Source - RNS
RNS Number : 4337M
OJSC Magnitogorsk Iron &Steel Works
13 October 2016
 

 

MMK Group Trading Update for Q3 and 9M 2016

 

ММК Group: Operational highlights

(thousand tonnes)


Q3 2016

Q2 2016

%

9M 2016

9M 2015

%

ММК Group crude steel

3,179

3,183

-0.1%

9,387

9,338

0.5%

ММК Group steel products

2,861

3,003

-4.7%

8,507

8,519

-0.1%

MMK steel products

2,840

2,936

-3.3%

8,484

8,415

0.8%

MMK-Metiz steel products

106

107

-0.2%

306

320

-4.5%

ММК Metalurji steel products

208

213

-2.3%

624

582

7.1%

MMK Group HVA products

1,302

1,420

-8.3%

3,621

4,010

-9.7%

MMK Group HVA products share

45.5%

47.3%


42.6%

47.1%


Belon coal concentrate

712

629

13.2%

2,135

2,025

5.4%

Iron ore

824

880

-6.4%

2,450

2,386

2.7%

Q3 2016 highlights vs. Q2 2016

ü MMK Group's total crude steel output in Q3 2016 totalled 3,179 thousand tonnes (flat q-o-q). Overall steelmaking capacity utilisation at the main Magnitogorsk site (subject to maintenance schedule) in Q3 2016 was 88%.

ü MMK Group's total finished steel product shipments in Q3 2016 (excluding intra-group sales) amounted to 2,861 thousand tonnes (down 4.7% q-o-q). The decrease versus Q2 2016 was partly due to the growth of sales within the Group.

ü MMK Group's HVA steel product output in Q3 2016 was 1,302 thousand tonnes (down 8.3% q-o-q). The share of HVA products in total output was 45.5%.

ü Production of coal concentrate by Belon in Q3 2016 totalled 712 thousand tonnes (up 13.2% q-o-q).

 

 

9M 2016 highlights vs. 9M 2015

ü MMK Group's total crude steel output in 9M 2016 totalled 9,387 thousand tonnes (+0.5% y-o-y). Overall steelmaking capacity utilisation at the main Magnitogorsk site (subject to maintenance schedule) increased to 89% (from 86% in 9M 2015).

ü MMK Group's total finished steel product shipments in 9M 2016 (excluding intra-group sales) amounted to 8,507 thousand tonnes (flat y-o-y). The decrease in demand for steel in the domestic market was balanced by higher export sales volumes.

ü MMK Group's HVA steel product output in 9M 2016 was 3,621 thousand tonnes. The share of HVA products in total output decreased y-o-y to 42.6%.

ü Production of coal concentrate by Belon in 9M 2016 stood at 2,135 thousand tonnes (up 5.4% y-o-y).

 

 



MMK Group highlights by key segments

Steel segment (Russia)

(thousand tonnes)


Q3 2016

Q2 2016

%

9M 2016

9M 2015

%

Pig iron

2,424

2,455

-1.3%

7,283

7,590

-4.1%

Crude steel

3,179

3,183

-0.1%

9,387

9,338

0.5%

Finished products output, of which:

2,840

2,936

-3.3%

8,484

8,415

0.8%

Slabs and billets

5

39

-87.0%

88

40

118.1%

Long products

453

450

0.5%

1,319

1,320

-0.1%

Flat hot-rolled products

1,363

1,313

3.8%

3,938

3,892

1.2%

HVA products, of which:

1,019

1,133

-10.1%

3,138

3,162

-0.7%

Thick plate (mill 5000)

187

239

-21.7%

644

814

-20.9%

Flat cold-rolled products

330

394

-16.2%

1,064

959

11.0%

Downstream products, of which:

502

500

0.3%

1,431

1,390

3.0%

Tin plate

36

37

-1.1%

115

121

-4.7%

Galvanised steel

298

307

-2.9%

850

803

5.8%

Polymer-coated steel

101

93

8.8%

279

261

7.0%

Band

27

35

-21.1%

91

118

-23.1%

Formed section

19

8

142.8%

35

27

31.8%

Pipes

21

22

-4.8%

61

61

0.7%

Shipments by market:







Russia + CIS

1,990

2,251

-11.6%

6,105

6,467

-5.6%

Export

850

685

24.0%

2,379

1,948

22.1%

(USD / tonne)


Q3 2016

Q2 2016

%

9M 2016

9M 2015

%

 Average price per tonne:

470

448

4.8%

411

474

-13.3%

Long products

382

371

2.9%

334

390

-14.4%

Flat hot-rolled products

379

380

-0.2%

336

391

-14.2%

HVA products, of which:

632

563

12.3%

543

613

-11.5%

Thick plate (mill 5000)

635

611

3.9%

593

744

-20.3%

Flat hot-rolled products

491

426

15.2%

406

462

-12.1%

Downstream products, of which:

723

647

11.9%

621

641

-3.0%

Tin plate

869

831

4.7%

778

736

5.8%

Galvanised steel

682

605

12.7%

580

604

-4.0%

Polymer-coated steel

899

808

11.2%

774

824

-6.0%

Band

554

516

7.5%

487

481

1.3%

Formed section

662

584

13.3%

577

570

1.3%

Pipes

492

466

5.5%

432

489

-11.6%

ü Pig iron output in Q3 2016 decreased by 1.3% q-o-q to 2,424 thousand tonnes due to scheduled maintenance at blast furnace No 4 at the beginning of the quarter.

