Mechel, one of Russia's leading mining and metals companies, announced on August 4, 2016, their 1H2016 operational results.
According to the statement of the Mechel´s CEO Oleg Korzhov, the coal industry demonstrated stable demand on both global and domestic markets, with a growth registered in both quarter benchmarks and spot prices.
Korzhov announced that Mechel increased overall mining by 4% and redirected some of their chief product — coking coal concentrate — to China, increasing company sales to this country nearly by half quarter on quarter.
In 2Q2016, China remained the market’s chief driver, and showed an increased demand for coal in the second quarter due to the decrease of local production.
In 2016 Chinese authorities announced plans to close down unprofitable facilities which produce a total of up to 250 mln tonnes a year. According to analysts, about a third of this volume has already left the market.
Accordingly, imports took the place of these unprofitable producers, especially as far as coking coal was concerned.
Mechel also made several coking coal shipments to India and Vietnam, which are new markets for the company.
The 16% increase in anthracite sales was due to a favorable price situation in Europe (Germany, the Netherlands and Belgium).
Steam coal sales went up by 9% due to an increase in shipments from Elga Coal Complex and Southern Kuzbass Coal Company’s facilities.
Over 50% of steam coal in this accounting period was exported to China.
The steel division of Mechel increased production quarter-on-quarter — steel production went up by 2%, pig iron by 3%.
Korzhov added, that they have moved forward in implementing their strategy aimed at boosting share in the high-margin product market, which resulted in billet sales decreased by 41%. In 2016 Mechel supplied Russian Railways with over 120,000 tonnes of rails, and we plan to bring this volume up to 220,000-250,000 tonnes by the year’s end.