Annual Report & Accounts 2013
Severstal Annual Report 2013 Home > Performance > Severstal Resources > Sales volumes
 

Sales volumes

Severstal Resources’ businesses are among Russia’s top five coking coal producers and top three Russian iron ore producers. Our iron ore businesses are leaders in their respective markets by extraction volumes.

Despite a weaker market in 2013, Severstal Resources managed to operate close to full capacity in Russia, selling 10.5 million tonnes of iron ore pellets (the same as in 2012), 7.2 million tonnes of coking coal concentrate (-5% compared with 2012), and 4.6 million tonnes of iron ore concentrate (-3% compared with 2012).

 20132012Change, %
Sales by productThousand tonnesUS$ millionThousand tonnesUS$ millionThousand tonnesUS$ million
Coking coal55829.762241.7(10.3%)(28.8%)
Coking coal concentrate7,161779.47,5131,028.0(4.7%)(24.2%)
Steam coal2,36091.62,34393.10.7%(1.6%)
Pellets10,4561,107.310,4391,130.70.2%(2.1%)
Iron ore concentrate4,618343.64,760372.1(3.0%)( 7.7%)
Total sales by products25,1532,351.625,6772,665.6(2.0%)(11.8%)
Other and shipping-313.1-339.0n/a(7.6%)
Total sales revenue-2,664.7-3,004.6n/a(11.3%)
Inter-segment transactions(12,569)( 1,181.5)( 12,449)( 1,301.0)1.0%(9.2%)

Revenue breakdown by products, 2013

Revenue breakdown by region, 2013

Sales by market

Severstal Resources sells its products internally within Severstal as well as on the domestic and international markets. We aim to maintain our domestic market share and expand our international market share in high-quality pellets and coking coal concentrate.

Russian market

Russia is the principal market for our mining businesses. Our main customer is the yield-to-maturity Severstal Russian Steel division. Our share of sales on the Russian market in 2013 was 69 per cent. The bulk of our revenue on the Russian market came from pellets and coking coal concentrate sales.

  2013 2012 Change, %
Domestic sales by productsThousand tonnesUS$ millionThousand tonnesUS$ millionThousand tonnesUS$ million
Coking coal--1277.9n/an/a
Coking coal concentrate5,175561.14,847649.06.8%(13.5%)
Steam coal2,23985.32,19184.02.2%1.5%
Pellets6,886730.67,904866.4(12.9%)(15.7%)
Iron ore concentrate4,484333.24,760372.1(5.8%)(10.5%)
Total sales by products18,7841,710.219,8291,979.4(5.3%)(13.6%)
Other and shipping-121.1-159.4n/a(24.0%)
Total domestic sales revenue-1,831.3-2,138.8n/a(14.4%)
Inter-segment transactions(12,569)(1,181.3)(12,436)(1,298.4)1.1%( 9.0%)

Export

Exports accounted for 31 per cent of our total revenue in 2013.

  2013 2012 Change, %
Export sales by productsThousand tonnesUS$ millionThousand tonnesUS$ millionThousand tonnesUS$ million
Coking coal55829.749533.812.7%(12.1%)
Coking coal concentrate1,986218.32,666379.0(25.5%)(42.4%)
Steam coal1216.31529.1(20.4%)(30.8%)
Pellets3,570376.72,535264.340.8%42.5%
Iron ore concentrate13410.4--n/an/a
Total sales by products6,369641.45,848686.28.9%(6.5%)
Other and shipping-192.0-179.6n/a6.9%
Total export sales revenue-833.4-865.8n/a(3.7%)
Inter-segment transactions-(0.2)(13)(2.6)n/a( 92.3%)

In 2013, our principal export products were pellets and coking coal concentrate. Our main shipping destinations were Europe and the CIS (Ukraine).

Increasing third party sales

We benefit from being a leading Russian supplier of premium quality coking coal and iron ore products. Being economically fully hedged for raw materials for our own steel business, and being close to European and CIS markets, we have been increasing our third party sales volumes in recent years. In 2013, third party shipments of iron ore pellets and coking coal concentrate represented 53 per cent of our total sales volumes of these products.

We remain one of the key iron ore pellets and coking coal suppliers to the Finnish steel company Rautaruukki. In November 2013, Severstal signed a long-term contract for the shipment of iron ore pellets manufactured at Karelsky Okatysh with Oy M. Rauanheimo Ab (the leading logistics company and port operator in bulk and Russian transit cargo services in Finland) based in the Port of Kokkola, Finland. The Port of Kokkola is located 400 kilometers and under 12 hours from Karelsky Okatysh.

The contract covers rail transport by Valtion Rautatiet (VR-Transpoint), a state-owned railway company in Finland, rolling stock operators from ZAO RWD-Services and logistics company Easyway Logistics. With these companies involved, the contract will extend beyond cargo transshipment services, to include goods transportation at an all-inclusive rate within Finland, as well as the unloading of goods at the port, storage and loading cargo onto vessels for overseas shipping.

Products manufactured at Karelsky Okatysh are exported mainly to Europe via Kokkola. Under this contract, more than two million tonnes of products manufactured at Karelsky Okatysh are expected to be shipped annually through the port of Kokkola.

This is the second long-term contract we have signed with Rauanheimo at the Port of Kokkola, with which we have been collaborating for almost ten years. Supported by our partners we can respond effectively to client deadlines and demand for volume. We plan to build on our relationship with Rauanheimo and the port to expand our shipment capacity and broaden the range of products exported via Kokkola.

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