Download PDF - Severstal

Russian Steel’s sales by product2008 2007 Change year-on-year %Thousand US$ million Thousand US$ million Thousand US$ milliontonnestonnestonnesSemifinished products 942 641.0 881 378.7 6.9 69.3Hot-rolled strip and plate 4,820 4,637.4 5,037 3,267.4 (4.3) 41.9Cold-rolled sheet 1,372 1,249.1 1,422 954.7 (3.5) 30.8Galvanized and other metallic сoatedsheet 695 801.3 756 701.4 (8.1) 14.2Color coated sheet 244 359.1 232 289.7 5.2 24.0Long products 1,980 1,715.8 2,115 1,290.0 (6.4) 33.0Others tubes and pipes, formed shapes 463 485.6 514 411.7 (9.9) 17.9Metalware products 76 85.6 75 63.4 1.3 35.0Scrap 835 321.3 1,243 290.7 (32.8) 10.5Total steel products 11,427 10,296.2 12,275 7,647.7 (6.9) 34.6Other and shipping - 949.5 - 787.8 n/a 20.5Total sales 11,427 11,245.7 12,275 8,435.5 (6.9) 33.3Inter-segment transactions (1,028) (1,190.0) (880) (647.7) 16.8 83.7Principal marketsRussian marketThe Russian market is the most important for RussianSteel. Market share, in revenue terms, changed onlyslightly – 69.3% in 2008, compared to 69.5% in 2007.As well as low logistics costs, the Russian market hasone of the highest growth rates in the world, and allowsfor long-term relationships with customers on culturaland other “soft” grounds.In 2008, sales to the Russian market dropped by 6.3%,yet revenues grew by 34.2%. Hot-rolled strip and plateaccounted for 43.7% of sales, while long productsaccounted for 25.3%, cold-rolled sheet for 12.9%, andgalvanized and other metallic coated sheet for theremaining 7.8%.Russian Steel’s main domestic customers include pipemills and automotive, machinery, construction andshipbuilding companies.Compared to 2007, we sold 8.1% less hot-rolled stripand plate by volume and 39.1% more by revenue in2008. For long products, this was an 8.4% decreasein shipments by volume and an increase by 31.7% inrevenues. Revenues from galvanized and other metalliccoated sheet increased by 0.4% in tonnes and by 26.1%in US dollars.Overall, the first three quarters of 2008 the domesticmarket showed very favourable dynamics, connectedwith speculative demand. Almost all Russian steel millsstruggled to meet market demand. But this situationreversed in the fourth quarter of 2008 – speculativedemand started to diminish due to growing economicuncertainty, pulling prices down as well as demand.However, as stated before, this fall in the last threemonths of 2008 only modestly influenced results forthe year as a whole.Export marketsExport sales volumes went down by 7.9% in 2008,compared to 2007, while revenues grew significantly– by 35.7%, thanks to price increases. The maincontributors to export revenues were hot-rolled stripand plate (39.5%), semi-finished products (21.5%),scrap (18.1%) and cold-rolled sheet (10.5%).In 2008, we enjoyed good prices for every product inglobal markets. With sales volumes of hot-rolled stripand plate growing by 3.9%, this led to an increase inrevenue of 49%. Another leading export was semifinishedproducts, with revenues 70.6% higher thanin 2007 thanks to 7.1% higher sales volumes and verypositive price dynamics.Sales by regionStrategically, Russian Steel is building long-termrelationships in the CIS and the EU. Deliveries toother regions are primarily carried out on a spotbasis. However, sales to tube and pipe makers, andautomotive producers are part of the dedicatedbusiness process, and are treated as a priority.In 2008, the main regions of export were Europe (59.7%of the export revenues) and the Middle East (15.3%).Revenues from other regions account for 25% of exportsales. This export structure is very similar to that of2007 (60.8% Europe, 17.3% Middle East).Sales by industryRussian Steel focuses on selling products to thepipe production, automotive, machine building andconstruction industries, and to steel service centres(also referred to as regional distribution). In revenueterms, regional distribution accounted for 51.3% of allsales worldwide in 2008. Pipe production accountedfor 20.9%, the automotive industry for 10.4%, andconstruction for 3.3%.The sales structure is similar to that in 2007’s, and canbe attributed to Russian Steel’s long-term marketingstrategy.Revenues by regions, 2008 Revenues by industry, 2008Russian Federation 69.3%Europe18.3%The Middle East 4.7%South-East Asia 2.2%China and Central Asia 1.7%Central & South America 1.6%North America 1.4%Africa0.8%Trading andregional distributionPipemakingAutomotive51.3%20.9%10.4%Machine buildingSteel IndustryConstructionRailway Construction7.1%6.1%3.3%60 61