DJ PJSC Magnitogorsk Iron and Steel Works: MMK Group Trading Update for Q2 and H1 2021
PJSC Magnitogorsk Iron and Steel Works (MMK)
PJSC Magnitogorsk Iron and Steel Works: MMK Group Trading Update for Q2 and H1 2021
14-Jul-2021 / 09:43 CET/CEST
Dissemination of a Regulatory Announcement that contains inside information according to REGULATION (EU) No 596/2014
(MAR), transmitted by EQS Group.
The issuer is solely responsible for the content of this announcement.
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MMK Group trading PJSC Magnitogorsk Iron & Steel Works ("MMK", or the "Group") (MICEX-RTS: MAGN; LSE: MMK), one
update for Q2 and H1 of the world's largest steel producers, is pleased to announce its Trading Update for Q2 and H1
2021 2021.
14 july 2021
Magnitogorsk, Russia
- Pig iron output increased by 2.6% quarter-on-quarter (q-o-q) to 2,640 thousand tonnes, driven by
the increase in productivity of blast furnaces amid continuing high steel demand.
- Steel output grew 3.1% q-o-q to 3,401 thousand tonnes, reflecting favourable market conditions.
HIGHLIGHTS
- MMK Group's sales of steel products totalled 3,320 thousand tonnes, up 14.3% q-o-q, driven by high
Q2 2021 steel demand.
VS Q1 2021
- Sales of the Group's premium products were up 20.6% to 1,392 thousand tonnes, driven by seasonal
growth in demand.
- MMK Coal's coal concentrate production totalled 874 thousand tonnes, up 7.3% q-o-q, due to stronger
procurement of ROM coals amid higher demand from MMK.
HIGHLIGHTS - Pig iron output increased by 17.3% year-on-year (y-o-y) to 5,213 thousand tonnes, as blast furnace
operations were not being overhauled over these six months.
H1 2021
VS H1 2020
- Steel output increased by 24.5% y-o-y, as no overhauls took place at converter facilities, as well
as the completion of Hot-Rolling Mill 2500's modernisation.
- MMK Group's sales of finished products increased by 25.3% y-o-y to 6,224 thousand tonnes driven by
favourable market conditions and the high utilisation rate of Hot-Rolling Mill 2500 after its
modernisation.
- Sales of premium products grew by 3.5% y-o-y to 2,546 thousand tonnes on the back of positive
market trends.
- Production of coal concentrate increased by 12.6% y-o-y to 1,690 thousand tonnes, driven by
stronger demand from MMK amid favourable market conditions.
Global steel products market: In Q2 2021, global steel was output steadily recovering after the drop of
2020. According to WorldSteel, 837.5 mln tonnes of steel were produced in the first five months of 2021,
up 14.5% y-o-y and up 9% compared to 2019.Demand for rolled steel in key world regions stayed higher than
supply, with prices steadily rising. In May, Chinese authorities hardened their rhetoric concerning high
prices in their domestic market for rolled steel, which led to a short price pullback.
Russian steel products market: In Russia, demand for rolled steel in Q2 2021 stayed high, supported by
the continuing recovery of the Russian economy after the recession of 2020. According to Metal Expert,
during the first five months of 2021, apparent steel use of rolled steel in Russia grew 6.5% y-o-y, with
May figures up as high as 35.9% y-o-y. The growing seasonal demand in the construction industry, ongoing
national projects and easing of pandemic-related restrictions were the key drivers for the Russian steel
products market in Q2 2021.
Global iron ore market: In the second quarter, the 62% Fe index hit a new all-time high amid a price
rally in global steel products markets. China's pig iron output grew at about 10% y-o-y, slightly
outpacing key commodity exporters' capacities. As a result, prices for steel products in China were
supported by already-high prices for iron ore at the end of the second quarter.
MARKET
OVERVIEW Russian iron ore market: In the second quarter, demand for raw materials remained relatively strong both
in the domestic and key export markets, while iron ore exports from Russia continued to grow in
traditional target markets, leaving domestic prices no other route than to follow global market trends
and increase rapidly.
Global coking coal market: Spot coal prices showed strong growth in the second quarter, reflecting the
rising prices on related raw materials and rolled products markets. Demand in the steel industries of
developed countries has approached pre-COVID levels, while the supply of raw materials for coking has not
increased for a number of reasons.
Russian coking coal market: Following the strong growth of early 2021, domestic prices increased only
slightly in the second quarter. Given the patterns of changes in coal prices, the dynamics that took
place in global indices in Q2 2021 will not affect Russian market prices until the next quarter.
