Severstal Distribution group of companies (a distribution network of a Severstal Russian Steel division) increased sales by 8% in the first half of 2020, compared to the same period last year.
In the second quarter, there was a consumption decline in all markets where the distribution network was present, because of restrictive measures to counter the spread of coronavirus infection. Severstal Distribution is a part of the continuous production chain of PAO Severstal: all branches and service centers of Severstal Distribution in Russia and Europe processed and shipped steel products in a regular mode, according to additional safety measures in January-June 2020. This allowed the distribution network enterprises to maintain the level of sales, as well as to promptly respond to market recovery in May-June.
SIA Severstal Distribution's sales to European countries in the first six months of 2020 amounted to 740 thousand tons, which is 13% in comparison with the 2019. Imports of rolled steel products from Russia to the countries of the European Union are limited by volume quotas, and often the supply of products to the Russian domestic market is more cost-effective for Severstal, therefore the European division focus is on sales of steel products with increased added value: products processed in steel service centers, polymer and zinc coated products, as well as fittings with a comprehensive certificate of conformity, which includes several national quality standards of the Nordic countries.
“We strive to become the first choice company for our clients in the Baltic countries, Finland, Sweden, Germany, Belgium, the Netherlands, Poland, Czech Republic, Slovakia. European consumers purchase Severstal Distribution steel products from Severstal with a full range of additional services. This means that the rolled steel was imported to Europe, passed custom clearance, processed in various European steel service centers (in ours or independent), delivered to the client at the point and time indicated by him. At the same time, the consumer has a direct communication channel with the manufacturer, which makes it easier to resolve any technical issues,” said Timur Yudichev, head of the distribution network of the Severstal Russian Steel division.
Severstal Distribution's sales in Russia in January-June 2020 increased to 580 thousand tones, which is 4% more than in comparison with the first half of 2019. There were two main growth factors: the expansion of warehouse space (due to the acquired warehouse complex in Vologda at the end of 2019), and the launch of an additional slitting line for coiled steel in Cherepovets service center.
“We have created a large distribution center in Vologda for the constant supply of our regional warehouses with rolled steel, as well as for the development of processing in the Cherepovets SMC. This year, Severstal launched a program to develop supplies to the small and medium-sized business segment consumers. For these customers it is very important to get steel products as fast as possible, so spot purchases from a warehouse are very relevant, and in this regard, we are expanding our storage capacity. The pilot of this program started in Moscow, where we are already ensuring the constant availability of the main assortment for various steel niches, while making sure that our market price remains fair and attractive to the consumer. Nowadays the shortage of operating assets becomes critical for many companies, so we offer a number of financial services developed in cooperation with leading Russian banks,” explained Timur Yudichev.
The distribution network of PAO Severstal includes steel trading enterprises with an infrastructure of warehouse sites, 15 of which are located in the European part of Russia, 12 in the countries of Northern and Central Europe, as well as in Belarus. Severstal Distribution enterprises have their own steel service centers located in Cherepovets and Riga, and also offer additional services to partner enterprises both in Russia and in European countries.