Key 2013 commercial and market highlights
- In 2013, demand for light ﬂat rolled steel was estimated at 66.6 million
tonnes, a slight decline of 1.9 per cent from 2012’s demand for 67.9 million
tonnes. Industry experts forecast that the demand for light ﬂat rolled products
in NAFTA will grow by 4.8 per cent in 2014, driven by a rebound in consumption
in the U.S., Canada, and Mexico.
- U.S. capacity use was 76.7 per cent in 2013, slightly higher than the 75.7
per cent reported in 2012.
- The market continued to suffer from overcapacity and imports, both of which
had a negative impact on steel prices, and both volume and capacity utilisation
declined throughout most of the year. Including preliminary census data, ﬂat
rolled imports ﬁnished the year 4.3 per cent higher than in 2012.
- Severstal shipped 4.7 million tonnes in 2013, totaling a market share of
7.1 per cent of all NAFTA shipments. We increased our annual shipments by four
per cent compared with 2012. Severstal’s utilisation rate is approximately 83
per cent above the industry’s 2013 average of 76.7 per cent.
- Severstal’s key market sectors include automotive, energy (oil & gas)
and service centres. Dearborn shipments are heavily focused on the automotive
industry. Total Severstal shipments to this sector reached 1.3 million tonnes
- Production of light vehicles ﬁnished strongly in 2013, with NAFTA
production up 4.9 per cent to 16.2 million units, led by gains of 7.6 per cent
in the US, 2.2 per cent in Mexico and a decrease of 3.2 per cent in Canada.
2014 NAFTA automotive production is projected to increase by four per cent over
2013 to 16.8 million units.
- Overall, construction non-seasonally adjusted spending in 2013 ﬁnished the
year 4.8 per cent higher than 2012, with residential construction increasing by
17.5 per cent and non-residential decreasing by 1.5 per cent. The AIA (American
Institute of Architects) Architecture Billings Index slowed towards the end of
2013 but ﬁnished the year with an average of 52.1. The index was above 50 for
nine months out of the year, indicating future construction growth. As
residential activity in the U.S. continues to improve, we expect to see
increased demand in this sector.
- The energy market showed positive signs in 2013. Oil prices remained
relatively stable and natural gas prices increased heavily. If natural gas
prices continue to increase in 2014 we could see gains in exploration, which
will lead to more steel demand for the production of energy pipe and tube
- Industry steel selling prices declined by 4.4 per cent in 2013 with CRU Hot
Roll coil prices averaging US$692 per tonne for the year. Prices declined
throughout the ﬁrst half of 2013 but rebounded strongly in the second half of
the year, supported by outages and improvements in demand. Steel selling prices
are expected to rise slightly in 2014 due to improvements in demand and
- Our shipments continue to be focused on the U.S. with only Mexico
accounting for any signiﬁcant export shipments. Our mini-mill in Columbus,
Mississippi, is beneﬁting from increased industrial activity in Mexico, and
continues to obtain auto quality compliance certiﬁcates, granting us access to
a wider range of automotive customers.
- Our priority for 2014 is to continue to focus on increasing efﬁciency in
our operations. We continue to analyse our sales and purchasing practices to
reduce costs and optimise margins, as well as increasing the sales of high
Dynamics of Severstal International’s sales volumes in 2013, (in thousand
Dynamics of Severstal International’s average steel price* in 2013,
*Steel price includes all steel products, based on mixed
price terms, resulting ex works.
Our strategic goal remains the same: we aim to be a leader in value creation. In the current volatile and challenging market environment, this means the ability to generate solid positive free cash ﬂow throughout the market cycle.
Since listing we have been committed to the highest standards of corporate Governance and aim for full compliance with the UK Corporate Governance Code.
Performance review 2012
Severstal achieved a solid set of results in 2012, despite worsening economic conditions, maintaining the Group’s EBITDA margin at 15.0%, reflecting the resilience of the business.
Performance review 2012 - Severstal International
Severstal is now strongly positioned in one of the world’s largest and most dynamic markets. We have invested heavily in our US operations since 2004 and now this modernisation is complete, we are making good progress towards our production targets.