The Russian steelmaker Severstal has announced that in 2009 its mining division Severstal Resources registered a 23.7 percent decrease year on year in its revenue to $1.871 billion; however, in Q4 2009, as a result of increased sales volumes and the very strong price performance from October to December, its revenue increased by 32.1 percent quarter on quarter to $621 million.
In Q4 2009, the coking coal market in Russia remained tight resulting in price increases of 34 percent quarter on quarter, while pellet prices were 16.8 percent higher than in Q3. In Q4, production of coking coal concentrate increased by 40.6 percent quarter on quarter. Severstal Resources' production volumes have already reached the pre-downturn levels.
"This positive change primarily reflects an improvement in demand in the Russian and North American markets," said Severstal in its statement.
Cost cutting measures and a weaker ruble in 2009 resulted in reductions in the cost per unit of production at Severstal mining subsidiaries Vorkutaugol (down 30.2 percent), Karelsky Okatysh (down 26.5 percent), and Olkon (down 23.7 percent), all compared to the previous year.
"Growing demand from China for coking coal and iron ore has already led to higher spot prices for these raw materials to date in 2010. We believe this trend will be sustained during the year, especially from Q2 onwards." reads the company's statement. "As the majority of our sales are made in the spot markets, we expect to be able to take advantage of rising commodity prices."