DJ PJSC Magnitogorsk Iron and Steel Works: MMK Group Trading Update for Q4 and 12M 2020
PJSC Magnitogorsk Iron and Steel Works (MMK)
PJSC Magnitogorsk Iron and Steel Works: MMK Group Trading Update for Q4 and 12M 2020
26-Jan-2021 / 07:54 CET/CEST
Dissemination of a Regulatory Announcement that contains inside information according to REGULATION (EU) No 596/2014
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MMK Group trading
update for q4 and 12M PJSC Magnitogorsk Iron & Steel Works ("MMK", or the "Group") (MICEX-RTS: MAGN; LSE: MMK), one
2020 of the world's largest steel producers, is pleased to announce its Trading Update for Q4 and
12M 2020.
26 january 2021
Magnitogorsk, Russia
- Pig iron output increased by 6.0% quarter-on-quarter (q-o-q) to 2,521 thousand tonnes, driven by
increased steel demand and increased production volumes.
HIGHLIGHTS - Steel output was up 14.9% q-o-q at 3,312 thousand tonnes due to stronger demand and production
ramp-up of Hot-Rolling Mill 2500 after its scheduled reconstruction in Q3.
Q4 2020
VS Q3 2020
- MMK Group's total sales of finished products amounted to 3,045 thousand tonnes, up 11.1% q-o-q.
- MMK Group's sales of premium products stayed flat q-o-q at 1,343 thousand tonnes (44.1% of total
sales).
- MMK Coal's coal concentrate production totalled 837 thousand tonnes, up 16.0% q-o-q due to the
decommissioning of an underperforming coal face and the launch of a new one.
HIGHLIGHTS
12M 2020 - Pig iron output decreased by 6.7% year-on-year (y-o-y) to 9,344 thousand tonnes, due to a longer
period of scheduled maintenance at blast furnace facilities and lower demand amid the coronavirus
VS 12M 2019 pandemic.
- Steel output in 12M 2020 was down 7.1% y-o-y to 11,574 thousand tonnes, affected by the scheduled
reconstruction of Hot-Rolling Mill 2500 and the slowdown in business activity due to the pandemic.
- MMK Group's total sales of finished products fell by 5.0% y-o-y to 10,755 thousand tonnes.
- Premium product sales dropped by 6.1% y-o-y to 5,143 thousand tonnes. The share of premium products
in total sales decreased to 47.8%.
- Coal concentrate output in 12M 2020 amounted to 3,059 thousand tonnes, up by 17.0% y-o-y, due to
the completion of a beneficiation plant upgrade, which took place throughout 2019, as well as the
increased processing of purchased coals.
Global steel products market: In Q4 2020, global prices reached their multi-year highs, fuelled by
shortages in key markets. Spurred by continuing infrastructure investment, China's economic recovery
supported high domestic demand and prices for rolled steel throughout 2020. In Q4, strong pent-up demand
for rolled steel built up in the US and Europe, due to low inventories and an import supply gap. Turkish
steelmakers were able to put a significant premium on their products amid growing demand in the domestic
and international markets.
Russian steel products market: In late Q4 2020, the Russian warehousing market saw a surge in prices for
rolled steel, spurred on by frantic demand from end consumers and increased global prices for metal
products. An unexpectedly strong growth in feedstock prices also had a substantial impact on the growth
in prices for rolled products.
Global iron ore market: In Q4 2020, iron ore prices soared driven by persistently high demand for
feedstock in China and improved demand in other regions. In late 2020, iron ore exports were somewhat
lower compared to late 2019, which also supported price growth. In Q1 2021, it is expected that the
volume of supply and demand in the iron ore market will decline due to seasonal factors, which may lead
to a correction in iron ore prices.
MARKET
OVERVIEW Russian iron ore market: Demand for iron ore in Russia and in the EU grew in late 2020 along with an
increase in steelmaking capacity utilisation. As a result, exports of Russian iron ore to China dwindled,
with suppliers returning to their traditional consumers. Base prices in Russia are following Chinese
indices, adjusted for changes in the USD/RUB rate, with discounts offered to domestic consumers in late
2020 remaining stable overall. In roubles, however, Russian prices for iron ore hit record high levels.
