MMK expects Russian demand to support sales in the third quarter

Magnitogorsk Iron and Steel Works (MMK) expects domestic demand for steel products to grow steadily in the third quarter to support strong sales. Completion of the next upgrade phase for the 2500 hot strip mill will have a positive impact on sales, supporting the group's financial performance in the third quarter, the company said in a statement to Kallanish.

The Russian domestic market, where the plant sold about 90% of its production in the second quarter, continues to provide a high price premium. Exports of finished steel products in the second quarter fell -1.5% qoq to 286,000 tons, while exports in the first half fell 47.2% y-o-y to 575,000 tons. Total finished goods sales in the second quarter were up 2.7% qoq to 2.86 million tonnes, but sales in the first half were down -1% to 5.64 million tonnes.

The company continued to ramp up sales of high value added (HVA) products in the second quarter, growing 6.6% qoq to 1.43 million tonnes, accounting for 50% of total sales. In the first half of the year, they grew by 1.4% year on year to 2.76 million tons, with a share of 49%. Subsequently, production and sales of cold rolled steel coils declined as the steel mill produced more galvanized coated products. It produced 241,000 tonnes of CRC in the second quarter, down 6.2% in the first quarter, and 498,000 tonnes in the first half, down 19% year on year.

The company produced 2.73 million tonnes of finished goods in the second quarter compared to the previous quarter, but production in the first half was down -2.3% to 5.46 million tonnes. The latter was partially affected by a 6.1% year-on-year decrease in hot-rolled product output amid the ongoing modernization of the 2500 mill.

Steel production remained virtually unchanged at 3.1 million tonnes in the second quarter and 6.2 million tonnes in the first half, but pig iron production rose 2.3% in the second quarter to 2.45 million tonnes and 3.6% in the the first half of the year to 4.85 million tons. This is due to the completion of the overhaul of blast furnace No. 7, which allowed the company to reduce the share of ferrous scrap in the raw mix.