DJ PJSC Magnitogorsk Iron and Steel Works: MMK Group Trading Update for Q1 2019
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PJSC Magnitogorsk Iron and Steel Works (MMK)
PJSC Magnitogorsk Iron and Steel Works: MMK Group Trading Update for Q1 2019
16-Apr-2019 / 07:59 CET/CEST
Dissemination of a Regulatory Announcement, transmitted by EQS Group.
The issuer is solely responsible for the content of this announcement.
MMK Group Trading Update for Q1 2019
??? Group: Consolidated results
(thousand tonnes)
Q1 2019 Q4 2018 % Q1 2019 Q1 2018 %
Finished products 2,782 2,936 -5.2% 2,782 2,828 -1.6%
sales, of which:
Long products 329 356 -7. 6% 329 284 15.8%
Flat hot-rolled 1,111 1,232 -9.8% 1,111 1 199 -7.3%
products
Thick plate (mill 293 184 59.2% 293 192 52.6%
5000)
Flat cold-rolled 257 292 -12.0% 257 338 -24.0%
products
Downstream 793 872 -9.0% 793 815 -2.7%
products, of
which:
Tin plate 32 33 -3.0% 32 36 -11.1%
Galvanised steel 414 449 -7.8% 414 435 -4.8%
Polymer-coated 156 166 -6.0% 156 152 2.6%
steel
Band 35 34 2.9% 35 37 -5.4%
Formed section 41 44 -6.8% 41 35 17.1%
Pipes 11 15 -26.7% 11 11 0%
Metalware 93 108 -13.9% 93 95 -2.1%
Other metal 11 24 -54.2% 11 14 -21.4%
products
HVA products 1,342 1,349 -0.5% 1,342 1,345 -0.2%
Share of HVA 48.2% 45.9% 48.2% 47.6%
products
Coal concentrate 777 781 -0.5% 777 666 16.7%
production
Iron ore 716 816 -12.3% 716 751 -4.7%
production
Q1 2019 highlights vs. Q4 2018
- MMK Group's total sales of finished products in Q1 2019 totalled 2,782
thousand tonnes, down 5.2% quarter-on-quarter (q-o-q) or down 1.6%
year-on-year (y-o-y).
- MMK Group's sales of HVA products in Q1 2019 remained almost at the level
of the previous quarter and amounted to 1,342 thousand tonnes. The share of
HVA products in total sales increased to 48.2%.
- MMK Coal's coal concentrate production in Q1 2019 totalled 777 thousand
tonnes, almost flat q-o-q but up 16.7% y-o-y.
MMK Group highlights by key segments
PSJC MMK
(thousand tonnes)
Q1 2019 Q4 2018 % Q1 2019 Q1 2018 %
Pig iron 2,396 2,558 -6.3% 2,396 2,404 -0.3%
Crude steel 3,107 3,112 -0.2% 3,107 3,147 -1.3%
Finished products, 2,731 2,812 -2.9% 2,731 2,830 -3.5%
of which:
Long products 457 423 8.0% 457 427 7.0%
Flat hot-rolled 1,180 1,316 -10.3% 1,180 1,277 -7.6%
products
HVA products, of 1,095 1,073 2.0% 1,095 1,126 -2.8%
which:
Thick plate (mill 267 213 25.4% 267 198 34.8%
5000)
Flat cold-rolled 319 351 -9.1% 319 377 -15.4%
products
Downstream 508 509 -0.2% 508 551 -7.8%
products, of
which:
Tin plate 34 33 3.0% 34 37 -8.1%
Galvanised steel 311 315 -1.3% 311 330 -5.8%
Polymer-coated 81 73 11.0% 81 91 -11.0%
steel
Band 28 28 0% 28 39 -28.2%
Formed section 40 42 -4.8% 40 40 0%
Pipes 14 18 -22.2% 14 14 0%
Shipments by
market:
Russia + CIS 2,442 2,187 11.7% 2,442 2,225 9.7%
Export 290 625 -53.6% 290 605 -52.1%
(USD / tonne)
Q1 2019 Q4 2018 % Q1 2019 Q1 2018 %
Average price per 578 579 -0.2% 578 647 -10.7%
tonne:
Long products 480 507 -5.3% 480 566 -15.2%
Flat hot-rolled 506 507 -0.2% 506 582 -13.1%
products
HVA products, of 698 697 0.1% 698 753 -7.3%
which:
Thick plate (mill 712 646 10.2% 712 843 -15.5%
5000)
Flat cold-rolled 579 606 -4.5% 579 628 -7.8%
products
Downstream 765 780 -1.9% 765 805 -5.0%
products, of which:
Tin plate 777 778 -0.1% 777 833 -6.7%
Galvanised steel 742 759 -2.2% 742 771 -3.8%
Polymer-coated 916 967 -5.3% 916 965 -5.1%
steel
Band 653 656 -0.5% 653 684 -4.5%