Global coking coal market: In Q4, the global market found itself in a unique position as China suspended
imports of coking coals from Australia, its key feedstock supplier. As a result, prices for alternative
supplies to China grew to USD 200 per tonne, while Australian prices stayed slightly above USD 100 per
tonne, reflecting the supply-side pressure. The further trend will depend on when China will lift its
suspension and on weather in Australia.
Russian coking coal market: Russian prices grew slightly in Q4 2020, but at a much lower rate than for
other types of feedstock and metal products. Russian coal companies have everything they need to raise
their contract prices for Q1 2021, although price growth rates will vary across product grades as usual.
Russian metal scrap market: In Q4 2020, scrap prices in Russia significantly grew, by 35%-40%, while the
demand from Russian steelmakers for scrap was not fully covered. An increased duty for scrap exports from
Russia will come into force in late January. However, no considerable decline in prices is expected in Q1
2021, given the low availability of scrap in winter.
MMK GROUP'S CONSOLIDATED RESULTS
thousand tonnes Q4 2020 Q3 2020 % 12M 2020 12M 2019 % Crude steel production 3,312 2,882 14.9 11,574 12,463 - 7.1 Pig iron production 2,521 2,379 6.0 9,344 10,013 - 6.7 Coal concentrate production 837 721 16.0 3,059 2,614 17.0 Iron ore production 638 811 - 21.3 2,893 2,769 4.5 Finished products sales, 3,045 2,742 11.1 10,755 11,316 - 5.0 including: Semi-finished products 0 0 - 20 0 - Long products 297 349 - 14.7 1,275 1,352 - 5.7 Flat hot-rolled products 1,404 1,052 33.4 4,317 4,486 - 3.8 Premium products, including: 1,343 1,341 0.2 5,143 5,477 - 6.1 Thick plate (Mill 5000) 202 195 3.2 841 1,036 - 18.8 Flat cold-rolled products 226 226 - 0.1 889 1,006 - 11.7 Downstream products, including: 916 919 - 0.3 3,414 3,435 - 0.6 Tinplate 38 44 - 15.2 168 141 19.7 Galvanised steel 460 454 1.3 1,735 1,813 - 4.3 Polymer-coated steel 200 220 - 9.2 717 666 7.7 Band 42 29 42.6 130 120 9.0 Formed section 36 20 77.8 122 167 - 26.7 Pipe 24 28 - 14.4 83 57 47.1 Metalware 111 109 1.9 418 416 0.4 Other metal products 6 14 - 56.3 39 56 - 30.9 Share of premium products 44.1% 48.9% 47.8% 48.4%
CONSOLIDATED PRICES
FOR METAL PRODUCTS
USD/tonne Q4 2020 Q3 2020 % 12M 2020 12M 2019 %
Average price per tonne: 575 535 7.5 558 628 - 11.1
Semi-finished products - - - 255 0 -
Long products 493 453 8.8 472 530 - 10.9
Flat hot-rolled products 514 439 17.1 479 530 - 9.6
Premium products, including: 657 633 2.4 646 733 - 11.9
Thick plate (Mill 5000) 593 554 3.8 595 730 - 18.5
Flat cold-rolled products 573 517 10.8 558 626 - 10.9
Downstream products, including: 691 678 1.9 682 765 - 10.9
Tinplate 672 696 - 3.4 711 813 - 12.6
Galvanised steel 659 679 2.9 656 728 - 9.9
Polymer-coated steel 852 760 12.1 804 899 - 10.6
Band 600 567 5.8 607 693 - 12.4
Formed section 621 571 8.8 659 781 - 15.6
Pipe 538 494 8.9 521 577 - 9.7
Metalware 627 593 5.7 629 728 - 13.6
Other metal products 777 713 9.0 708 803 - 11.8
+ 7.5% Q-o-Q The average selling price in US dollars grew by 7.5% q-o-q in Q4 2020 to USD 575 per tonne, driven by the
increase in global prices for metal products and iron ore. The 11.1% y-o-y fall in the average selling
AVERAGE price in 12M 2020 was caused by a drop in global steel prices due to the COVID-19 pandemic.
