DJ PJSC Magnitogorsk Iron and Steel Works: MMK Group Trading Update for Q2 2018
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PJSC Magnitogorsk Iron and Steel Works (MMK)
PJSC Magnitogorsk Iron and Steel Works: MMK Group Trading Update for Q2 2018
17-Jul-2018 / 07:58 CET/CEST
Dissemination of a Regulatory Announcement, transmitted by EQS Group.
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MMK Group Trading Update for Q2 2018
??? Group: Consolidated results
(thousand tonnes)
Q2 2018 Q1 2018 % H1 2018 H1 2017 %
Finished products 2,848 2,828 0.7% 5,675 5,558 2.1%
sales, of which:
Long products 364 284 28.0% 648 658 -1.5%
Flat hot-rol led 1,103 1,198 -8.0% 2,302 2,361 -2.5%
products
Thick plate (mill 195 192 1.3% 387 416 -6.9%
5000)
Flat cold-rolled 278 338 -17.8% 615 612 0.5%
products
Downstream 909 815 11.5% 1,723 1,511 14.0%
products, of
which:
Tin plate 37 36 3.0% 73 65 13.0%
Galvanised steel 445 435 2.4% 880 786 12.0%
Polymer-coated 203 152 34.0% 355 282 26.1%
steel
Band 36 37 -2.4% 73 58 26.7%
Formed section 40 35 13.4% 75 54 38.8%
Pipes 19 11 67.7% 30 38 -21.2%
Metalware 108 95 13.8% 203 198 2.5%
Other metal 20 14 45.5% 34 31 7.0%
products
HVA products 1,381 1,345 2.7% 2,726 2,539 7.3%
Share of HVA 48.5% 47.6% 48.0% 45.7%
products
Coal concentrate 746 666 12.1% 1,412 1,308 8.0%
production
Iron ore 780 761 2.6% 1,320 1,604 -17.7%
production
Q2 2018 highlights vs. Q1 2018
- MMK Group's steel products sales in Q2 2018 totalled 2,848 thousand
tonnes, up 0.7% quarter-on-quarter (q-o-q).
? MMK Group's HVA steel product sales in Q2 2018 were 1,381 thousand tonnes,
up 2.7% q-o-q. HVA products accounted for 48.5% of total sales.
- MMK Coal's coal concentrate production in Q2 2018 totalled 746 thousand
tonnes, up 12.1% q-o-q.
H1 2018 highlights vs. H1 2017
- MMK Group's steel products sales in H1 2018 totalled 5,675 thousand
tonnes, up 2.1% year-on-year (y-o-y).
? MMK Group's HVA steel product sales in H1 2018 were 2,726 thousand tonnes,
up 7.3% y-o-y. HVA products accounted for 48.0% of total sales.
- MMK Coal's coal concentrate production in H1 2018 totalled 1,412 thousand
tonnes, up 8.0 y-o-y.
MMK Group highlights by key segments
MMK
(thousand tonnes)
Q2 2018 Q1 2018 % H1 2018 H1 2017 %
Pig iron 2,276 2,404 -5.3% 4,680 4,648 0.7%
Crude steel 3,029 3,147 -3.8% 6,176 6,094 1.3%
Finished products 2,762 2,830 -2.4% 5,592 5,455 2.5%
shipments, incl.:
Long products 464 427 8.7% 892 899 -0.9%
Flat hot-rolled 1,221 1,277 -4.4% 2,498 2,553 -2.1%
products
HVA products, of 1,076 1,126 -4.4% 2,203 2,003 10.0%
which:
Thick plate (mill 202 198 2.0% 401 424 -5.3%
5000)
Flat cold-rolled 348 377 -7.7% 724 638 13.5%
products
Downstream 526 551 -4.5% 1,078 941 14.5%
products, of
which:
Tin plate 36 37 -4.0% 73 66 9.6%
Galvanised steel 313 330 -5.2% 642 511 25.8%
Polymer-coated 88 91 -3.6% 178 208 -14.1%
steel
Band 34 39 -14.3% 73 61 20.3%
Formed section 39 40 -3.7% 79 57 38.7%
Pipes 18 14 29.7% 32 38 -17.2%
Shipments by
market:
Russia + CIS 2,278 2,225 2.4% 4,503 4,185 7.6%
Export 484 605 -20.1% 1,089 1,247 -12.7%
(USD / tonne)
Q2 2018 Q1 2018 % H1 2018 H1 2017 %
Average price per 655 647 1.2% 651 565 15.3%
tonne:
Long products 566 566 0.0% 567 462 22.6%
Flat hot-rolled 588 582 1.0% 584 482 21.3%
products
HVA products, of 769 753 2.1% 760 716 6.2%
which:
Thick plate (mill 818 843 -3.0% 830 740 12.2%
5000)
Flat hot-rolled 641 628 2.1% 634 578 9.6%
products
Downstream products, 834 805 3.6% 819 798 2.6%
of which:
Tin plate 826 833 -0.8% 829 871 -4.9%
Galvanised steel 814 771 5.6% 792 756 4.7%
Polymer-coated steel 1,008 965 4.5% 986 947 4.2%
Band 680 684 -0.6% 680 687 -1.0%
Formed section 828 851 -2.7% 838 795 5.5%
Pipes 642 687 -6.6% 664 606 9.5%
- Pig iron output in Q2 2018 decreased by 5.3% q-o-q. This was due to
continued scheduled maintenance work on blast furnace No. 1 during the
quarter.
