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Severstal's Q1'16 steel sales fall 4% YOY as Russian demand contracts

PAO Severstalsaw its consolidated steel sales decline 4% in the first quarter, to 2.4 milliontonnes, compared to a year earlier, according to the April 12 quarterly report.

The Russian steelmaker attributed the drop to a contraction indomestic consumption, partially on the back of seasonal factors.

First-quarter crude steel production declined 2% to 2.9 milliontonnes, while hot metal output climbed 2% to 2.4 million tonnes.

Refurbishment of Severstal's four-stand cold rolling mill inCherepovets began in January, which resulted in lower output of high value-addedproducts.

Severstal said the drop was somewhat offset by an increase inhot rolled coil production.

The refurbishment, expected to be completed in the second quarter,will increase mill capacity to 200,000 tonnes per annum.

Quarter over quarter coking coal concentrate output was negativelyaffected because of the accidentat Vorkutaugol's Severnayamine in Russia's northern Komi Republic in late February.

Vorkutaugol, one of Russia's largest producers of hard cokingcoal, is a subsidiary of Severstal.

Coking coal sales in the first quarter slumped 8%, to 1.4 milliontonnes, compared to the prior quarter, though year-over-year sales increased 7%.

While the investigation into the accident continues, the GovernmentCommittee has provisionally determined that the main reason for the rock burst andsubsequent methane blast was geological factors.

Mining operations at Severnaya remain suspended, but Vorkutaugol'sother four mines and one open pit are operating as usual.

Sales of iron ore pellets fell 7% year over year to 2.4 milliontonnes and sales of iron ore concentrate dropped 5% to 937,772 tonnes.