divided between China and the rest of the world due to a ban on imports from Australia. As a result, Chinese import

prices approached USD300/t CFR, while Australian export prices were subdued and only recently started to grow to USD190

/t FOB. ? Steel demand was strong in Q2 2021 thanks to a recovery in industrial production, low inventory levels and optimism

due to the progress of international vaccination programmes. Supply was unable to meet demand, resulting in longer

lead times in the EU and the USA. ? The Asian market was supported by the seasonal increase in consumption during the Spring, but this subsided in

June. Asian supply moved to the Middle East and Europe, causing some weakening of export prices in the Black Sea

region. Turkish demand has also weakened, putting additional pressure on prices. At the same time, market

conditions in Europe and USA remain exceptionally tight due to import barriers and inadequate domestic supply. ? The Chinese government is combating higher prices by discouraging steel exports and imposing strict regulation on

futures trading. ? As for the domestic market landscape going forward, the Russian Government is imposing a temporary 15% export duty

on steel coming into force from 1 August 2021 until 31 December 2021, which might impact local pricing.

Alexander Shevelev, CEO of Severstal Management, commented:

"The COVID-19 pandemic continues to challenge regions across the world, and Russia is no exception. The number of new cases has grown significantly in recent weeks. The health of our employees is Severstal's number one priority, and we have intensified all preventive measures. As an essential part of our efforts to reduce the risk of infection, we have started an information campaign encouraging our employees and contractors to get vaccinated. Today more than 50% of our staff already has immunity through vaccination or antibodies after infection and we aim to reach 80% by the end of the summer.

Another vital health and safety focus is workplace injury prevention. LTIFR for both our staff and contractors declined in Q2 2021 to 0.63. However, the LTIFR for our staff was unfortunately up 14% to 0.57 qoq and regrettably we had two fatalities in Q2 2021: one fatality among staff and one among contractors.

We also continue to improve our environmental strategy. Thus we set a medium-term goal to reduce the carbon intensity of CO2 emissions per tonne of steel by 10% by 2030. The medium-term target will be achieved through projects including the technical re-equipment of production facilities and the introduction of the best available technologies at all the Company's assets (press-release).

As for the macro-environment, Q2 2021 was remarkably strong. The continued global economic recovery supported steel and raw materials prices across all key regions. This led to a robust set of financial results in the reporting quarter. Revenue grew by 33% qoq to USD2.9bn due to an increase in average prices coupled with a growth in sales volumes and an improved product mix, with the share of HVA products expanding by 3 ppts qoq to 49%. EBITDA rose by 42% to USD1.6bn following a widening of revenue and price spreads.

Management's continuing efforts focused on cash generation resulted in a record FCF of USD0.9bn (+88% qoq). Our net debt/EBITDA ratio decreased to 0.37, which helped us to recommend a dividend in line with our policy.

Severstal's strong performance in Q2 2021 has demonstrated the benefits of our business model and sales flexibility. Although we expect steel and commodity prices to soften later this year, the Board of Directors remains confident in our ability to deliver industry-leading margins and strong returns."

SEGMENTS PERFORMANCE

Severstal Russian Steel (RSD) 


USD million, unless otherwise stated Q2 2021 Q1 2021 qoq    6m 2021 6m 20201 yoy 
Steel sales, kt                    2,691   2,642   2%     5,333   5,147    4% 
Semis                              317     259     22%    576     205      181% 
Commercial                         1,066   1,161   (8%)   2,227   2,692    (17%) 
HVA                                1,308   1,222   7%     2,530   2,250    12% 
Revenue                            2,759   2,154   28.1%  4,913   3,286    49.5% 
EBITDA                             1,021   689     48.2%  1,710   721      137.2% 
EBITDA margin, %                   37%     32%     5 ppts 34.8%   21.9%    12.9 ppts

Notes: 1. These data include adjustments made in connection with the change in presentation described in Severstal's

quarterly financial statements. ? Steel sales increased by 2% qoq to 2.7 mln t driven by higher sales of semis and HVA products. The Company

increased its share of domestic shipments to 55% (+7 ppts qoq) due to the start of the construction season in

Russia. ? Total share of high value-added (HVA) products amounted to 49%. ? Revenue increased by 28% qoq to USD2,759 mln. ? EBITDA grew by 48% qoq to USD1,021 mln. EBITDA margin expanded to 37% (+5 ppts). ? The total non-integrated cash cost of slab per tonne at the Cherepovets Steel Mill increased to USD457/t (+23% qoq)

affected by higher input costs. The integrated cash cost of slab amounted to USD175/t (-5% qoq).