Russian metal scrap market: In the second quarter scrap prices on the Russian market continued growing
during peak demand within the country, albeit fluctuating during the quarter. It is expected that the
market will be impacted by the new increase of scrap export duties from Russia and the adoption of export
duties for steel products.
MMK GROUP'S CONSOLIDATED RESULTS
thousand tonnes Q2 2021 Q1 2021 % H1 2021 H1 2020 % Crude steel production 3,401 3,300 3.1 6,701 5,381 24.5 Pig iron production 2,640 2,572 2.6 5,213 4,444 17.3 Coal concentrate production 874 815 7.3 1,690 1,501 12.6 Iron ore production 874 815 7,3 1 690 1 501 12,6 Finished products sales, 3,320 2,904 14.3 6,224 4,968 25.3 including: Slabs and billets 74 53 38.3 127 20 546.6 Long products 316 268 17.9 585 628 - 7.0 Flat hot-rolled products 1,538 1,428 7.7 2,966 1,861 59.4 Premium products, including: 1,392 1,154 20.6 2,546 2,459 3.5 Thick plate (Mill 5000) 251 165 52.8 416 444 - 6.3 Flat cold-rolled products 203 184 10.0 387 437 - 11.3 Downstream products, including: 938 805 16.5 1,743 1,578 10.4 Tinplate 43 43 0.0 87 86 0.4 Galvanised steel 538 439 22.5 976 821 19.0 Polymer-coated steel 158 150 5.0 308 297 3.8 Band 35 35 - 2.1 70 59 18.1 Formed section 17 26 - 31.7 43 67 - 35.6 Pipe 24 12 97.0 37 31 18.0 Metalware 118 97 21.2 215 198 8.6 Other metal products 4 2 148.8 6 19 - 68.4 Share of premium products 41.9% 39.7% 40.9% 49.5%
CONSOLIDATED PRICES
FOR METAL PRODUCTS
USD/tonne Q2 2021 Q1 2021 % H1 2021 H1 2020 %
Average price per tonne: 944 713 32.4 836 560 49.3
Slabs and billets 626 568 10.2 602 255 136.1
Long products 762 633 20.4 702 472 48.7
Flat hot-rolled products 880 638 37.9 764 475 60.8
Premium products, including: 1,073 832 29.0 964 648 48.8
Thick plate (Mill 5000) 746 667 11.8 714 615 16.1
Flat cold-rolled products 989 731 35.3 866 572 51.4
Downstream products, including: 1,179 889 32.6 1,045 679 53.9
Tinplate 849 736 15.4 792 736 7.6
Galvanised steel 1,198 853 40.4 1,043 641 62.7
Polymer-coated steel 1,482 1,121 32.2 1,306 808 61.6
Band 1,028 798 28.8 912 631 44.5
Formed section 1,149 863 33.1 979 706 38.7
Pipe 969 706 37.3 880 531 65.7
Metalware 893 820 8.9 860 649 32.5
Other metal products 1,426 1,100 29.6 1,332 682 95.3
+ 32.4% Q-o-Q
Average selling prices for Q2 2021 grew by 32.4% q-o-q to USD 944 per tonne, driven by an upward trend in
AVERAGE global prices for metal products amid continued global supply constraints. In H1 2021, prices grew by
SELLING PRICE 49.3% y-o-y to USD 836 per tonne, driven by favourable market dynamics amid last year's low base.
MMK GROUP'S PERFORMANCE
ACROSS CORE SEGMENTS
STEEL SEGMENT RUSSIA
thousand tonnes Q2 2021 Q1 2021 % H1 2021 H1 2020 %
Crude steel production 3,401 3,300 3.1 6,701 5,381 24.5
Pig iron production 2,640 2,572 2.6 5,213 4,444 17.3
Finished products sales, 3,288 2,853 15.3 6,141 4,719 30.1
including:
Slabs and billets 74 53 38.3 127 20 546.6
Long products 316 268 17.9 585 628 - 7.0
Flat hot-rolled products 1,721 1,570 9.6 3,291 1,926 70.9
Premium products, including: 1,177 961 22.5 2,138 2,145 - 0.3
Thick plate (Mill 5000) 251 165 52.8 416 444 - 6.3
Flat cold-rolled products 203 184 10.0 387 437 - 11.3
Downstream products, including: 723 612 18.1 1,335 1,264 5.6
Tinplate 43 43 0.0 87 86 0.4
Galvanised steel 350 270 29.5 621 576 7.7
Polymer-coated steel 131 126 3.9 256 227 12.9
Band 35 35 - 2.1 70 59 18.1
Formed section 17 26 - 31.7 43 67 - 35.6
Pipe 24 12 97.0 37 31 18.0
Metalware 118 97 21.2 215 198 8.6
Other metal products 4 2 148.8 6 19 - 68.4
Share of premium products 35.8% 33.7% 34.8% 45.4%
+ 15.3% Q-o-Q
sales of Sales of finished steel products in Q2 2021 increased by 15.3% q-o-q to 3,288 thousand tonnes, driven by
finished favourable market conditions. The 30.1% y-o-y increase in sales to 6,141 thousand tonnes in H1 2021 was
products due to the completion of Hot Rolling Mill 2500's modernisation.
