The Russian steel producer Severstal has announced that in Q1 2010 its Russian Steel division saw a 14.8 percent quarter-on-quarter drop in its revenue to $1.664 billion, with average sales prices and sales volumes decreasing by 2.5 percent and 13.3 percent respectively compared to Q4 2009.
In Q1 this year, Severstal Russian Steel's EBITDA amounted to $404 million compared to $555 million in Q4 2009, producing an EBITDA margin of 24.3 percent. Increasing raw material costs led to a cost per unit of slab produced (including depreciation and amortization) of $340 in Q1 2010 versus $296 in Q4 2009.
"Higher input costs and lower sales volumes during the quarter were the main drivers of the quarterly results. Sales volumes were impacted by a reduction in export shipments and an increase in domestic demand was not sufficient to offset this," reads the company's statement. The Russian Steel operation was left with substantial inventories of finished steel products for export that could not be shipped from the port of St. Petersburg due to severe weather conditions.
As part of its $1.4 billion capital expenditure program in 2010, Severstal has started construction works at its mini-mill in Balakovo, in Russia's Saratov region, which by 2013 is expected to produce 1 million mt of long steel per year. Severstal said it is also plans to invest in downstream expansion in Russia to improve its product mix and further differentiate it from other Russian steel producers.