) has released its operational results for the first quarter of
2013. In the reported quarter, Mechel's coal production declined
sequentially because of unfavorable open pit mining conditions in
cold winter months. However, sales of coking coal anthracites and
PCI increased both internationally and domestically due to
improvement in the metallurgical coal market and Mechele's
efforts to expand its client base.
Coking coal sales in the reported quarter increased 13%
sequentially but declined 11% year over year. Anthracite sales
increased 19% sequentially and declined 12% annually to 0.54
million tons while PCI sales increased 13% sequentially and 62%
annually to 0.82 million tons.
On the other hand, Steam coal sales also went up 9%
sequentially and 3% year over year to 1.6 million tons, due to
increased supplies to Mechels' power enterprises, especially
Southern Kuzbass Power Plant, which augmented electricity
generation due to seasonal factors.
Sales in the steel division declined due to the measures taken
by Mechel to optimize production in view of steel product
markets' seasonal weakness as well as disposal of Mechel's
steelmaking plants in Romania.
Ferrosilicon sales increased 6% sequentially to 22,800 tons
based on repairs and launch of a furnace at Bratsk Ferroalloy
Plant. This also represents a year-over-year increase of 27%.
Chrome sales declined 40% sequentially and 41% annually to 10,100
tons due to a planned production decrease at Tikhvin Ferroalloy
Plant caused by a weaker market. Nickel was not produced due to
the halting of Southern Urals Nickel Plant in late 2012 because
of unfavorable market conditions.
Mechel is a leading domestic steel and coal producer with a
strong position in key businesses, including production of
specialty steel and alloys. The company has the largest coal
reserve base in Russia and is mainly focusing on growth and
Mechel owns and controls essential infrastructure, including
ports, rolling stock and power plants, which provide access to
the export markets. However, Mechel could be jeopardized because
of its high debt and interest burden, and might not be able to
keep up with its huge capital spending program.
Mechel currently retains a short-term Zacks Rank #3 (Hold).
ANGANG STEEL LT (ANGGY): Get Free Report
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