? Continued scheduled repairs to the oxygen converter at the beginning of Q2
2018 led to a decrease in crude steel output by 3.8% q-o-q.
- Sales of finished goods stocks from temporary storage meant shipments of
finished products in Q2 2018 decreased at a slower pace (down 2.4% q-o-q)
than crude steel output.
- In Q2 2018, the Company continued to increase shipments to the domestic
market (up 2.4% q-o-q). As a result, domestic sales accounted for 82.5% of
overall sales (up from 78.6% in Q1 2018).
- In Q2 2018, shipments of long products increased by 8.7% q-o-q to 464
thousand tonnes. This growth was due to the seasonal uptick in domestic
demand for construction products, leading to increased capacity utilisation
of long products production facilities and a significant decrease in
warehouse stocks of finished products.
? The 4.4% decrease in shipments of hot-rolled products q-o-q in Q2 2018 was
mainly due to the reconstruction of Mill 2500 and equipment upgrades.
- Shipments of HVA products in Q2 2018 decreased 4.4% q-o-q and totalled
1,076 thousand tones. This was mainly due to lower shipments of cold-rolled
products and coated steel.
- In H1 2018, shipments of HVA products grew 199 thousand tonnes, or 10.0%,
y-o-y. This growth was mainly due to the hot-dip galvanizing line
commissioned in mid-2017 reaching its full capacity, higher supplies of
cold-rolled products to the Lysvensky Metallurgical Plant, and higher sales
of other HVA products on the domestic market.
- The decrease in shipments of cold-rolled products in Q2 2018 (down 7.7%
q-o-q) was due to lower exports and the completion of restocking process at
Lysvensky Metallurgical Plant.
- In Q2 2018, output at Mill 5000 grew 2.0% q-o-q with a 100% capacity
utilisation rate. The decrease in shipments of the Mill's products by 5.5%
y-o-y in H1 2018 was due to changes in the product mix, particularly an
increase of the share of high-tech but less productive rolled steel.
- In Q2 2018, galvanised steel shipments decreased by 5.2% q-o-q to 313
thousand tonnes. This decline was mainly due to lower export sales as
domestic sales increased.
- The increase in shipments of galvanised steel in H1 2018 by 131 thousand
tonnes, or 25.8%, was due to the hot-dip galvanizing line commissioned in
mid-2017 reaching its full capacity.
- Lower shipments of polymer-coated metal were due to both higher shipments
of galvanised steel and changes to how sales of products by Lysvensky
Metallurgical Plant are reported following its acquisition in late 2017.
- Shipments of formed section in H1 2018 grew 38.7% y-o-y due to
consistently high demand from railcar manufacturers.
- The average sales price in US dollars in Q2 2018 increased by 1.2% q-o-q
to USD 655 per tonne. This growth was due to an increased share of domestic
sales and continued growth in domestic prices during the quarter.
