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Mechel increases coal sales

Published by , Editorial Assistant
World Coal,

Mechel PAO’s Chief Executive Officer Oleg Korzhov commented on the 1H17 operational results:

“Early in the second quarter, correction in the metallurgical coal market which we observed since last December changed to a dramatic price hike as the powerful storm Debbie hit Australia’s key coal producing state of Queensland.

We made every effort to take maximum advantage of this beneficial situation and to boost metallurgical coal exports to Asia Pacific. In 2Q17, the volume of our metallurgical coal concentrate exports went up by over 20% quarter-on-quarter, and that included nearly quadrupling our Elga coal supplies. As a result, our sales of metallurgical coal concentrate, which is our key product, to third parties went up by 3%.

“PCI sales remained at the last quarter’s level due to stable demand.

“The 19% decrease in anthracite sales was due to a decrease in export orders, primarily from Europe, and several shipments to South-East Asia being shifted from the second to the third quarter.

“Steam coal sales mostly remained on the same level. We have, however, increased shipments to our clients in China, South Korea and Vietnam, with our supplies to these countries totaling some 900 000 t of thermal coal in 2Q17.

“As a whole, the export share in our sales structure for all kinds of coal sold to third parties amounted to 83% in 2Q17.

“As for iron ore concentrate, the Group’s priority still lies with uninterrupted supply of Chelyabinsk Metallurgical Plant.

“In 2Q17, Mechel decreased coke sales by 9% due to an unstable market situation.

“The company’s steel division decreased production of pig iron by 5% and steel by 2% quarter-on-quarter due to major planned repairs in Chelyabinsk

Metallurgical Plant’s agglomeration and blast furnace facilities.

“We continue to implement our strategy aimed at increasing the share of high-margin steel products in our sales structure. In 2Q17 sales of all types of long rolls went up by 8%. This increase was partly due to the increase in production at Izhstal and mastering of new bar profile types at Chelyabinsk Metallurgical Plant’s universal rolling mill. Two our rail profiles were certified as compliant with European TSI standard, which enables us to expand our sales geography. As of today, the universal rolling mill has reached a monthly load equal to 80% of the mill’s maximum capacity.


“In this accounting period, due to a traditional seasonal hike in demand for rebar from construction companies, we managed to increase sales of this product by 14%. The seasonal factor also had its impact on the 16% increase in hardware sales.

“Sales of Bratsk Ferroalloy Plant’s ferrosilicon went up by 22% in this accounting period, mostly due to an increase in the group’s internal demand. “The 7% decrease in stampings sales in 2Q17 was due to our fulfilling several contracts ahead of schedule, in 1Q17. The 13% decrease in forgings sales was due to repairs at Urals Stampings Plant’s Chelyabinsk facility.

“The 20% decrease in electricity generation was due to planned equipment repairs at Southern Kuzbass Power Plant. The 52% decrease in heat generation was due to the fact that the heating season ended in May and thus the heat load went down significantly.” 

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