+ 17.9% Q-o-Q
Sales of long products in Q2 2021 were up 17.9% q-o-q to 316 thousand tonnes reflecting the seasonal
sales of long growth in demand. Year-on-year, sales decreased by 7.0% to 585 thousand tonnes amidst scheduled repairs
products of rolling equipment.
+ 9.6% Q-o-Q
sales of Sales of hot-rolled products grew 9.6% q-o-q in Q2 2021 q-o-q to 1,721 thousand tonnes, coming on the
hot-rolled back of seasonal recovery in demand. Sales were up 70.9% y-o-y to 3,291 thousand tonnes, driven by the
products production growth at Hot-Rolling Mill 2500 following its modernisation.
+ 22.5% Q-o-Q
sales of Sales of premium products in Q2 2021 increased by 22.5% q-o-q to 1,177 thousand tonnes following the
premium reconstruction of Reverse Cold-Rolling Mill 1700. The share of premium products grew to 35.8% of the
products sales portfolio. Year-on-year, sales decreased slightly to 2,138 thousand tonnes.
+ 52.8% Q-o-Q Sales volumes of thick plates from Mill 5000 were up 52.8% q-o-q to 251 thousand tonnes, driven by the
growth in orders from pipe manufacturers. Y-o-Y sales fell 6.3% to 416 thousand tonnes, following a
sales of Mill change in the order mix.
5000 products
+ 10.0% Q-o-Q
Sales of cold-rolled products in Q2 2021 were up 10.0% q-o-q to 203 thousand tonnes following the
sales of reconstruction of Reverse Cold-Rolling Mill 1700. Sales dropped 11.3% y-o-y to 387 thousand tonnes due
cold-rolled to higher sales of coated steel amid higher margins.
products
0.0%
Q-o-Q Sales of tinplate in Q2 2021 remained flat q-o-q at 43 thousand tonnes, reflecting full capacity
utilisation. Sales of tinplate increased slightly year-on-year to 87 thousand tonnes.
sales of
tinplate
+ 29.5% Q-o-Q
sales of The increase in the sales of galvanised steel in Q2 2021 by 29.5% q-o-q to 350 thousand tonnes was due
galvanised to seasonal growth in demand and higher equipment productivity. In H1 2021, sales increased by 7.7%
steel y-o-y to 621 thousand tonnes.
+ 3.9% Q-o-Q
Sales of polymer-coated steel increased by 3.9% q-o-q to 131 thousand tonnes due to seasonal factors.
SALES OF Year-on-year, sales were up 12.9% to 256 thousand tonnes, reflecting a low 2020 base amid the spread of
POLYMER-COATED the COVID-19 pandemic.
STEEL
STEEL SEGMENT TURKEY
thousand tonnes Q2 2021 Q1 2021 % H1 2021 H1 2020 %
Finished products sales, 221 196 12.7 416 322 29.5
including:
Flat hot-rolled products 6 3 103.8 9 7 17.5
Premium products, including: 215 193 11.4 408 314 29.8%
Flat cold-rolled products - - - - - -
Downstream products, including: 215 193 11.4 408 314 29.8%
Galvanised steel 187 168 11.4 356 244 45.5
Polymer-coated steel 27 25 10.9 52 70 - 25.7
Share of premium products 97.4% 98.5% 97.9% 97.7%
Intersegment sales from Steel segment Russia 189 145 30.0 334 72 362.1
+ 12.7% Q-o-Q
SALES OF The sales of finished products in the Turkish steel segment in Q2 2021 were up 12.7% q-o-q to 221
FINISHED thousand tonnes, reflecting the steadying of semi-finished hot-rolled stock shipments and favourable
PRODUCTS market conditions. At the same time, exports exceeded domestic sales in Turkey.
Sales were up 29.5% y-o-y, reflecting a low 2020 base amid the spread of the pandemic and lockdown
restrictions.
