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Severstal anticipates higher US steel prices

Keywords: Tags  Severstal, North America operations, earnings report, steel, Catherine Ngai

NEW YORK — OAO Severstal’s North American operations expect to see continued strength in U.S. steel demand during the third quarter, with "moderate upward pricing movements," the company said.

However, "while the short-term outlook for the steel industry is showing signs of improvement, over the medium- to long-term we expect the market will remain challenging," the Moscow-based steelmaker said.

Severstal’s international unit—comprising its Dearborn, Mich., and Columbus, Miss., operations, along with its Lucchini Piombino operations in Italy—posted revenue of $953.4 million for the three months ended June 30, down 10.3 percent from $1.06 billion in the same period last year but up 2.5 percent from $929.8 million in the first three months of this year.

The division’s sales volumes grew by 5.2 percent sequentially to 1.2 million tonnes from 1.1 million tonnes, but the increase was offset by lower average selling prices, which fell 2.6 percent to $787 per tonne from $808 in the first quarter.

The major contributors to demand growth in the second quarter were the automotive and construction industries, the company said.

Severstal international’s segment posted earnings before interest, taxes, depreciation and amortization (Ebitda) of $44 million, down 42.9 percent from $77 million a year earlier and 12 percent below $50 million in the first quarter of this year.

The company said its mill utilization rate was near 100 percent in the second quarter compared with an average of 78 percent for the U.S. steel industry.

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