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Mechel is a mining and steel group that combines coking coal mining with steel production. The market knows the company not only for its products: its history is inseparable from the history of the large debt accumulated in the years of expansion. Its ordinary and preferred shares trade under the tickers MTLR and MTLRP.
The pairing of coal and steel here is no accident: coking coal is the raw material for smelting pig iron, and a group with its own coal depends less on its price. But this pairing has a second side as well: coking coal is the most volatile of industrial commodities, and when world prices for it fall, the mining segment loses profit quickly.
The steel segment produces rolled products and specialty steels for machine building; its result is determined by domestic demand.
The key feature of the company is its debt. It was taken on during the period of asset purchases and has shaped the company's financial life ever since: a significant part of operating profit goes to servicing interest, and so this group's sensitivity to the key rate is higher than that of most commodity companies.
Coking and thermal coal, iron ore concentrate.
Rolled products, specialty steels and wire products for machine building and construction.
Generation that serves primarily the group's own production facilities.
Strengths and weaknesses describe the business itself. Opportunities and threats describe what may happen around it.
The group mines coking and thermal coal and iron ore, and also produces steel, rolled products and wire products. The coal goes both to its own steelmaking and for sale.
Coking coal is the raw material for smelting pig iron and one of the main items in the cost of steel. A company with its own coal suffers less when it becomes more expensive, but feels a fall in its price more strongly in the mining segment.
It was accumulated during the period of active asset purchases before the crisis of 2008 and has been restructured several times since then. Servicing the interest takes a substantial part of operating profit, which makes the company's result especially sensitive to the level of interest rates.