Severstal Russian Steel Update

Sales volumes of steel products from the Russian Metals Division increased by 12 percent QoQ in Q2, driven by seasonal improvements in domestic and export demand, growth in the Russian construction market, and the proximity of the division's key assets to major metal consumption regions.

Rolled products showed strong sales growth of 10 percent QoQ, driven mainly by sales of long products (up 27 percent QoQ), color-coated coils (up 43 percent QoQ) and metal products (up 21 percent QoQ). quarterly comparison).

The share of sales of high value-added products from Severstal Russia increased by 47 percent. The share of domestic sales in Q2 2014 increased to 64 percent (Q1 2014: 60 percent), demonstrating the favorable geographic location of key assets for increasing domestic sales, while local prices reached attractive levels.

The division's revenue increased 16.1 percent for the quarter to $ 1990 million from $ 1,714 million in the first quarter. The company's EBITDA of $ 395 million is 51.9 percent stronger than the prior quarter of $ 260 million, driven by lower raw material prices coupled with cost savings.

The production of slabs at the Cherepovets Metallurgical Plant increased, which is explained by an increase in the production of complex slabs for the construction of the South Stream gas pipeline. The Balakovo Long Products Mini-Mill is ramping up production in response to increased demand from an increase in real estate construction throughout Russia, as well as major national infrastructure projects expected in the coming years.