Severstal reports Q3 & 9M 2020 operatioal results

October 9, 2020

PAO Severstal (MOEX: CHMF; LSE: SVST), one of the world’s leading vertically
integrated steel and steel-related mining companies, today announces its
operational results for Q3 & 9M 2020.

Q3 2020 GROUP HIGHLIGHTS

• Hot metal output increased 3% q/q in Q3 2020 to 2.40 mln tonnes (Q2 2020:
  2.33 mln tonnes) following the completion of maintenance works at blast furnace
  facilities in the previous quarter. Crude steel production increased by 3% to
  2.89 mln tonnes (Q2 2020: 2.81 mln tonnes), supported by growth in hot metal
  output.
• Consolidated sales of steel products increased 18% q/q to 3.01 mln tonnes
  in Q3 2020 (Q2 2020: 2.55 mln tonnes) reflecting production growth, a lower
  share of export shipments with a longer realisation period vs the previous
  quarter and finished goods stock reduction.
• The Company increased its share of domestic steel shipments to 63% (Q2
  2020: 56%) in response to a demand recovery in Russia in Q3 2020.
• The share of high value-added (HVA) products within the sales portfolio
  amounted to 49% (Q2 2020: 43%) as a result of delayed demand for HVA products,
  and the Company reduced HVA finished goods stock levels q/q.
• Sales volumes of coking coal concentrate from Vorkutaugol declined 5% q/q
  to 1.22 mln tonnes as a result of lower concentrate output and a lower
  run-of-mine (ROM-rate) at the Zapolyarnaya mine.
• Sales volumes of iron ore pellets increased by 3% to 2.61 mln tonnes (Q2
  2020: 2.53 mln tonnes) on the back of iron ore pellet production growth and
  inventory sell-off q/q.
• Sales volumes of iron ore concentrate grew by 3% to 1.96 mln tonnes (Q2
  2020: 1.90 mln tonnes), primarily driven by higher output at Karelsky Okatysh
  and Olcon.

9M 2020 GROUP HIGHLIGHTS

• Hot metal output remained flat y/y in 9M 2020 at 7.14 mln tonnes (9M 2019:
  7.13 mln tonnes). Production of crude steel decreased to 8.55 mln tonnes (9M
  2019: 9.13 mln tonnes) due to lower production volumes of EAF steel following
  the disposal of Balakovo mini-mill in July 2019.
• The share of HVA products remained stable y/y at 45% in 9M 2020. The share
  of domestic shipments in 2020 was 58%, which is lower than in 2019 (9M 2019:
  67%). This is a result of a deceleration in domestic demand in 2020 after
  achieving peak levels in the previous year and the disposal of the Balakovo
  mini-mill, which primarily served domestic markets.
• The average steel selling prices for 9M 2020 declined from 10% to 19%
  across the product range, as a result of adverse pricing dynamics of global
  benchmarks y/y.
• Iron ore concentrate sales volumes grew 14% y/y to 5.33 mln tonnes (9M
  2019: 4.66 mln tonnes) driven by output growth at Karelsky Okatysh and the
  Yakovlevskiy mine y/y. The Company expects to achieve total production of
  around 2mt of iron ore concentrate at the Yakovlevskiy mine in FY2020.
• Coking coal concentrate sales volumes from Vorkutaugol increased 3%
  y/y.

SUMMARY OF KEY PRODUCTION, SALES VOLUMES

Production, thousands of tonnes	Q3 2020	Q2 2020	Change, %	9M 2020	9M 2019	Change, %
Crude Steel (Russian Steel)	2,890	2,807	3%	8,547	9,133	(6%)
Hot metal (Russian Steel)	2,402	2,331	3%	7,143	7,125	0%

Sales volumes, thousands of tonnes	Q3 2020	Q2 2020	Change, %	9M 2020	9M 2019	Change, %
Coking coal concentrate	1,218	1,276	(5%)	3,445	3,340	3%
Iron ore pellets	2,613	2,532	3%	8,112	8,192	(1%)
Iron ore concentrate	1,960	1,904	3%	5,333	4,660	14%
Total steel products (Consolidated)	3,006	2,551	18%	8,306	8,503	(2%)
Total steel products (Russian Steel)	3,020	2,561	18%	8,340	8,538	(2%)

High value added steel products, %	Q3 2020	Q2 2020	Change, %	9M 2020	9M 2019	Change, %
Severstal (Consolidated)	49%	43%	6 ppts	45%	45%	(0 ppts)
Severstal Russian Steel	49%	43%	6 ppts	45%	45%	(0 ppts)

SEVERSTAL’S CONSOLIDATED SALES (NET OF INTERCOMPANY
SALES)

Sales volumes, thousands of tonnes	Q3 2020	Q2 2020	Change, %	9M 2020	9M 2019	Change, %
Coal:	344	370	(7%)	1,101	1,250	(12%)
Coking coal concentrate	46	104	(56%)	215	331	(35%)
Steam coal	298	266	12%	886	919	(4%)
Iron ore:	1,358	1,511	(10%)	4,530	4,785	(5%)
Iron ore pellets	1,355	1,461	(7%)	4,343	4,170	4%
Iron ore concentrate	3	50	(94%)	187	615	(70%)
Semi-finished products	97	100	(3%)	389	279	39%
Rolled products:	2,383	2,084	14%	6,637	6,916	(4%)
Hot – rolled coil	1,267	1,179	7%	3,643	3,310	10%
Hot – rolled plate	244	219	11%	715	702	2%
Cold – rolled coil	253	198	28%	661	743	(11%)
Galvanised and metallic coated coil	286	196	46%	701	729	(4%)
Colour coated coil	162	113	43%	373	365	2%
Long products	171	179	(4%)	544	1,067	(49%)
Downstream products:	526	367	43%	1,280	1,308	(2%)
Metalware products	145	135	7%	426	413	3%
Large diameter pipes	85	25	n/a	129	303	(57%)
Other tubes, pipes, formed shapes	296	207	43%	725	592	22%

SALES PRICE, SEVERSTAL RUSSIAN STEEL (‘RSD’)

Sales price, $/tonne	Q3 2020	Q2 2020	Change, %	9M 2020	9M 2019	Change, %
Semi-finished products	376	388	(3%)	385	427	(10%)
Hot – rolled coil	416	417	0%	423	506	(16%)
Hot-rolled plate	517	545	(5%)	558	660	(15%)
Cold – rolled coil	504	528	(5%)	536	621	(14%)
Galvanised and metallic coated coil	639	643	(1%)	638	724	(12%)
Colour coated coil	797	790	1%	789	894	(12%)
Long products	411	417	(1%)	419	476	(12%)
Metalware products	832	837	(1%)	852	965	(12%)
Large diameter pipes	825	778	6%	811	996	(19%)
Other tubes, pipes, formed shapes	480	477	1%	492	578	(15%)

Sales price, $/tonne	Q3 2020	Q2 2020	Change, %	9M 2020	9M 2019	Change, %
Weighted average steel selling price	510	500	2%	510	602	(15%)

NOTES:

1. Sales prices are stated on EXW basis;
2. Segmental data includes intercompany sales;
3. Semi-finished products include pig iron, slabs, billets, ingots, steel
   casting and forgings;
4. Large diameter pipes include all pipes with a diameter between 820 and
   1420 mm.

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version of the press release.