SELLING PRICE
MMK GROUP'S PERFORMANCE
ACROSS CORE SEGMENTS
STEEL SEGMENT RUSSIA
thousand tonnes Q4 2020 Q3 2020 % 12M 2020 12M 2019 %
Crude steel production 3,312 2,882 14.9 11,574 12,463 - 7.1
Pig iron production 2,521 2,379 6.0 9,344 10,013 - 6.7
Finished products sales, 2,933 2,617 12.1 10,268 11,001 - 6.7
including:
Semi-finished products 0 0 - 20 0 -
Long products 297 349 - 14.7 1,275 1,352 - 5.7
Flat hot-rolled products 1,505 1,112 35.4 4,542 4,876 - 6.8
Premium products, including: 1,131 1,156 - 2.2 4,431 4,773 - 7.2
Thick plate (Mill 5000) 202 195 3.2 841 1,036 - 18.8
Flat cold-rolled products 226 237 - 4.5 899 1,003 - 10.4
Downstream products, including: 703 725 - 3.0 2,692 2,735 - 1.6
Tinplate 38 44 - 15.2 168 141 19.7
Galvanised steel 298 321 - 7.3 1,195 1,257 - 4.9
Polymer-coated steel 150 159 - 5.9 536 522 2.7
Band 42 29 42.6 130 120 9.0
Formed section 36 20 77.8 122 167 - 26.7
Pipe 24 28 - 14.4 83 57 47.1
Metalware 111 109 1.9 418 416 0.4
Other metal products 6 14 - 56.8 38 56 - 31.3
Share of premium products 38.5% 44.2% 43.2% 43.4%
+ 12.1% Q-o-Q
sales of
finished
products
- 14.7% Q-o-Q
sales of long
products
The increase in the sales volume of finished products in Q4 2020 by 12.1% q-o-q to 2,933 thousand tonnes
was due to the production ramp-up of Hot-Rolling Mill 2500 after its scheduled reconstruction and a high
demand for steel in global markets. The 6.7% decrease in product sales y-o-y to 10,268 thousand tonnes
was driven by long scheduled reconstruction of Hot-Rolling Mill 2500 and a worsening market environment
+ 35.4% Q-o-Q on the back of the coronavirus pandemic.
sales of
hot-rolled
products Sales of long products in Q4 2020 were down by 14.7% q-o-q to 297 thousand tonnes due to a high base in
the previous quarter and the seasonal decline in demand. Year-on-year, sales were down 5.7% to 1,275
thousand tonnes in Q4 2020, reflecting the slowdown in business activity.
The volume of sales of hot-rolled products in Q4 2020 increased by 35.4% q-o-q to 1,505 thousand tonnes.
This was due to the production ramp-up of Hot-Rolling Mill 2500 after its scheduled reconstruction,
- 2.2% Q-o-Q combined with a growing demand for steel in global markets. Year-on-year, sales of hot-rolled products
dropped by 6.8% to 4,542 thousand tonnes in 12M 2020, affected by scheduled reconstruction of
sales of Hot-Rolling Mill 2500.
premium
products In Q4 2020, sales of premium products were down by 2.2% to 1,131 thousand tonnes, and their share of
total sales reached 38.5%, reflecting the growing share of hot-rolled products. Year-on-year, sales of
premium products were down 7.2% to 4,431 thousand tonnes in 2020, while their share of total sales
slipped slightly to 43.2%. The major drivers of the change were a decline in sales of Mill 5000 thick
plate and the slowdown in business activity.
+ 3.2% Q-o-Q The 3.2% increase in sales volumes of Mill 5000 products q-o-q to 202 thousand tonnes was due to the
growth in orders from pipe manufacturers. The 18.8% y-o-y decline in Mill 5000 thick plate sales to 841
sales of Mill thousand tonnes in 12M 2020 was due to changes in order mix amid a 100% capacity utilisation rate.
5000 products
Sales of cold-rolled products in Q4 2020 were down by 4.5% q-o-q to 226 thousand tonnes, due to a more
complex product mix. Year-on-year, sales were down 10.4% to 899 thousand tonnes in 12M 2020, due to the
slowdown in business activity along with an accident at the reverse Cold-Rolling Mill 1700 in February
2020.
