the Rejection of the projects is a response to the market decline began due coronaviruses.

the Largest steelmaking companies — “Severstal” Alexey Mordashov, Victor Rashnikov’s MMK and NLMK Vladimir Lisin, who provide a total of 56% of Russian steel production — reported about work results for the first quarter. The financial performance of companies have grown or declined slightly compared to the fourth quarter of last year, but fell in the annual comparison. Thus, NLMK’s sales revenue in the first quarter of this year amounted to $2.5 billion Is 6% more than in the previous quarter, but 14% lower than a year earlier. EBITDA of the company amounted to $594 million (+24% quarter-over-quarter comparison, -15% yoy). CMI revenue for the quarter was $1.7 billion (-0.7 PCT, -6,8%), EBITDA of $442 million (+31,9%, +0,5%). Revenue of Severstal — $1.8 billion (-3,2%, -12%), EBITDA of $555 million (-8,5%, -19,5%).

the Fall of the financial results of steel companies in the second quarter is likely to be even greater, sure analyst Raiffeisеnbank Irina Elizarovskaya. On him fell the most stringent quarantines, explains the expert, whereas in the first quarter of the restrictive measures affected only the second half of March in European markets.

MMK already expects lower production in the second quarter of this year by 15-17% and a fall in EBITDA of 30%, said the Director of MMK for the economy Andrey Eremin on a conference call for the quarter. Production NLMK’s Lipetsk site will decline in the second quarter, but it will be associated with the planned repairs is specified in company materials. Deputy General Director of “Severstal” for economy and Finance Alexey Kulichenko at the conference for the quarter, stressed that plans to reduce production from the company yet.

In the pessimistic scenario may fall in annual revenue by half, predicts the expert. The recovery of the markets and demand for steel is estimated to be Elizarovskiy, is not expected before mid-third quarter

all three companies have already announced a reduction of investment programs. So, NLMK April 30 announced that the company’s capex in 2020 will decrease by 20-25% from the previously planned $1.2 billion to $900 — 950 million. And in a stress scenario, the company may cut investment to $750 million, said on the conference call, the President of NLMK Grigory Fedorishin. The decision on the possible further reduction of the investment the company will take in June. What investment projects the company will lay in materials, NLMK is not specified.

give up of the investment projects and “Severstal”: the company’s investments in 2020 will be reduced until 15%, from $1.7 billion to $1.45 billion. However, in the case of negative developments in the global steel markets, the company can reduce the investment program by 30-40%, putting the least priority of plannedx investment projects, specified in the materials of “Severstal”.

reduction of the investment will not affect the main investment projects of the company, Kulichenko said during a conference call.

One of the largest planned investment projects — the construction of blast furnace # 3, scheduled for launch in 2020., coke oven battery No. 11 (design capacity in 2022), as well as a number of major projects associated with the mining division and ecology. MMK announced the reduction of the investment for the year by 20% to $700 million: the company will move to a later date “the active phase of construction of the complex of coke oven battery No. 12”.

the Projects related to the increase in rolling capacity and modernization of the first redistribution now will go by the wayside: all completed the active phase of investments, said senior Director of ACRE Maxim Hudalov. Capital investment program will be adjusted and the following year, he believes, because the rapid market recovery should be expected.

of Course, the Russian steel producers suffer less from such limitations due to the ruble costs, but the new restrictions in any case will slow down the recovery of the market, I’m sure Hudalov.

Programs capex NLMK, MMK and Severstal is not required in the claimed amount, according to Elizarovskaja: “major projects such as the repair and modernization, which can be partially set aside in case of emergency”. Moreover, the investment program was formed under good market conditions, emphasizes the expert. And if you remember the previous crisis period, in 2015 capex NLMK does not exceed $ 595 million, Severstal$ 439 million, MMK — $348 million, reminds Elizarovskaya.

Polina Trifonova