Mechel, one of the leading Russian mining and steel groups, has issued its operational results for the second quarter and first half of 2009.
According to Mechel senior vice-president Vladimir Polin, in view of the decreased demand for coking coal especially in the Russian domestic market, in H1 2009 Mechel signed a number of large scale long-term contracts with Chinese, Japanese and South Korean companies, which allowed it to increase utilization of coking coal mining capacity in the second quarter, establishing a basis for its restoration of output to pre-crisis levels. Certain increases in both Russian and Chinese production of steel products also favored increased iron ore concentrate production.
Thus, in the second quarter this year Mechel saw a 19 percent increase in its coking coal production to 1.237 million mt, a 25 percent rise in its coal concentrate output to 1.736 million mt (including a 38 percent increase in its coking coal concentrate production to 1.221 million mt), a 22 percent increase in its iron ore concentrate production to 1.073 million mt, and a 34 percent rise in its coke production to 723,000 mt, all compared with the first quarter. Meanwhile, in the first half year Mechel produced 2.28 million mt of coking coal, 3.129 million mt of coal concentrate (including 2.093 million mt of coking coal concentrate), 1.954 million mt of iron ore concentrate, and 1.263 million mt of coke.
As compared to the "challenging" first quarter, in the second quarter of the current year certain positive dynamics in the steel markets were observed, Mr. Polin stated. In the second quarter Mechel saw a 41 percent increase in its pig iron production to 965,000 mt, a 27 percent rise in its crude steel production to 1.397 million mt and a 25 percent increase in its finished steel products output to 1.341 million mt, including an18 percent rise in flats output to 79,000 mt, a 39 percent increase in longs output to 988,000, but a seven percent drop in semis production to 274,000 mt, all compared to the first quarter. "We continue to produce most downstream products increasing the share of high value added products in our portfolio while reducing billets production," Mr. Polin commented. In the first half year, Mechel produced 1.651 million mt of pig iron, 2.497 million mt of crude steel, and 2.412 million mt of finished steel products, including 146,000 mt of flats, 1.697 million mt of longs, and 569,000 mt of billets.
Accordingly, the active development of its own sales network and the expansion of its sales geography allowed Mechel to commission all the production units suspended at its facilities in Q4 2008. Steel and ferroalloys segments' capacity utilization reached pre-crisis levels and at some plants was even higher, reads the company's release.
"In the ferroalloys division a recovery of ferronickel and ferrochrome prices could be observed from the end of the first quarter that allowed us to increase capacity utilization of our ferroalloy assets to 100 percent and to significantly raise output of these ferroalloys," the Mechel senior vice-president commented.