Further oil price deterioration could put additional pressure on the Russian economy in 2016, with visibility for domestic steel demand in 2016 remaining low, according to Severstal. Increasing protectionism globally is seen exerting pressure on export deliveries and margins.

Severstal reported a -16% decline in fourth-quarter revenue versus the previous quarter to $1.4 billion due mainly to lower sales prices and weaker shipments at Russian Steel. But net loss narrowed 12% to $114 million.

Net debt declined to $805m at the end of Q4 from $829m in Q3. Strong liquidity, with $1.65 billion in cash and cash equivalents and unused committed credit lines of $683m, more than covers short-term debt principal requirements of $476m. Ebitda decreased -23.5% versus Q3 to $401m, while capital expenditure was 18.4% higher at $122m.

Steel product sales decreased -13% on-quarter to 2.63m tonnes in Q4 due to seasonal factors and short-term scheduled maintenance at Cherepovets Steel Mill’s hot strip mill. The share of domestic shipments within the sales mix decreased to 64% from 67% in Q3.

Coking coal concentrate sales increased 1% on-quarter to 1.48mt in Q4, reflecting a substantial increase in ROM-coal output at Vorkutaugol. Iron ore pellet sales decreased -1% to 2.7mt, while iron ore concentrate sales decreased -15% to 960,000t, both reflecting lower internal procurement and seasonally weaker demand.

Full-year 2015 revenue decreased -22.9% on-year $6.4 billion as a result of lower sales prices, which were only partially mitigated by an increase in volumes. However, Severstal turned to a net profit of $562m compared to a loss of $795m in 2014.

The location of Severstal’s mills allowed Severstal to react to a -12% on-year decline in Russian steel consumption in 2015 by reallocating sales volumes between domestic and export markets. Overall shipments thus increased 4%. Further deleveraging remains a priority for Severstal, whose debt is predominantly public.

“Despite limited visibility in both domestic and export markets, the company is consistent in the execution of its stated strategy focusing on customer care and product quality improvement, cost efficiency, and investment optimisation,” says Severstal chief executive Vadim Larin in a statement seen by Kallanish.