- 4.5% Q-o-Q
In Q4 2020, tinplate sales decreased by 15.2% to 38 thousand tonnes due to an equipment overhaul. The
sales of 19.7% y-o-y growth in tinplate sales in 2020 to 168 thousand tonnes reflects a higher demand from the
cold-rolled food industry.
products
The decrease in the sales of galvanised steel in Q4 2020 by 7.3% q-o-q to 298 thousand tonnes was due to
a higher base in Q3 and a more complex product mix. Year-on-year, sales declined by 4.9% to 1,195
- 15.2% Q-o-Q thousand tonnes in 12M 2020.
sales of In Q4 2020, sales of polymer-coated steel reduced by 5.9% q-o-q to 150 thousand tonnes, driven by an
tinplate equipment overhaul. Year-on-year, sales of polymer-coated steel grew by 2.7% to 536 thousand tonnes in
2020, driven by a year-on-year growth in pent-up demand in Q4 2020.
- 7.3% Q-o-Q
sales of
galvanised
steel
- 5.9% Q-o-Q
sales of
polymer-coated
steel
STEEL SEGMENT TURKEY
thousand tonnes Q4 2020 Q3 2020 % 12M 2020 12M 2019 %
Finished products sales, including: 220 200 10.1 741 721 2.8
Flat hot-rolled products 7 5 34.1 19 16 23.8
Premium products, including: 213 194 9.4 721 705 2,4
Flat cold-rolled products - - - - 4 -
Downstream products, including: 213 194 9.4 721 701 3.0
Galvanised steel 163 133 21.8 540 556 - 2.9
Polymer-coated steel 50 61 - 17.9 181 144 25.5
Share of premium products 96.8% 97.4% 97.4% 97.8%
Intersegment sales from Steel segment Russia 108 75 43.8 255 406 - 37.3
+ 10.1% Q-o-Q
sales of The Turkish steel segment's sales of finished products in Q4 2020 were up 10.1% q-o-q at 220 thousand
finished tonnes, reflecting a growing demand from Turkish and European consumers, driven by a limited supply in
products the market and the replenishment of inventories. In Q4 2020, the Turkish steel segment continued its
sales diversification strategy and almost doubled its galvanised steel exports to 97 thousand tonnes.
The increase in 2020 sales by 2.8% y-o-y to 741 thousand tonnes reflects the product portfolio
diversification strategy of the Turkish steel segment and is linked to the significant growth in
polymer-coated steel sales volumes by 25.5% y-o-y to 181 thousand tonnes.
COAL MINING SEGMENT
thousand tonnes Q4 2020 Q3 2020 % 12M 2020 12M 2019 %
Coking coal mining 1,246 965 29.1 4,354 4,811 - 9.5
Coking coal processing 1,404 1,242 13.1 5,291 4,710 12.3
Mined 1,208 1,149 5.2 4,777 4,438 7.6
Purchased 159 93 69.9 477 258 85.1
Toll 37 - - 37 14 166.2
Coking coal concentrate 837 721 16.0 3,059 2,614 17.0
+ 29.1% Q-o-Q
coking coal
production
Coking coal production in Q4 2020 amounted to 1,246 thousand tonnes, an increase of 29.1% q-o-q, after
the decommissioning of an underperforming coal face and the launch of a new one. Year-on-year, coking
coal production was down 9.5% to 4,354 thousand tonnes in 2020, due to the challenging geological
conditions at the Chertinskaya-Koksovaya mine and the suspension of mine operations following an accident
in September.
+ 16.0% Q-o-Q
Coking coal concentrate production in Q4 2020 grew by 16.0% q-o-q to 837 thousand tonnes, driven by
COKING COAL higher coking coal production. The 17.0% y-o-y growth in coal concentrate output to 3,059 thousand tonnes
CONCENTRATE in 2020 was driven by the completion of a beneficiation plant upgrade, which took place throughout 2019,
PRODUCTION as well as the increased processing of purchased coals.
MMK GROUP'S
SUSTAINABILITY PERFORMANCE (ESG)
- In Q3, MMK Group established its ESG department. The department is responsible for all stakeholder
communications as well as the development and execution of the Group's sustainability strategy.
- On 8 July 2020, MMK published a corporate Sustainability Report prepared under Global Reporting
Initiative (GRI) standards. The publication of this Report reflects MMK's commitment to its mission
HIGHLIGHTS and core principles of sustainable development, including the achievement of the UN's Sustainable
Development Goals.
