PJSC Mechel : Mechel Reports 9M2021 Operational Results

Rhea-AI Summary

Mechel PAO (NYSE:MTL) released its operational results for 9M2021 and 3Q2021, highlighting significant market volatility in commodities. Coking coal prices surged to over $600 per tonne, while coal production fell 37% year-on-year due to decreased contractor mining and geological issues. Sales of coking coal concentrate and thermal coal dropped 30% and 10%, respectively. The introduction of new export tariffs is estimated to cost the company around 1.1 billion rubles, representing 1% of steel revenue. However, the company noted an increase in sales of high-margin products, with notable growth in various categories.

Positive

• Increased sales of high-margin products year-on-year: H- and I-beams up 21%, hot-rolled thin flats up 37%, and high-precision sections up 73%.
• Iron ore concentrate shipments increased by 108% quarter-on-quarter.

Negative

• Coking coal concentrate sales decreased by 30% in 3Q2021.
• Thermal coal sales fell by 10% due to mining declines.
• New export tariffs anticipated to cost approximately 1.1 billion rubles, impacting revenue.

MOSCOW, RUSSIA / ACCESSWIRE / November 18, 2021 / Mechel PAO (MOEX:MTLR, NYSE:MTL), one of the leading Russian mining and metals companies, announces 9M2021 and 3Q2021 operational results.

Mechel's Chief Executive Officer Oleg Korzhov commented on the results:

"This year's third quarter will be written into the history of international commodity markets as anomalous, as it saw a price rally both unprecedented in scale and unexpected for industry players. For example, the price of premium coking coal FOB Australia more than doubled in this quarter and firmly reached $400 per tonne. The price for premium coking coal CFR China set a new record in the last week of September, jumping yet another psychological barrier of $600 per tonne. Just as we have foreseen in our 2Q2021 report, the signs of price adjustment began appearing only in the fourth quarter, after Chinese authorities took practical measures slashing steel production. Mechel's coal assets finished this reporting period with mining results generally equal to the previous quarter. Considering the mining equipment renovation program which we allocated 3.3 billion rubles to this year, we continue with our gradual restoration of our key operational results. The 37-percent year-to-year decrease in coal production was due to decreased contractor mining at Neryungrinsky and Krasnogorsky open pits as well as face transfers at V.I. Lenina and Sibirginskaya underground mines.

"Coking coal concentrate sales went down 30% in 3Q2021 as mining decreased at Neryungrinsky Open Pit due to difficult geological conditions at stoping areas, as well as the fact that in 2Q2021 sales involved accumulated coal stockpiles of which there were practically none left by the third quarter. The same factors were at play for the overall sales of thermal coal, which declined by 10% in the third quarter. PCI and anthracite sales remained on the previous reporting period's level.

"Iron ore concentrate sales went down 12% due to repairs at Korshunov Mining Plant's washing plant. The facility has accumulated major ore stockpiles which will be processed into saleable product in the next reporting periods. In 3Q2021, the plant shipped 16,000 tonnes of iron ore concentrate to third-party buyers, which is a 108-percent increase quarter-on-quarter.

"Coke sales in 3Q2021 went down 8% due to stockpiles having been sold off in the previous quarter. Besides, shipment of one of the contract shiploads was put off until the fourth quarter. However, trends in the coke market remain favorable.

"Pig iron and steel output remained largely at the previous quarter's level.

"This reporting period saw a downward trend for average market prices for rolled steel as demand from the construction industry, steelwork producers, metalworking factories and machine-builders slumped. We think this logically followed the spike in demand for steel products seen in the second quarter, when consumers formed reserves sufficient for their needs.

"Another factor negatively impacting our 3Q2021 sales was the introduction of new export tariffs. In 2021, before the introduction of these tariffs, exports accounted for over 30% of sales of our Group's Russian-based facilities, but as the new tariffs hit, this share fell by nearly 10% and returned to the average level of the last few years. By our preliminary estimates, the temporary tariffs will cost our company about 1.1 billion rubles, which is roughly equivalent to 1% of our steel division's revenue.

"On a positive note regarding 9M2021 results, I would like to emphasize the increased share of high-margin products year-on-year. Sales of Chelyabinsk Metallurgical Plant's universal rolling mill's sections went up 26%, with sales of a most popular and profitable type of output - H- and I-beams - up by 21%, hot-rolled thin flats up by 37%, Izhstal's high-precision sections up by 73%, Urals Stampings Plant's stampings up by 59% and high-margin types of Beloretsk Metallurgical Plant's hardware up by 12%.