Formed section 779 787 -1.0% 779 851 -8.5%
Pipes 542 579 -6.4% 542 687 -21.1%
- Pig iron output in Q1 2019 decreased by 6.3% q-o-q. This was due to the
beginning of the scheduled overhaul of the blast furnace No.7.
- At the same time, the volume of steel output in Q1 2019 remained flat
q-o-q. The decrease in pig iron volumes was balanced by the higher share of
metal scrap in burden.
- The volume of shipments in Q1 2019 decreased by 2.9% q-o-q, which is due
to the scheduled repairs of rolling equipment, the formation of stocks of
finished products in the Company's warehouses during the season of low
business activity in the domestic market and due to calendar factor.
- In Q1 2019, the domestic market saw an increase in demand for steel
products, associated with the beginning of the process of replenishment of
stocks in the warehouses of traders, and with the growth of orders from
manufacturers of large diameter pipes. These trends allowed the Company to
increase shipments to the domestic market by 11.7% q-o-q (up to 2,442
thousand tonnes), as a result, the share of shipments to the domestic market
exceeded 89%.
- The volume of shipments of long products in Q1 2019 increased by 8.0%
q-o-q and amounted to 457 thousand tonnes. This growth was due to the low
base of Q4 2018, and the beginning of the process of formation of pre-season
stocks of rolled products for construction purposes in the warehouses of the
MMK Trading House.
- The volume of shipments of hot-rolled products for Q1 2019 decreased by
10.3% q-o-q, which was due to the beginning of the reconstruction of Mill
2500 under the current investment programme.
- The volume of shipments of HVA products for Q1 2019 increased by 2.0%
q-o-q and amounted to 1,095 thousand tonnes. This growth is mainly due to
the increase in the shipments of thick plate and high capacity utilisation
rates of the equipment, producing downstream products.
- The decrease in the volume of shipments of cold-rolled products for Q1
2019 by 9.1% q-o-q is mainly due to a decrease in sales to automakers, who
traditionally cut vehicles output at the beginning of the year.
- In Q1 2019, the volume of shipments of Mill 5000 products increased by
more than 25% q-o-q and reached 267 thousand tonnes. This growth was
associated with the start of supply of steel for the production of large
diameter pipes as part of the implementation of large pipeline projects by
Gazprom.
- The growth in the share of high-margin steel sheet for LDP production in
the structure of Mill 5000 products and the decrease in export shipments
allowed the Company to increase the average sales price for this type of
product by more than 10% q-o-q.
? Despite the seasonally low demand for construction products, the volume of
shipments of galvanized steel in Q1 2019 remained almost at the level of the
previous quarter and shipments of rolled products with polymer coatings
increased by 12.3%. This growth was due to the seasonal process of long-term
storage stocks formation in the warehouses of the independent traders and
traders, which are part of MMK Group.
- The average selling price, expressed in US dollars, for Q1 2019 remained
almost unchanged from the level of the previous quarter and amounted to USD
578 per tonne. Maintaining the average price at a high level allowed a
significant increase in the share of sales to the domestic market,
characterized by a price premium to exports.
