Key highlights

• Sales of coking coal concentrate in the third quarter went down by 12% quarter-on-quarter due to weaker demand from Chinese consumers which was partly compensated by redirecting our supplies to Japanese and South Korean steelmakers. The lack of trade working capital had its impact too.

      

      • High demand for coke products in all our markets served as an impulse for production growth at Mechel-Coke OOO and Moscow Coke and Gas Plant OAO, and, accordingly, a quarter-on-quarter 27-percent increase of coking coal concentrate supplies to these facilities.

      

      • The 21-percent q-on-q decrease in PCI sales is primarily due to a weaker global market for metallurgical coals. We managed to maintain our anthracite sales on the previous quarter’s level due to increased supplies for Chelyabinsk Metallurgical Plant’s agglomeration facility.

      

      • Steam coal sales demonstrated a major growth in the third quarter, going up by 40% quarter-on-quarter. This was due to a seasonal hike in supplies to Southern Kuzbass Power Plant and increased exports of Elga Coal Complex’s products. The stability of our steam coal sales was also ensured by contracts with several Russian generating companies.

      

      • The slump in iron ore concentrate sales by 19% as compared to 9M2013 is due to a major weakness of price situation, which led to a decrease in exports. This decrease was partly compensated by re-orientation of our supplies to Chelyabinsk Metallurgical Plant, which helped increase the steel division’s profitability. Apart from the iron ore concentrate market’s weakness, this product’s sales in 3Q2014 were also impacted by a decrease in iron ore mining, which was due to the lack of trade working capital.

      

      • In 3Q2014, flat rolls sales went down by 9% quarter-on-quarter due to planned repairs at Chelyabinsk Metallurgical Plant’s mill 2300.

      

      • Sales of long rolls went down by 14% quarter-on-quarter due to planned repairs of Chelyabinsk Metallurgical Plant’s mill-300.

      

      “We are proud to announce that Elga Coal Complex has started to produce significant volumes of coal, with over 520,000 tonnes of run-of-mine coal mined in the third quarter alone, and that enabled the company to increase its overall coal output in the third quarter by 3% compared to the previous quarter,” said Mechel OAO’s Chief Executive Officer Oleg Korzhov.