Lysvensky Metallurgical Plant
(thousand tonnes)
Q2 2018 Q1 2018 % H1 2018 H1 2017 %
Finished products 69 46 47.7% 115 57 100.2%
output, of which:
Electro-galvanised 0.4 3 -86.8% 3 3 6.4%
steel (automotive
sheet)
Galvanised steel 66 41 63.0% 107 52 105.1%
with polymer
coating
Galvanised steel 2 3 -30.2% 5 2 125.3%
with decorative
coating (SteelArt)
- Sales of finished products in Q2 2018 amounted to 69 thousand tonnes, up
47.7% q-o-q. This growth was mainly due to the seasonal uptick in demand for
construction metal.
- Sales of finished products in H1 2018 grew 58 thousand tonnes, or 100.2%
q-o-q. This significant growth was mainly due to the low base effect in H1
2017, which in turn was related to a shortage of working capital. Capacity
utilisation rates and sales in 2018 have stabilized thanks to the plant
becoming part of MMK Group.
Steel segment (Turkey)
(thousand tonnes)
Q2 2018 Q1 2018 % H1 2018 H1 2017 %
??? Metalurji 198 231 -14.3% 428 463 -7.6%
finished products,
of which:
Flat hot-rolled 9 27 -64.9% 36 81 -55.6%
products
HVA products, of 188 204 -7.6% 392 382 2.6%
which:
Galvanised steel 149 148 0.9% 297 299 -0.7%
Polymer-coated 39 56 -30.0% 95 83 14.5%
steel
??? Metalurji 187 153 22.4% 339 317 6.9%
finished output
from ??? steel
- Sales of finished products in Q2 2018 decreased by 14.3% q-o-q and
totalled 198 thousand tonnes.
- Sales of finished products in H1 2018 decreased by 7.6% y-o-y, mainly due
to lower volumes of cut sheets as a result of volatility in prices for
hot-rolled and cold-rolled steel.
- In H1 2018, production of polymer-coated products increased by 14.5% due
to changes in the market situation, as these products have become relatively
high margin in hourly terms.
MMK Coal
(thousand tonnes)
Q2 2018 Q1 % H1 H1 %
2018 2018 2017
Coking coal mining 1,323 865 53.0% 2,187 1,634 33.9%
Coking coal 1,493 1,259 18,5% 2,752 2,304 19.5%
processing
Mined 1,325 943 40.4% 2,268 1,657 36.9%
Purchased 168 316 -46.8% 483 647 -25.3%
Coking coal 746 666 12.1% 1,412 1,308 8.0%
concentrate
? Coking coal production in Q2 2018 increased by 53.0% q-o-q and amounted to
1,323 thousand tonnes. This increase was due to the completion of
maintenance work at Kostromskaya mine and after an area with complex geology
at Chertinskaya-Koksovaya mine was passed.
? Coal concentrate production in Q2 2018 amounted to 746 thousand tonnes, up
12.1% q-o-q. This growth was due to higher volumes of own materials
processing.
- In H1 2018, coking coal production increased by 33.9% y-o-y to 2,187
thousand tonnes. This growth was due to the commissioning of a new longwall
at Chertinskaya-Koksovaya mine.
- In H1 2018, coal concentrate production increased by 8.0% y-o-y to 1,412
thousand tonnes. This growth was due to higher volumes of own material
processing, which in turn allowed the company to significantly cut coal
purchases from the third parties.
Outlook
Currently, the Company's management sees sustainable demand for its products
from the domestic customers, which together with completion of scheduled
maintenance and equipment modernisation should lead to an increase in
finished products sales in Q3 2018.
The company expects the stabilization of steel prices on exports markets to
support domestic prices and limit their correction over a period of weaker
business activity.
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 2017, the company produced 12.9 million tonnes of crude steel
and 11.6 million tonnes of commercial steel products. MMK Group had sales in
2017 of USD 7,546 million and EBITDA of USD 2,032 million.
Contacts
Investor Relations Department:
Andrey Serov
+7 3519 24-52-97
serov.ae@mmk.ru
Communications Department:
Dmitry Kuchumov Dmitry Bulin
+7 499 238-26-13 +7 499 238-26-13
kuchumov.do@mmk.ru bulin.dn@mmk.ru
ISIN: US5591892048
Category Code: TST
TIDM: MMK
LEI Code: 253400XSJ4C01YMCXG44
Sequence No.: 5754
EQS News ID: 705119
End of Announcement EQS News Service
(END) Dow Jones Newswires
July 17, 2018 01:58 ET (05:58 GMT)
