NEW YORK OAO Severstal
expects the fourth quarter to be more challenging than the
third quarter, forecasting falling global steel prices amid
stable input costs.
The outlook for the end of the
year comes as the Moscow-based steelmaker reported net sales of
$3.59 billion for the three months ended Sept. 30, down 3.4
percent from the second quarter, putting year-to-date sales at
$10.99 billion, a 9.1-percent decline from the first nine
months of last year.
"Severstal delivered a solid
financial and operational performance in (the third quarter); a
quarter that, across the steel and steel-related mining
markets, was characterized by contracting prices," chief
executive officer Alexey Mordashov said in a statement
Thursday. "Until the (years) end, we anticipate coking
coal and iron ore prices to remain stable, while steel prices
have some downside risk. Therefore, we expect (the fourth
quarter) to be more challenging for us compared with (the third
Citing lower realized prices and
"weaker" sales volumes at Severstal North America, the company
said its international division posted net sales of $910
million during the third quarter, down 14.4 percent from the
Severstal noted that capacity
utilization rates in the United States were below 70 percent at
the same time the country saw finished steel imports increase
18 percent year over year.
However, Severstal said that
most market segments "remain healthy" thanks to demand from the
automotive and pipe and tube industries. "There are some signs
of recovery in the residential and non-residential construction
segments," it noted.
Unlike its other divisions,
Severstals Russian unit reported a 2-percent increase in
sales to $2.8 million as the company benefited from strong
sales of value-added products.
Despite the decreased earnings
during the quarter, Severstal saw a higher profit margin thanks
to a change in foreign exchange rates. The companys
profit totaled $329 million for the quarter, more than double
the $155 million it posted in the second quarter.