Moscow, Russia– August 27, 2021 – Mechel PAO (MOEX: MTLR, NYSE: MTL), one of the leading Russian mining and metals companies, announces 2Q2021 and 1H2021 operational results.

Mechel’s Chief Executive Officer Oleg Korzhov commented on the 2Q2021 results:

“In the second quarter, prices for our key product — coking coal — CFR China and FOB Australia continued their confident growth, and positive export commodity dynamics supported the domestic market as well. The key reason lies in reduced coking coal production in China. Imported coking coal prices in China also grew as supply from Mongolia did not recover due to worsening pandemic situation in that country. We expect that demand from major Chinese steelmakers will maintain prices for imported coal at a fairly high level in the entire Asian region. We do not expect any corrections until the fourth quarter.

“We consider this reporting period as the time of gradual restoration of our operations. Coal mining went up by 12% quarter-on-quarter. We signed contracts for delivery of some 40 mining transport units that are due to arrive in the second half of the year. In view of the current situation, the company’s management decided to cut down on thermal coal mining in 2Q2021, prioritizing coking coals to benefit from favorable market trends. This had a positive impact on the volumes of coking coal concentrate processing and sales (+71% quarter-on-quarter). Sales in both Asia Pacific and the domestic market more than doubled.

“PCI sales went up by 27% due to increased shipments to our Japanese and South Korean customers. Anthracite sales remained largely on the previous quarter’s level.

“Exports accounted for 86% of our coal product sales to third parties in the second quarter.

“Iron ore concentrate sales went up by 27% due to increased stripping and mining works. Launches of new mining and transport equipment had a positive effect as well.

“The overall coke sales went up 22% quarter-on-quarter, with sales to third parties up by 53% due to stable demand from Russian and Asian steelmakers.

“Pig iron and steel making dynamics in 2Q2021 have climbed into positive territory. By using the stockpiles accumulated in the previous quarter as we prepared for a seasonal hike in demand, we ensured a major boost to sales of nearly every type of our steel division’s products. This way we took full advantage of the favorable market trend seen in 2Q2021, and that enabled the division to secure the highest quarterly revenue in a decade.

“Sales of long steel in 2Q2021 went up by 22%. We upped the load on our universal rolling mill for sales of high-value added sections. As a result, sales of the universal rolling mill’s sections went up 41% quarter-on-quarter; our strategy of expanding sales of high-margin products through our Mechel Service sales network also contributed in many ways. Rebar sales in 2Q2021 went up by 24%, with exports, primarily to the CIS member states, more than doubled. We did not sell rails to Russian Railways in this reporting period due to lack of orders. Most of our rails in 2Q2021 went to export.

“Flat steel sales went up 15% quarter-on-quarter as Chelyabinsk Metallurgical Plant upped output of flats after completing major repairs in 1Q2021.

“Ferrosilicon sales grew by 16% as we increased shipments to Europe.

“Hardware sales were up 21% due to a spike in demand for wire ropes and wire as the construction season set in. We have accumulated additional hardware stockpiles in Mechel Service’s storages in advance, and this enabled us to expand our client base and sales geography.

“Sales of forgings increased by 15% quarter-on-quarter due to higher demand from foreign customers. Demand for railroad axles from domestic wagon-builders remains fairly stable, and sales of stampings went up by 42% quarter-on-quarter.

“The quarter-on-quarter 13-percent decrease in electric power generation and 55-percent slump in heat output was due to the end of the heating season and planned maintenance and repairs of the heat and electric equipment.”
 

* Excluding volumes produced by Elga Coal Complex which is no longer part of the Group. 

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