Severstal lost more than $400 million due to the effect of Western sanctions

The Russian steel plant Severstal lost more than $400 million due to the effect of Western sanctions. This was announced by the chairman of the company’s board of directors, Oleksiy Mordashov, reports Kallanish.

“We understand that now it is very difficult or even impossible to return foreign exchange earnings to the country. Severstal lost more than $400 million. Part of the funds was seized in Europe in the form of tangible goods and account balances. Until the sanctions are lifted, we will not return these losses,” he said.

Severstal and its main owner Oleksiy Mordashov are under USA sanctions since June 2022, and the chairman of the company’s board of directors was added to the EU sanctions list in the spring.

Due to the effect of EU sanctions the company lost a third of its sales. Customers avoid Russian products, agreements are canceled. Part of the products remains in warehouses in Poland, the Netherlands and Germany. There are also problems with the payment of salaries.

Poland in April 2022 seized the property of Severstal for the total amount of 140 million zlotys (about $33 million). Thus, Severstal became the largest Russian company whose assets in Poland were frozen due to sanctions.

Despite the sanctions, the Russian Ministry of Industry and Trade predicts that steel production in the country will decrease by only 6-8% in 2022. At the same time, export volumes in 2023 will remain at the level of the current year.

Due to diversification in the domestic and export markets, as well as the provision of large discounts on steel, Russian steelmakers maintain export volumes.

At the same time, analysts of the investment bank BCS GM previously stated that the export of steel and iron ore is unprofitable for almost all Russian steel companies. In addition to sanctions, the profitability of the export of steel products and raw materials is affected by expensive logistics and the strengthening of the ruble.

Only NLMK shows a positive export margin thanks to the continuation of deliveries of steel semi-finished products to the European market.