PAO Severstal : Severstal presents outlook for its LDP products and solutions for Energy customers in key markets

December 22, 2020

PAO Severstal, one of the world's leading vertically integrated steel and mining companies, has published a presentation on its outlook for LDP demand in key markets and its strengthened offer for Energy customers. Severstal's energy sector focus is a core pillar of the Group's growth strategy, representing 9% of sales in 2019, with significant opportunities for further expansion.

Key market outlook summary

The LDP market in Russia is expected to grow to approximately 2,500kt in 2022 (2020: 1,375kt) driven by trends including a new investment cycle announced by Gazprom, Transneft's pipeline modernization programme and increased exploration by oil and gas companies. Severstal's share of the Russian market was 17% in 2019.

In Europe, the LDP market is expected to grow to 600kt in 2024 (2020: 350kt), following trends to develop LNG infrastructure and the energy transition focus, which will lead to the prioritization of renewable energy projects and hydrogen production and transportation projects. Severstal's share of the European market was 2-3% in 2019.

In MENA, the LDP market is expected to stabilize at 2,200kt in 2023 (2020: 1,560kt), with near term growth driven by projects delayed during the pandemic. The Company sees a particular trend for sustainable pipe solutions required for oil and gas reserves containing high levels of sulphur compounds.

Severstal's highly competitive offering

Severstal's USPs for oil and gas customers include its ability to offer tailored products, superior customer service and cost-effective solutions. The full vertical integration of Severstal offers significant competitive advantages for Energy sector clients. Severstal has total quality and cost control across the value-chain, from the production of pig iron, to the production of LDP. This enables it to provide cost-efficient solutions for its clients and on-time deliveries.

Severstal is focused on innovation and the development of products tailored to customer needs. The Company can bring these very quickly to market, thanks to highly developed internal R&D and advanced engineering capabilities. The Company has a unique product range. As one example, Severstal's Izhora Pipe Mill produces 18m LDP, compared to the conventional 12m pipes offered by the market. Using these longer pipes can reduce the costs of pipeline construction for Severstal's customers by up to 15%.

Dmitry Goroshkov, Director, Sales and Business Development, Energy, Severstal, said:

'In 2019 we started intensively exploring international regions for our oil and gas pipe products. Now, we see growth opportunities for our large-diameter pipes in all three of our key Energy markets. In Russia, our clients have announced significant new oil and gas projects, in the European market we hope to increase our market share by supplying pipes for the construction of gas interconnectors and planned pipeline modernization programmes, and in the Middle East market we expect energy majors to revive delayed oil and gas projects.

We took advantage of reduced oil and gas project activity in 2020 to build up our agency network, get closer to our customers, and further develop our technology. For example, we can now sell advanced corrosion-resistant pipes of different sizes and steel grades, which are particularly important for MENA customers. This work has ensured Severstal is well positioned to qualify for future key project tenders and to be the supplier of choice for Energy customers in our key markets.'

Please find the presentation available of Severstal's website: https://www.severstal.com/files/21307/Severstal_for_Energy_Industry.pdf