"Ferrosilicon sales went down 11% quarter-on-quarter due to planned repairs at Bratsk Ferroalloy Plant's furnaces. Most of the plant's ferrosilicon goes to export.

"The 3Q2021 31-percent decrease in electricity generation quarter-on-quarter was due to planned repairs of our technological equipment. The decrease in heat generation is seasonal."

Production (thousand tonnes):
Product Name	3Q2021	2Q2021	%	9M2021	9M2020	%
Run-of-mine coal*	2,933	2,962	-1%	8,537	13,131	-37%
Pig iron	790	796	-1%	2,358	2,646	-11%
Steel	891	876	+2%	2,615	2,654	-1%
Electric power generation (thousand kWh)	517,501	745,682	-31%	2,117,686	2,295,497	-8%
Heat power generation (Gcal)	691,607	922,842	-25%	3,678,168	3,388,154	+9%

Sales (thousand tonnes):
Product Name	3Q2021	2Q2021	%	9M2021	9M2020	%
Coking coal concentrate*	1,056	1,501	-30%	3,434	4,487	-23%
Including coking coal concentrate supplied to third parties	602	1,078	-44%	2,168	3,241	-33%
PCI	322	322	0	897	1,473	-39%
Including PCI supplied to third parties	322	322	0	897	1,473	-39%
Anthracites	345	347	-1%	1,051	861	+22%
Including anthracites supplied to third parties	294	312	-6%	925	716	+29%
Thermal coals*	643	716	-10%	2,336	2,857	-18%
Including thermal coals supplied to third parties	454	477	-5%	1,632	1 979	-18%
Iron ore concentrate	367	414	-12%	1,108	1,648	-33%
Including iron ore concentrate supplied to third parties	16	8	108%	31	31	+1%
Coke	690	752	-8%	2,059	1,873	+10%
Including coke supplied to third parties	293	364	-19%	895	597	+50%
Ferrosilicon	18	21	-11%	57	47	+22%
Including ferrosilicon supplied to third parties	14	15	-4%	42	31	+38%
Long rolls	555	685	-19%	1,804	1,940	-7%
Flat rolls	106	121	-12%	332	342	-3%
Hardware	130	142	-8%	389	415	-6%
Forgings	8	10	-19%	27	31	-13%
Stampings	18	17	+4%	48	30	+59%

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

***

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

***

Mechel is an international mining and steel company. Its products are marketed in Europe, Asia, North and South America, Africa. 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.

***

Some of the information in this press release may contain projections or other forward-looking statements regarding future events or the future financial performance of Mechel, as defined in the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. We wish to caution you that these statements are only predictions and that actual events or results may differ materially. We do not intend to update these statements. We refer you to the documents Mechel files from time to time with the U.S. Securities and Exchange Commission, including our Form 20-F. These documents contain and identify important factors, including those contained in the section captioned "Risk Factors" and "Cautionary Note Regarding Forward-Looking Statements" in our Form 20-F, that could cause the actual results to differ materially from those contained in our projections or forward-looking statements, including, among others, the achievement of anticipated levels of profitability, growth, cost and synergy of our recent acquisitions, the impact of competitive pricing, the ability to obtain necessary regulatory approvals and licenses, the impact of developments in the Russian economic, political and legal environment, volatility in stock markets or in the price of our shares or ADRs, financial risk management and the impact of general business and global economic conditions.

SOURCE: PJSC Mechel

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https://www.accesswire.com/673564/PJSC-Mechel-Mechel-Reports-9M2021-Operational-Results

FAQ

What are Mechel's operational results for 3Q2021?

Mechel reported a 37% decrease in coal production year-on-year and a significant drop in coking coal and thermal coal sales.

How did new export tariffs affect Mechel's revenue?

The new tariffs are expected to cost Mechel about 1.1 billion rubles, roughly equating to 1% of their steel division's revenue.

What were the sales trends for Mechel in 9M2021?

Mechel saw an increase in high-margin product sales, including a 26% rise in sections from its universal rolling mill.

What caused the decrease in coking coal concentrate sales for Mechel?

Coking coal concentrate sales declined by 30% in 3Q2021 due to geological challenges and the depletion of previously accumulated coal stockpiles.

Did Mechel's iron ore sales show any growth?

Yes, Mechel's iron ore concentrate shipments to third-party buyers increased by 108% from the previous quarter.