ü Crude steel output in Q3 2016 remained nearly flat q-o-q at 3,179 thousand tonnes. A decrease in arc-furnace capacity utilisation to 56% (from 61% in Q2 2016) was balanced by higher steel production at oxygen converters following completion of scheduled maintenance in the middle of Q2 2016.

ü In Q3 2016, sales of finished products totalled 2,840 thousand tonnes, down 3.3% q-o-q. The decrease in sales was due to higher shipments of products from the seasonal stocks in Q2 2016.

ü In response to weaker demand for steel on the domestic market in 2016 as compared to 2015, the Company efficiently redirected part of shipments to export markets. In 9M 2016 export sales grew 22.1% y-o-y, while the share of export sales in the overall structure amounted to 28.0%.

ü This flexibility in redirecting sales flows even amid weaker domestic demand enabled the Company to increase total shipments volumes in 9M 2016 by 0.8% y-o-y to 8,484 thousand tonnes.

ü Solid demand for construction products helped maintain high levels of shipments of long products at 453 thousand tonnes in Q3 2016.

ü Higher shipments to foreign markets and MMK Metalurji contributed to higher sales of hot-rolled products in Q3 2016 (up 3.8% q-o-q).

ü Lower sales of HVA products in Q3 2016 (down 10.1% q-o-q) were mostly due to lower shipments of Mill 5000 thick plate. Shipments of downstream products remained high.

ü In 9M 2016 shipments of cold-rolled products grew 11.0% y-o-y to 1,064 thousand tonnes. Sales of cold-rolled products in Q3 2016 decreased 16.2% q-o-q due to change of product mix structure in customers' orders.

ü Rescheduling of some orders for major pipe projects to 2017 resulted in lower sales of Mill 5000 thick plate in Q3 2016.

ü Growth in sales of galvanized and polymer-coated steel in 9M 2016 by 5.8% and 7.0% y-o-y, respectively, was due to a higher demand for galvanized steel on the domestic market and import substitution effect.

ü The average sales price in US dollars in Q3 2016 increased by 4.8% q-o-q. This growth was mainly due to a time-lag between export and domestic prices, as well as the ruble strengthening against the US dollar.

ü Continued demand for construction products led to flat sales of MMK-Metiz products in Q3 2016 as compared to the previous quarter.

 

Steel segment (Turkey)

(thousand tonnes)


Q3 2016

Q2 2016

%

9M 2016

9M 2015

%

ММК Metalurji finished products, of which:

208

213

-2.3%

624

582

7.1%

Flat hot-rolled products

31

33

-5.4%

96

54

78.3%

HVA products, of which:

177

180

-1.8%

527

528

-0.1%

Galvanised steel

130

131

-0.3%

372

330

12.8%

Polymer-coated steel

47

50

-5.6%

155

198

-21.7%

ММК Metalurji finished output from ММК steel

189

147

28.3%

460

481

-4.3%

ü Sales of finished products in Q3 2016 totalled 208 thousand tonnes (down 2.3% q-o-q). This was due to a slowdown of business activity during the holy month of Ramadan and the celebration of Eid al-Adha.

ü Efficient capacity utilisation and product mix, which allowed to increase productivity, enabled the Company to increase sales volumes in 9M 2016 by 7.1% y-o-y.

ü The high volume of orders for the company's products meant maximum utilisation rates were maintained.

ü Supply of semi-finished rolled products from MMK to MMK Metalurji in 9M 2016 slightly decreased y-o-y to 460 thousand tonnes.

 

Raw materials segment (Belon)

(thousand tonnes)


Q3 2016

Q2 2016

%

9M 2016

9M 2015

%

Coking coal mining

981

674

45.5%

2,463

2,562

-3.9%

Coking coal processing

1,250

1,151

8.6%

3,670

3,427

7.1%

Mined

941

806

16.7%

2,603

2,276

14.4%

Purchased

309

345

-10.4%

1,067

1,151

-7.3%

Coking coal concentrate

712

629

13.2%

2,135

2,025

5.4%

ü Volumes of coking coal production in Q3 2016 increased by 45.5% q-o-q, to 981 thousand tonnes. This was mainly due to completion of scheduled maintenance at Chertinskaya-Koksovaya and Kostromovskaya mines in the previous quarter, as well as higher productivity.

ü Higher production of coking coal led to a 13.2% increase in concentrate production in Q3 2016 q-o-q. In 9M 2016 concentrate production increased by 5.4% y-o-y.

Outlook

In October 2016 the Company sees solid demand for its products on both domestic and export markets. However, the Company anticipates lower sales closer to the end of 2016 due to the seasonal slowdown of business.

Stable prices on export markets together with higher rates for coking coal and scrap will support domestic steel prices in Q4 2016, limiting their potential seasonal correction.

 

MMK is one of the world's largest steel producers and a leading Russian metals company. The company's operations in Russia include a large steel producing complex encompassing the entire production chain, from preparation of iron ore to downstream processing of rolled steel. MMK turns out a broad range of steel products with a predominant share of high-value-added products. In 2015, the company produced 12.2 million tonnes of crude steel and 11.2 million tonnes of commercial steel products. MMK Group had sales in 2015 of USD 5,839 million and EBITDA of USD 1,668 million.

 

 

 

Contacts

Investor Relations Department:

Andrey Serov

+7 3519 24-52-97

[email protected]

Communications Department:

Dmitry Kuchumov         Sergey Vykhukholev

+7 499 238-26-13           +7 499 238-26-13

[email protected]     [email protected]


This information is provided by RNS
The company news service from the London Stock Exchange
 
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