Lysvensky Metallurgical Plant
(thousand tonnes)
Q1 2019 Q4 2018 % Q1 2019 Q1 2018 %
Finished products, 60 55 9.1% 60 46 30.4%
of which:
Electro-galvanised 1 2 -50.0% 1 3 -66.6%
steel (automotive
sheet)
Galvanised steel 56 51 9.8% 56 41 36.5%
with polymer
coating
Galvanised steel 4 1 300.0% 4 3 33.3%
with decorative
coating (SteelArt)
? Finished products output increased by 9.1% q-o-q in Q1 2019 and was due to
the seasonal build-up of stocks on traders' warehouses before construction
season beginning.
- Significant growth as compared to Q1 2018 was due to the preliminary
formation of warehouse stocks of finished products in the end of 2018
(period of seasonally low business activity) and active sales of finished
products over Spring, as well as the introduction of a programme to promote
construction products, including SteelArt, in H2 2018.
Steel segment (Turkey)
(thousand tonnes)
Q1 2019 Q4 2018 % Q1 2019 Q1 2018 %
??? Metalurji 176 202 -12.9% 176 231 -23.8%
finished products,
of which:
Flat hot-rolled 7 2 250.0% 7 27 -74.1%
products
HVA products, of 169 199 -15.0% 169 204 -17.2%
which:
Galvanised steel 129 157 -17.8% 129 148 -12.8%
Polymer-coated 39 43 -9.3% 39 56 -30.4%
steel
??? Metalurji 136 132 3.0% 136 153 -11.1%
finished products
from ??? steel
- Sales of commercial products for Q1 2019 amounted to 176 thousand tonnes,
down 12.9% q-o-q mainly due to external headwinds and the challenging
economic and political situation in Turkey. In this situation, buyers prefer
to wait for more certainty in the market and not to force the purchase to
ensure summer seasonal demand.
- In export markets, buyers also took a wait-and-see position, as there was
high price volatility and uncertainty about the EU quotas for steel imports.
- The increased competition among coated steel producers forced the company
to look for new niches and markets for steel products, uncommon in recent
years, which have influenced the change in range and production volumes.
MMK Coal
(thousand tonnes)
Q1 2019 Q4 2018 % Q1 2019 Q1 2018 %
Coking coal 1,464 1,228 19.2% 1,464 865 69.2%
mining
Coking coal 1,422 1,451 -2.0% 1,422 1,259 12.9%
processing
Mined 1,403 1,362 3.0% 1,403 943 48.8%
Purchased 19 89 -78.6% 19 299 -93.6%
Toll 0 0 0 17 -100.0%
Coking coal 777 781 -0.5% 777 666 16.7%
concentrate
- The volume of coking coal production in Q1 2019 increased by 19.2% q-o-q
and amounted to 1,464 thousand tonnes. This increase is due to the
completion of maintenance works in the previous quarter and work at full
capacity at the beginning of the year.
- Higher coal production allowed the company to completely cut the need to
buy coal from third parties. Thus, external coal purchases decreased by more
than 15 times compared to Q1 2018.
- The volume of coal concentrate production in Q1 2019 remained almost at
the level of the previous quarter.
Outlook
At the moment, the Company's management sees a consistently high demand for
steel products in the domestic market, which should have a positive impact
on the sales volumes of MMK Group's commercial products.
Recovery of steel prices from minimum levels at the beginning of the year
and the maximum capacity utilisation of high-margin production units should
support MMK Group's financial results in Q2 2019.
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 unit encompassing the entire production chain, from the
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 2018, the company produced 12.7 mln tonnes of
crude steel and 11.7 mln tonnes of commercial steel products. MMK Group had
sales in 2018 of USD 8,214 mln and EBITDA of USD 2,418 mln.
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.: 8215
EQS News ID: 800417
End of Announcement EQS News Service
(END) Dow Jones Newswires
April 16, 2019 01:59 ET (05:59 GMT)
