MMK prepares metallurgical plants to meet demand for rolled metal

The Russian steel mill MMK said on July 14 that it had begun to ramp up production again, seeing production declining 22% qoq and 24% yoy in April-June, when it suspended several facilities for modernization to take advantage of a quieter market. ,

The end of the second quarter was marked by an increase in domestic steel consumption, which MMK expects in the period from July to September. The recovery in FOB prices for hot rolled coils in the Black Sea, which has been visible since late June, should continue to affect Russian domestic flat steel prices.

The upcoming launch of the remanufactured 2,500 mm hot strip mill, due this month, is expected to expand the company's production capacity and support sales for the rest of the year.

MMK says it expects the capacity utilization of its mills and lines involved in the production of high value-added products - plate, cold-rolled steel and coated coils, tinplate, profiles, pipes and wire products - to be close to maximum capacity in third quarter, and this should also support the company's steel sales.

In April-June, MMK produced 2.36 million tons of steel, which is 660,000 tons less than in January-March and 730,000 tons less than in the second quarter of 2019. Over the same period, steel sales declined 19% in both the quarter and the most recent period. a year to 2.22 million tons.

Technically, production declined due to lower pig iron production as MMK was upgrading Blast Furnace # 2 for 130 days at its flagship Ural Magnitogorsk Iron and Steel Works, completed in June.

This, the planned reconstruction of the 2,500 mm rolling mill and a number of other upgrades that affected productivity, were combined in April-June to help MMK make the most of the decline in demand for coronavirus in both the domestic and export markets. ,

Weak demand coupled with large-scale renovations resulted in a double-digit drop in production in the first six months of the year.

In January-June, MMK produced 5.38 million tons of steel, which is 800 thousand tons or 13% less than in the previous year. Steel sales were 4.97 million tonnes, down 670,000 tonnes or 12%. High value added products accounted for half of this volume.

MMK reported that the average dollar-denominated steel price for the second quarter fell 12% qoq to $ 522 per tonne due to a combination of ruble devaluation, slower business activity and lower global HRC prices.