Russian steel and mining group Severstal has blamed stock chains for a 15% on-year fall in iron ore pellet sales in the third quarter to 2.38 million mt, while the company expects quarterly sales volumes to increase going forward.
Of the total, external pellet sales contributed 1.34 million mt in Q3, down from 1.62 million mt on the same basis in Q3 2016, it said. In Q2 2017, pellet sales totaled 2.88 million mt, of which 1.67 million mt was sold externally.
Severstal's nine-month pellet sales volume fell 3% to 7.84 million mt, from the corresponding period of 2016, the Moscow-based group said in an operations report.
"The company expects an uptick in pellet sales volumes in subsequent periods," it said.
The drop in sales volume came as Several replenished inventory over Q3, with the company commenting on a "higher share of finished goods in transit and accumulation of stocks at the end of Q3, following [a] Q2 sell-off."
Severstal said raw material prices were supported by strong steel demand in China during Q3 with higher steel pricing spreading into Russia to support iron ore and coking coal.
"Export steel prices started to recover, and Russian domestic steel prices followed global trends, but with a time lag," it said.
Severstal cited industry sources as predicting Russian domestic steel demand increasing 5% in 2017. World Steel Association's short-range outlook released April 2017 factored in a 3.2% annual growth in Commonwealth of Independent States regional steel demand for this year.
Severstal sold 49,801 mt of coking coal externally over Q3, with around 915,000 mt in total coking coal sales.
The company noted recovering coking coal sales from its main Vorkutaugol complex in northwest Russia following planned long-wall repositioning at the Vorkutinskaya and Komsomolskaya mines in the first half.
Internal coking coal procurement made up almost 95% of total group needs in Q3, it said.
The company is recovering from a February 2016 explosion at the Severnaya mine within the Vorkutaugol area.