Severstal Resources 


USD million, unless otherwise stated Q2 2021 Q1 2021 qoq      6m 2021 6m 2020 yoy 
?oal sales, kt                     1,149   1,298   (11%)    2,447   2,815   (13%) 
Iron ore sales, kt                 4,659   4,142   12%      8,801   8,872   (1%) 
Revenue                            999     747     33.7%    1,746   802     117.7% 
EBITDA                             733     525     39.6%    1,258   353     256.4% 
EBITDA margin, %                   73.4%   70.3%   3.1 ppts 72.1%   44.0%   28.1 ppts   ? Coal sales decreased by 11% qoq to 1.15 mln tonnes mainly as a result of coking coal concentrate sales reduction

due to a decline in output qoq affected by the long wall repositioning. ? Sales of iron ore increased by 12% qoq to 4.66 mln tonnes due to accelerating of pellets sales to third parties and

concentrate to captive assets. ? Revenue from the Resources Division increased to USD999 mln (+34% qoq). EBITDA increased by 40% qoq to USD733 mln. The

EBITDA margin increased to 73%. ? At Vorkutaugol, the cash cost of coal concentrate per tonne amounted to USD90/t (+30% qoq). The cash cost of iron ore

pellets per tonne at Karelsky Okatysh was USD33/t (+14% qoq). At Olcon, the cash cost per tonne of iron ore

concentrate decreased to USD27/t (-18% qoq).

NOTES 1. Full consolidated interim condensed financial statements are available at http://www.severstal.com/eng/ir/

results_and_reports/financial_results/index.phtml. This includes the review report from KPMG, Severstal's external

auditor, carried out in accordance with International Standard on Review Engagements 2410. 2. Severstal's Annual Report 2020 is available at http://www.severstal.com/eng/ir/results_and_reports/annual_reports/

index.phtml 3. Each of the directors who is a director at the date of the approval of this document confirms that to the best of

their knowledge: that the consolidated interim condensed financial statements has been prepared in accordance with

IAS34; that the consolidated interim condensed financial statements give a true and fair view of Severstal's

assets, liabilities, financial position and profit or loss; and that this document contains a fair review of

important events that have occurred during the first six months of the year and their impact on the consolidated

interim condensed financial statements; and of the principal risks and uncertainties for the remaining six months

of the year; and that the report contains a fair review of related party transactions.

A conference call on Q2 2021 results for investors and analysts hosted by Alexey Kulichenko, Chief Financial Officer, will be held on 16 July 2021 at 12.00 (London)/ 14.00 (Moscow).

Call Conference ID: 8735792 International Dial:

+44 (0)330 336 9434 (local access)

0800 279 7209 (toll-free)

Russian Dial: +7 495 646 9190 (local access)

8 10 8002 8675011 (toll-free)

The call will be recorded and there will be a replay facility available for seven days as follows:

Replay pass code: 8735792

International Dial:

+44 (0)20 3859 5407 (local)

0 808 101 1153 (toll-free)

Russian Dial: 810 800 2702 1012 (toll-free)

ANNEX

1. Consolidates sales by product 


Sales volumes, kt                 Q2 2021 Q1 2021 qoq   6m 2021 6m 20201 yoy 
Coal:                             282     345     (18%) 627     757      (17%) 
Coking coal concentrate           38      35      9%    73      169      (57%) 
Steam coal                        244     310     (21%) 554     588      (6%) 
Iron ore:                         1,310   1,024   28%   2,334   3,172    (26%) 
Iron ore pellets                  1,309   978     34%   2,287   2,988    (23%) 
Iron ore concentrate              1       46      (98%) 47      184      (74%) 
Steel:                            2,678   2,630   2%    5,308   5,127    4% 
Semi-finished products            317     259     22%   576     205      181% 
Hot-rolled steel and plate        1,102   1,191   (7%)  2,293   2,770    (17%) 
Cold-rolled steel                 280     257     9%    537     408      32% 
Galvanized steel                  255     275     (7%)  530     406      31% 
Color coated coil                 119     83      43%   202     211      (4%) 
Long steel                        162     158     3%    320     373      (14%) 
Metalware                         175     142     23%   317     281      13% 
Large diameter pipes              75      60      25%   135     44       n/a 
Other tubes, pipes, formed shapes 193     205     (6%)  398     429      (7%)

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