The Russian steel producer Severstal has announced that in Q1 2010 its North American operations posted a 10.5 percent growth quarter on quarter in revenue to $1.170 billion, with sales volumes increasing by 13.8 percent as a result of improved demand in Q1 compared to the last quarter of 2009, although average selling prices were slightly lower.
Meanwhile, the Q1 EBITDA of Severstal's North American operations was minus $83 million, being affected by increasing costs of main raw materials, such as iron ore pellets, scrap and coke, by idling expenses, by excessive operating and maintenance costs related to weather-influenced production interruptions at Sparrows Point, and by startup costs at steelmaking and hot rolling operations at Warren.
The restart of operations at Warren, coupled with the successful restart of Wheeling finishing facilities, will allow Severstal to increase capacity utilization and improve the profitability of its North American operations in Q2.
"We believe that the North American market conditions will continue to improve in Q2 due to better end-user demand and low inventories at processors. We expect to see further increases in key raw material prices driven by stronger demand for raw materials in the global markets," reads the company's statement.
Over the longer term, Severstal expects the cost position of its North American business to improve as a result of further investment in manufacturing efficiencies, higher utilization rates and fixed cost reduction through labor restructuring and other initiatives.