Russia's Severstal reports Q4 steel output up 3% on q/q

FILE PHOTO: The logo of steelmaker Severstal is seen at the company's plant in Cherepovets, Russia October 22, 2018. Picture taken October 22, 2018. REUTERS/Polina Ivanova

MOSCOW (Reuters) -Severstal, one of Russia’s largest steelmakers, said on Thursday its fourth-quarter crude steel output rose 3% quarter on quarter to 2.7 million tonnes.

Sales of steel products fell by 11% to 2.8 million tonnes.

Crude steel production for 2022 totalled 10.7 million tonnes, down 8% year on year, although hot metal output was flat, the company said in a statement.

Despite Western sanctions, Severstal’s steel sales were down only 2% to 10.9 million tonnes in 2022 thanks to robust domestic demand and deliveries to ex-Soviet countries, CEO Alexander Shevelev said on Thursday.

In 2022 Russian steel exports were under pressure from Western sanctions levelled Moscow for what it calls its “special military operation” in Ukraine.

Last March, the European Union imposed sanctions on Sevestal owner Alexei Mordashov, while the United States sanctioned him, his family and companies, including Severstal, in June.

Severstal, which usually exports 40% of its annual production to Europe, halted supplies to the EU and redirected them to alternative markets.

The company said it expects domestic demand to fall by 1% in 2023 after a 3% drop in 2022, Shevelev added.

“Sanctions pressure on the Russian economy remains. Therefore, in 2023 we expect a slight decline in steel demand in Russia, in the range of 1% ... The situation could improve, if automakers and machine builders raise production,” he said.

Reporting by Anastasia Lyrchikova; writing by Maria Kiselyova; editing by Jason Neely