Severstal' : Severstal reports Q2 & H1 2017 operational results

Moscow, Russia - 12 July 2017 - PAO Severstal (MICEX-RTS: CHMF; LSE: SVST), one of the world's leading vertically integrat--ed steel and steel-related mining companies, today announces its operational results for Q2 & H1 2017.

Q2 2017 GROUP HIGHLIGHTS

· Hot metal output decreased 4% to 2.24 mln tonnes (Q1 2017: 2.34 mln tonnes) compared with the previous quarter due to maintenance works at BF#2, BF#4 and BF#5.

· Crude steel production declined 1% to 2.83 mln tonnes (Q1 2017: 2.86 mln tonnes). Crude steel output at CherMK was impacted by planned maintenance works at converter #1.

· Consolidated steel product sales grew 9% to 2.75 mln tonnes compared with the previous quarter (Q1 2017: 2.53 mln tonnes). During Q2 2017 the Company sold-off stocks of HVA products accumulated in previous quarters, responding to increased demand from local traders which primary reflects the beginning of construction season in Russia. Semi-finished product sales were impacted by the maintenance works at converter #1.

· Responding to improved domestic demand in Q2, the Company increased domestic sales volumes to 60% (Q1 2017: 58%) of the sales mix.

· Following the refurbishment of the four-stand cold rolling mill at CherMK and the increase in production volumes, cold-rolled coil sales volumes in H1 2017 were up 52% compared with H1 2016.

· The company maintained its share of high value-added (HVA) products within the sales portfolio at 44% (Q1 2017: 44%) as increased cold-rolled, galvanized and colour-coated sales were matched by growth in HRC and long product sales.

· In Q2 2017, coking coal concentrate sales volumes from Vorkutaugol increased 16%, driven by production volumes growth after scheduled long-wall repositioning at the Vorkutinskaya and Komsomolskaya mines in Q1.

· Iron ore concentrate sales volumes surged 54% q/q to 1.24 mln tonnes (Q1 2017: 0.80 mln tonnes). Iron ore pellet sales improved 12% and totalled 2.88 mln tonnes (Q1 2017: 2.58 mln tonnes).

· Steel and raw material prices were under pressure due to high inventories in China, but capacity cuts and stable Chinese demand supported the markets. The anticipated supply normalisation in the seaborne hard coking coal market was temporarily disrupted by storm Debbie in Queensland. The final decision by the EU Commission on HRC Anti-Dumping duties expected in October. Russian domestic steel demand is slowly recovering, according to industry sources.