Annual report and accounts 2012

Case 3 – Product mix, premium margins

Severstal is the Russian leader in high-value-added (HVA) steel production with product mix including 44 per cent HVA products in 2012. So in recent years we have invested strategically in the production facilities needed to support the growing number of contracts for these higher margin products.

Automotive

We aim to increase our share of the growing Russian autosheet market, currently about 20 per cent. Our focus is on growing our sales to foreign car brands manufacturing in Russia, and on higher sales of lucrative galvanized sheet. At Cherepovets we have now commissioned a second colour-coating line (CCL-2) to double our output of coated hot-dip rolled products. We have also developed several service centres near St. Petersburg and Vsevolozhsk, a joint venture with Gestamp, and are launching a joint venture with Mitsui – to supply stampings for the auto and machinery industries – the latter operating a fully automated line for assembly of vehicle units. Similarly, in the USA, our new hot-dip galvanizing line (HDGL) at Dearborn strengthens our presence in the recovering automotive industry, by meeting the high demand for galvanized and galvanneal products for automobiles.

Large diameter pipes

We also focus on providing value-added solutions for the pipeline industry, and in position to benefit from the planned construction of the South Stream and Chayanda pipelines. We serve two distinct markets: Selling increasing amounts of plate from Rolling Plate Mill 5,000 to Russian pipe producers, and selling specialist large-diameter pipes from Izhora Pipe Plant to oil and gas companies.