Mechel attributes decrease in coal sales in 1H'22 to limited carrying capacity of railroads leading to FE ports
Sale of coking coal concentrate in H1’22 fell by 12% YoY to 2.08 million tonnes
PAO Mechel attributed the decrease in coal product sales in 1H2022 to two factors — high figures of 1H2021, when the company successfully managed to sell off significant stockpiles, and limited carrying capacity of railroads leading to Far Eastern ports in 2Q2022. According to the company’s statistics, sale of coking coal concentrate in the first half of the year fell by 12%, year-on-year, to 2.08 million tonnes, thermal coals – by 7% to 1.57 million tonnes, coke ‒ by 16% to 1.15 million tonnes.
Mechel PAO’s Chief Executive Officer Oleg Korzhov commented on the results: “In this reporting period, domestic coke sales went down due to a slump in demand from Russian steelmakers, as did exports as sales to Western countries were limited.
According to him, the upward trend for average commodity and steel product prices, which began in 2021, also persisted in 1Q2022, but started to weaken gradually in 2Q2022. In July-August prices continued to slump. “We consider the positive price dynamics early in the year a result of resurging global demand following several waves of the coronavirus pandemic,” he said.
Oleg Korzhov marked the effect of the investment program aimed at upgrading the mining equipment. According to him, it led to increased mining volumes both quarter-on-quarter and and in 1H2022 compared to 1H2021.
The company’s statistics shows that coal production in H1’2022 rose by 7%, year-on-year to 5.98 million tonnes, pig iron – by 6% to 1.66 million tonnes, steel – by 7% to 1.85 million tonnes.
According to Oleg Korzhov, starting in 2Q2022, due to export limitations and domestic oversupply, demand trends turned downward. Negative price trends for almost every kind of steel product persist to this day. “We increased sales of long steel by 6% (to 1.3 million tonnes – Ed.),” he said adding that sales of flat steel went down by 10% (to 204 thousand tonnes – Ed.).
Mechel is an international mining and steel company. Mechel unites producers of coal, iron ore concentrate, steel, rolled products, ferroalloys, heat and electric power. All of its enterprises work in a single production chain, from raw materials to high value-added products. The group’s consolidated revenue in 2021 totaled RUB 402.1 billion (+51%, year-on-year); EBITDA – RUB 118.9 billion (+190%, year-on-year).
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