The Russian steel sector remains impacted negatively by international sanctions, facing challenges to sell its products globally and witnessing shrinking demand locally. Due to this pressure, Severstal, one of the main Russian steel producing companies, saw a six percent decline in its sales during the January-June period this year to 6 million mt. The main impact was felt by Severstal in the second quarter when its consolidated sales fell by 17 percent. As a result, the company had to reconsider its production program and reduced its capacity utilization rate to 75 percent. In the meantime, the company’s costs increased due to inflation pressure and increased transportation costs.
According to the company’s statement, its semis and raw materials sales increased by 12 percent year on year in the first half, mainly due to active BPI sales to the US in the first quarter. However, its finished steel trade shrunk by nine percent in the same period to 2 million mt, mainly as a result of the EU restricting imports from Russia. “The first half of 2022 was extremely challenging for Russian steel companies and Severstal particularly. The sanctions forced Severstal to take urgent measures in order to sustain business. After the complete stoppage of sales to the EU, the company had to redirect sales to other, less marginal markets, and to reconstruct the chain of raw materials purchases for production operations,” the statement reads.