Mechel’s steel production decreased by 7.0pc to 3.610mn mt in 2019 from 3.881mn mt a year earlier.
The Russian company’s pig iron production declined by 9.9pc to 3.326mn mt in 2019 compared to 3.690mn mt in 2018. The large-scale upgrades to the blast furnace and oxygen-converter workshops at the company’s Chelyabinsk Metallurgical Plant were largely responsible for the pig iron and steel output declines. Mechel noted that the large-scale facility modernization upgrades that dampened 2019 production totals were necessary and will have a positive effect in 2020, both on output volumes and profitability.
Mechel’s consolidated revenues decreased 5.1pc to RUB296,567mn ($3.7bn) in 2019 compared to fiscal year 2018, while its EBITDA dropped by 29pc to RUB53,428mn ($667.8mn) in 2019 compared to the prior year. The company’s EBITDA margin declined from 24pc in 2018 to 18pc in 2019.
All lines for finished steel production declined in volume sales, which the company partially attributed to market conditions, as well as the introduction of import quotas and tariff fees for shipments to destinations in the EU and Ukraine. The lower production volumes were attributed to the modernization project at Chelyabinsk. Long roll sales dipped by 8.1pc to 2.509mn in 2019 from 2.731mn mt the previous year, while flat rol l sales decreased by 6.7pc to 449,000mt in 2019 compared to 481,000mt in 2018. Hardware declined by 9.3pc to 564,000mt in 2019 compared to 622,000mt the previous year. Stampings decreased by 25.2pc from 143,000mt in 2018 to 107,000mt in 2019. Forgings also decreased by 9.1pc to 40,000mt from 440,000mt in 2018.
Total coal production rose marginally by 0.2pc to reach 18.845mn mt in 2019 from 18.813mn mt in 2018.
Coking coal concentrate sales were mostly flat at 7.163mn in 2019 from 7.149mn in 2018. Twenty-nine percent of overall coking coal concentrate sales were Japan-bound, 27pc went to China, and 24pc to domestic Russian customers. Coke sales increased by 3.6pc, reaching 2.528mn from 2.550mn in 2018. Coke sales to third parties increased by 36pc, as stockpiles freed because of the repairs at the Chelyabinsk Metallurgical Plant’s blast furnace No. 4 were sold to export destinations, including Turkey and India.
PCI production rose by 14.6pc from 1.237mn mt in 2018 to 1.417mn mt in 2019. PCI sales increased primarily because of higher exports to South Korea. Anthracite sales declined by 37pc to 736,000mt in 2019 from 1.169mn mt the year prior. The decline in anthracite sales was largely driven by sales to third parties decreasing by 43.4pc 968,000mt in 2018 to 548,000mt in 2019.
Iron ore concentrates sales increased by 29.7pc from 1.972mn mt in 2018 to 2.558mn mt in 2019. The increase was attributed to output rising at the company’s Korshunov Mining Plant, which it achieved on recent technical upgrades. Sales to third-party clients increased by 38pc in 2019 to 193,000mt.
On an annual basis, rail sales increased by 14.8pc in 2019 to 280,000mt, while section sales rose by only 1.8pc to 287,000mt during the same period.
Ferrosilicon sales declined by 9.5pc to 67,000mt in 2019 from 74,000mt in 2018. The sales decrease of products from the Bratsk Ferroalloys Plant was the result of the ore-thermal furnace No.3 being idled for an upgrade later in the year.
China and South Korea were among the key players in the market. Both countries increased their imports of both coking and thermal coal. As for Mechel’s salessome sales to China decreased in 2019, redistributing volumes to Japan’s more profitable market.
Thermal coal sales decreased to 5.181mn mt in 2019 from 5.290mn mt a year ago, down by 2.1pc. Mechel is also involved in power generation. Electric power generation increased by 4.5pc to 3.395bn kWh from 3.250bn kWh in 2018. Heat power generated declined by 6.1pc from 5.741mn Gcal in 2018 to 5.393mn Gcal in 2019.