Severstal NA Sales Up 2.6% in Q3 Q/Q

Average selling price of $798 per tonne for the first nine months of 2013 was lower than the $851 per tonne in the same period in 2012.

Severstal OAO Reported a net profit of $157 million in the third quarter compared to a net loss of $44 million in the second quarter (Q2 impacted by $226 mill FX losses). Revenue decreased 6.5 percent quarter-over-quarter to $3.19 billion due to lower selling prices and sales volume at Severstal Russian Steel and iron ore segments. EBITDA was up 13.4 percent to $543 million from $479 million the second quarter.

In its market outlook, Severstal expects iron ore prices to weaken by the end of the year “due to inventory cycle and increasing supply from Brazil.” Coking coal prices are expected to bottom out and stabilize. High Chinese exports and year-end destocking are leaving global flat steel prices flat.

Inventories are expected to pick up in November and December as products are sold for delivery in the first quarter of 2014. Growth in Chinese steel output will result in oversupply and pressure steel prices.

Severstal says steel demand in Russia was 3 percent higher in the first nine months of the year due to demand by residential construction and the oil and gas sectors. Expectations are for slightly weaker steel demand in Russian and the US in the fourth quarter due to seasonal factors.

Good demand, low inventory and idling of some US capacity is strengthening sheet and long steel prices in the U.S.