Annual Report & Accounts 2013
Severstal Annual Report 2013 Home > Performance > Severstal Russian Steel > Sales results
 

Sales results

Steel prices increased at the beginning of 2013 on the back of seasonal steel and raw materials inventories restocking. The global economic environment then deteriorated, leading to a low level of demand in our export markets, especially in Europe, and steel products sales volumes started declining. Sales volumes grew again in the fourth quarter due to a seasonal activity peak. Overall Severstal Russian Steel sales totalled 10,685 thousand tonnes of steel products in 2013, which is a 3.2 per cent increase year on year.

Against the decrease in prices due to lower demand, Severstal Russian Steel managed to improve its sales portfolio by increasing the share of high value added products like colour-coated steel.

Sales by product

In 2013, sales of hot-rolled strip and plate accounted for 45.8 per cent of overall sales volumes and 33.5 per cent of revenue, cold-rolled sheet for 12.5 per cent of sales volume and 10.1 per cent of revenue, semi-finished products for 5 per cent of sales volume and 3 per cent of revenue, long products – 8.5 per cent of sales volume and 6.6 per cent of revenue, metalware products for 8.0 per cent of sales volume and 11.3 per cent of revenue, and coated sheet (galvanized and colour-coated) for 9.9 per cent of sales volume and 12.1 per cent of revenue, large diameter pipes for 3 per cent of sales volume and 6.4 per cent of revenue. Other steel products such as tubes, pipes and scrap, accounted for 7.3 per cent of overall sales volume and 6.5 per cent of revenue. Other revenues and shipping reached 10.5 per cent of total revenues.

Revenue breakdown by key products in 2013

 20132012Change %
Sales by productsThousand tonnesUS$ millionThousand tonnesUS$ millionThousand tonnesUS$ million
Hot-rolled strip and plate4,8932,689.14,4822,747.69.2%(2.1%)
Large diameter pipes325515.2321564.91.2%(8.8%)
Cold-rolled sheet1,334809.51,292917.73.3%(11.8%)
Metalware products856911.9829969.93.3%(6.0%)
Galvanized and other metallic coated sheet609500.7604572.60.8%(12.6%)
Long products904532.1831556.08.8%(4.3%)
Semi-finished products533237.3932491.6(42.8%)(51.7%)
Other tubes and pipes, formed shapes740507.6636483.016.4%5.1%
Colour-coated sheet448474.5368428.621.7%10.7%
Scrap4312.15717.3(24.6%)(30.1%)
Total steel products10,6857,190.010,3527,749.23.2%(7.2%)
Other and shipping-842.9-867.9n/a(2.9%)
Total sales by products10,6858,032.910,3528,617.13.2%(6.8%)
Inter-segment transaction(156)(82.6)(155)(95.5)0.8%(13.5%)

Sales by market

Severstal Russian Steel sells its products on both domestic and international markets, with an increasing focus on the Russian market.

Severstal Russian Steel's revenue by region, 2013

The Russian market

The Division continues to regard Russia as its most important market. Its main domestic customers include pipe mills and construction companies, machinery and automotive clients. The share of sales volume to the Russian market grew to 63 per cent in 2013 from 60 per cent in 2012.

In 2014, Severstal Russian Steel aims to further increase its share of domestic sales, and we expect that growth will be driven primarily by increased sales to the construction and automotive industries.

 20132012Change %
Domestic salesThousand tonnesUS$ millionThousand tonnesUS$ millionThousand tonnesUS$ million
Hot-rolled strip and plate2,6701,512.92,1991,433.521.4%5.5%
Large diameter pipes262437.2298541.0(12.1%)(19.2%)
Cold-rolled sheet775457.9773550.90.3%(16.9%)
Metalware products565566.1568629.2(0.5%)(10.0%)
Galvanized and other metallic coated sheet493398.7494469.0(0.2%)(15.0%)
Long products845495.0758507.311.5%(2.4%)
Semi-finished products7841.1188123.8(58.5%)(66.8%)
Other tubes and pipes, formed shapes588395.8504380.216.7%4.1%
Colour-coated sheet406429.3337392.420.5%9.4%
Scrap4312.15516.6(21.8%)(27.1%)
Total steel products6,7254,746.16,1745,043.98.9%(5.9%)
Other and shipping-556.1551.4n/a0.9%
Total sales by products6,7255,302.26,1745,595.38.9%(5.2%)
Inter-segment transactions(23)(25.2)(19)(23.2)21.1%8.6%

Export markets

Severstal Russian Steel benefits from its proximity to steel export routes. Europe accounts for more than 56.5 per cent of the division’s total export sales. In 2013, Severstal increased its sales to the Baltic countries, Northern and Central Europe. We expect those export markets to continue to perform well in 2014 as economic indicators improve.

In 2013, export sales of steel products decreased by 5.2 per cent in terms of volume, and by 9.6 per cent in terms of revenue, compared with 2012.

The largest share of export sales volumes came from hot-rolled strip and plate products (56.1 per cent of total steel products), cold-rolled sheet (14.1 per cent of total steel products) and semi-finished products (11.5 per cent of total steel products).

In 2013, export prices for almost all product groups decreased because of decline in demand due to global economic downturn.

  2013 2012 Change %
Export salesThousand tonnesUS$ millionThousand tonnesUS$ millionThousand tonnesUS$ million
Hot-rolled strip and plate2,2231,176.22,2831,314.1(2.6%)(10.5%)
Large diameter pipes6378.02323.9173.9%226.4%
Cold-rolled sheet559351.6519366.87.7%(4.1%)
Metalware products291345.8261340.711.5%1.5%
Galvanized and other metallic coated sheet116102.0110103.65.5%(1.5%)
Long products5937.17348.7(19.2%)(23.8%)
Semi-finished products455196.2744367.8(38.8%)(46.7%)
Other tubes and pipes, formed shapes152111.8132102.815.2%8.8%
Colour-coated sheet4245.23136.235.5%24.9%
Scrap--20.7(100.0%)(100.0%)
Total steel products3,9602,443.94,1782,705.3(5.2%)(9.7%)
Other and shipping286.8-316.5n/a(9.4%)
Total sales by products3,9602,730.74,1783,021.8(5.2%)(9.6%)
Inter-segment transactions(133)(57.4)(136)(72.3)(2.1%)(20.6%)

Sales by region

Severstal Russian Steel is building long-term strategic relationships with customers in the CIS and EU. Thanks to our low-cost base, we can deliver to remote regions and supply products to them on the spot. The exceptions to this are the tube and pipe, and automotive industries. We prioritise sales to Russian customers, as they are strategically important. In 2013, the main export regions were Europe (56.5% of export revenue), Asia (19.0% of export revenue) and Central and South America (8.1% of export revenue). Sales to other regions amounted to 16.4% of export sales. In 2013, the division’s primary focus was Europe and the CIS, which together accounted for 67.4% of export revenue.

Sales by industry

On the domestic market, Severstal Russian Steel focuses on selling its products to the construction, and oil and gas industries, pipe and automotive producers, machinery builders and steel service centers. On export, sales are primarily to the processing and construction industries, including re-rollers of slabs, hot-rolled and cold-rolled coils.

In 2013, our revenue coming from the construction and processing industries accounted for 52 per cent of total sales, while sales to the oil and gas sector accounted for 6.7 per cent, machinery building – accounted for 9.1 per cent, and tube- and pipe making accounted for 12.3 per cent.

Severstal Russian Steel’s revenue by industry, 2013

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