In its financial report Wednesday for Q2 and the first half of 2012, Russian steelmaker Severstal noted that in its US operations, Q2 saw softening demand and prices, but a lag in realized prices passed on from a strong Q1 helped soften the impact of declining prices. This, coupled with the higher share of value-added galvanized steel in the sales portfolio due to the launch of two modern galvanizing lines in Q1, helped minimize the decrease in average realized price in Q2.
Slightly lower realized prices and weaker selling volumes contributed to lower revenue of $1.06 billion (Q1 2012 revenue was $1.09 billion). However lower production costs provided support for earnings growth with EBITDA climbing 16.7 percent to $77 million (Q1 2012 EBITDA was $66 million).
Looking forward, Severstal said that in the US, producers started to increase prices in August on the back of improving market balance with lower imports, production cuts due to idling several facilities and seasonal maintenance work. Real steel demand remains healthy, and a seasonal pick-up of automotive activity is expected after the summer breaks.