In order to do that, we continue with renewing our mining equipment and drawing in contractors with their own fleet of BelAZ trucks, excavators and drill rigs.

“Sales of coking coal concentrate fell lower quarter-on-quarter due to extraordinarily high stock of concentrate in ports in 4Q2017, which yielded extra volumes at that time. Planned repairs at Neryungrinskaya Washing Plant early this year also had their impact. This year’s first quarter was made distinctive by our re-routing coking coal concentrate sales from China to a more profitable Japanese market, where we increased sales by 10%. PCI sales dropped due to a weaker demand in Asia, and we transferred some of our supplies to April. The seven-percent growth in steam coal sales quarter-on-quarter was due to an increase in supplies to Russian energy holdings.

“Weaker results in production and sales of iron ore concentrate persist due to our working through a geologically difficult area and low iron content in the ore mined there.

“The steel division maintained steel production at the previous quarter’s level. We are consistently pursuing our strategy of modifying our product range by redistributing resources in order to increase the share of high-margin products in our sales structure. At Chelyabinsk Metallurgical Plant’s universal rolling mill, the focus in this accounting period was made on shaped rolls and mastering new beam types. Due to a stable demand for these products ahead of the summer season, we increased their sales by 17%. By the first quarter’s end, the universal rolling mill’s product range expanded to include Z-sections for transport purposes, which is highly in demand with wagonbuilders, and wide-flange beam intended for the European market. The universal rolling mill is producing approximately 20 European-standard types of beams and rails for the European Union’s construction and railroad industry facilities.

“Sales of flat rolls went up by 8% quarter-on-quarter primarily due to a major contract for supplies of stainless flats made of heat-resistant steel grades.

“The 13-percent increase in forged long rolls was due to a stable market demand in Europe. Stampings sales went up by 25% due to our contracts with leading Russian wagonbuilders. Urals Stampings Plant has significantly increased production of wagon axles in 1Q2018. In order to satisfy growing market needs, the plant launched an additional upgraded hammer line. We see the increased demand for wagon axles as a positive sign that joint efforts by steelmakers, wagonbuilders and transport companies will soon manage to reverse the acute shortage of gondola cars.

“Electricity generation remained at the previous quarter’s level. The 22-percent increase in heat generation was due to climatic conditions, which is to say lower air temperatures.” 

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Mechel PAO
Ekaterina Videman
Tel: + 7 495 221 88 88
ekaterina.videman@mechel.com