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Mechel's Management Discusses F2Q11 Results - Earnings Call Transcript

In the steel segment of Mechel, the production dynamics since the beginning of the year was also positive. We attribute this to optimization of the loading of the main technological machinery as well as launching of new capacities and the constantly improving price situation in the markets. Because of the successes of our sales division, Mechel Service Global we have managed to considerably progress in conquering new segments of the market and in expanding the geography of sales of metallurgical products of the company.

Despite scheduled repairs of the Blast Furnace Number 5 at Chelyabinsk Metallurgical Plant in May this year at the end of Q2, the steel division notably improved the sales of its key products, rebar and hardware by 46% and 12% respectively. This was made possible first of all due to a very well developed warehouse and network of Mechel Service Global and accurate planning which is based on seasonal fluctuations of prices on construction materials.

On the whole in the second quarter against the background of growing prices, we managed to sell the major part of our stock that we accumulated in the first quarter ahead of the start of the construction season in Russia.

I must note that Mechel Service Global experienced a very dynamic, very rapid growth and today we have more than 140 warehouses located in all regions of Russia and in many countries of Europe; proximity to the end consumer and diversification by markets and types of products allow us to efficiently plan production as well as they enable additional stability in the times of increased volatility of the markets.

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