- The newly-reconstructed Blast Furnace No. 2, with its advanced dust exhausting units at cast and
stock houses, was put into operation, which will significantly reduce future dust emissions.
- In February 2020, an appraisal audit was successfully conducted for compliance with the international
standard ISO 45001:2018.
Q4 2020 Q3 2020 % 12M 2020 12M 2019 %
LTIFR 0.53 0.68 - 22.1 0.66 0.89 - 25.8
Gross air emissions, thousand tonnes 54.6 45.4 20.3 177.4 197.0 - 9.9
Specific air emissions, kg/tonne 17.40 17.68 - 1.6 17.15 17.98 - 4.6
- 25.8% Y-o-Y
In 2020, lost-time-injury frequency rate (LTIFR) decreased year-on-year by 25.8% to 0.66, reflecting a
ltifr decrease in the number of accidents due to the implementation of measures aimed at improving the
production safety culture and eliminating the root causes of accidents.
- 4.6% Y-o-Y
SPECIFIC AIR
EMISSIONS Specific air emissions in 12M 2020 were down 4.6% y-o-y to 17.15 kg per tonne, driven by the construction
and launch of Sinter Plant No. 5 in mid-2019, which boasts an advanced gas-cleaning system, coupled with
the subsequent decommissioning of Sinter Plant No. 4.
In Q4 2020, specific air emissions decreased by 1.6% q-o-q to 17.4 kg/tonne on the back of higher share
of EAF steel in the total steel output.
COVID-19
RESPONSE
- The COVID-19 response centre established at MMK and led by the CEO has continued to operate. In line
with all the measures introduced in spring, office employees work remotely, the number of personnel
at production sites is reduced, and shifts are separated by pauses.
- The Group continuously monitors the situation and takes all necessary steps to prevent the spread and
reduce the risk of coronavirus infection.
- The stable demand in the domestic and international markets will support sales in Q1 2021. The
premium product capacity utilisation rate will remain at 100%.
- The major increase in metallurgical raw material prices and positive dynamics of global prices for
metal products will support the growth of prices for MMK Group's metal products in Q1 2021.
OUTLOOK
- CAPEX for Q1 2021 is expected to grow q-o-q, in line with the implementation schedule for projects
pursued under the Group's strategy.
- Operational excellence initiatives under the updated strategic initiatives will further boost the
Group's profitability in Q1 2021.
ABOUT MMK
MMK is one of the world's largest steel producers and a leading Russian metals company.
The Group'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 Subscribe to our official MMK
rolled steel. MMK turns out a broad range of steel products, with a predominant share of channel on Telegram to be the
high-value-added products. In 2019, MMK produced 12.5 mln tonnes of crude steel and 11.3 first to know about key MMK
mln tonnes of commercial steel products. news.
MMK is an industry leader in terms of production costs and margins. Group revenue in 2019
totalled USD 7,566 mln, with an EBITDA of USD 1,797 mln. MMK boasts the industry's lowest
debt burden. Net debt/EBITDA ratio was -0.13? at the end of 2019. The Group's
investment-grade rating is confirmed by the leading global rating agencies Fitch, Moody's
and S&P.
MMK's ordinary shares are traded on the Moscow Exchange, while its depositary receipts
are traded on the London Stock Exchange. Free float amounts to 15.7%.
KEY UPCOMING EVENTS IN 2021
Veronika Kryachko
+7 915 380 6266 kryachko.vs@mmk.ru Financial calendar
ESG DEPARTMENT 27 January Video conference for retail investors, Finam
Yaroslava Vrubel 2 February Q4 and 12M 2020 IFRS financials
+7 982 282 9682
vrubel.ys@mmk.ru 10 February Citi virtual Russia Credit Investor Day
25 February Video conference for retail investors, Smart-lab Dmitry Kuchumov +7 985 219 2874 kuchumov.do@mmk.ru Oleg Egorov +7 903 971 8837 egorov.oa@mmk.ru -----------------------------------------------------------------------------------------------------------------------
ISIN: US5591892048
Category Code: TST
TIDM: MMK
LEI Code: 253400XSJ4C01YMCXG44
Sequence No.: 92233
EQS News ID: 1163163
End of Announcement EQS News Service
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January 26, 2021 01:55 ET (06:55 GMT)
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