COAL MINING SEGMENT
thousand tonnes Q2 2021 Q1 2021 % H1 2021 H1 2020 %
Coking coal mining 1,098 1,282 - 14.4 2,380 2,181 9.1
Coking coal processing 1,496 1,356 10.3 2,853 2,644 7.9
Mined 1,068 1,177 - 9.2 2,246 2,419 - 7.2
Purchased 358 114 214.3 471 225 109.5
Toll 70 65 7.2 136 - -
Coking coal concentrate 874 815 7.3 1,690 1,501 12.6
- 14.4% Q-o-Q
Coking coal production in Q2 2021 amounted to 1,098 thousand tonnes, a decrease of 14.4% q-o-q, due to
COKING COAL face transfer operations at the Kostromovskaya mine. Coking coal production increased by 9.1% y-o-y to
PRODUCTION 2,380 thousand tonnes as MMK's demand for concentrate grew.
+ 7.3% Q-o-Q
Coking coal concentrate production in Q2 2021 was up 7.3% q-o-q due to stronger procurement of ROM
COKING COAL coals amid higher demand from MMK. Coal concentrate production was up 12.6% y-o-y to 1,690 thousand
CONCENTRATE tonnes amid higher demand from MMK.
PRODUCTION
MMK GROUP'S
SUSTAINABILITY PERFORMANCE (ESG)
- On 8 July 2021, BSI issued a Verification Certificate confirming the reliability of the Group's
statement on its greenhouse gas emissions. BSI carried out its verification to the latest revision of
HIGHLIGHTS ISO 14064-1:2018.
- In Q2 2021, MMK joined the Social Charter of Russian Business. The Social Charter of Russian Business
is a new format for assessing the joint contribution of a business and its partners to the country's
sustainability and social wellbeing.
Q2 2021 Q1 2021 % H1 2021 H1 2020 %
LTIFR 1.16 1.20 - 0.03 1.18 0.69 71.0
Gross air emissions, thousand tonnes 46.6 47.5 - 1.9 94.2 81.5 15.6
Specific air emissions, kg/tonne 13.7 14.4 - 4.9 14.0 15.1 - 7.3
+ 71.0% Y-o-Y The LTIFR for H1 2021 increased by 71% y-o-y to 1.18, reflecting an increase in the number of ice-related
accidents driven by lower temperatures in Q1 2021 compared to the previous year. The Group continues to
ltifr implement initiatives to address the root causes of accidents and improve the production safety culture.
- 7.3% Y-o-Y Specific air emissions in H1 2021 decreased by 7.3% y-o-y to 14.0 kg per tonne, driven by an increase in
the share of scrap in the charge on the back of increased EAF steel output.
SPECIFIC AIR
EMISSIONS Specific air emissions decreased by 4.9% q-o-q to 13.7 kg per tonne as a result of an increase in EAF
steel production.
- Seasonal recovery of demand in Russia and continued favourable conditions in global markets will
positively impact the Group's sales in Q3. Sales will be additionally supported by the start of hot
tests at the electric arc furnace facility, with a casting and rolling module at the Turkish asset.
- Completion of the reconstruction of Reverse Cold-Rolling Mill 1700 and 100% utilisation of premium
products equipment will positively impact the structure of the Group's sales portfolio.
OUTLOOK
- CAPEX for Q3 2021 is expected to decline q-o-q, in line with the implementation schedule for projects
pursued under the Group's strategy.
- Operational excellence measures implemented under MMK's updated strategic initiatives will further
boost the Group's profitability in Q3 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
rolled steel. MMK turns out a broad range of steel products, with a predominant share of
premium products. In 2020, MMK produced 11.6 mln tonnes of crude steel and sold 10.8 mln Subscribe to our official MMK
tonnes of commercial steel products. channel on Telegram to be the
first to know about key MMK
MMK is an industry leader in terms of production costs and margins. Group revenue in 2020 news.
totalled USD 6,395 mln, with an EBITDA of USD 1,492 mln. MMK boasts the industry's lowest
debt burden. Net debt/EBITDA ratio was -0.06? at the end of 2020. 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%.
INVESTOR RELATIONS DEPARTMENT
+7 915 380 6266 KEY UPCOMING EVENTS IN 2021
kryachko.vs@mmk.ru
Financial calendar
ESG DEPARTMENT
22 July Q2 and H1 2021 IFRS financials
Yaroslava Vrubel
+7 982 282 9682 Virtual conference for retail investors,
vrubel.ys@mmk.ru 27 July
VTB Capital
28-29 July Non-deal roadshow (NDR), online
COMMUNICATIONS DEPARTMENT Dmitry Kuchumov +7 985 219 2874 kuchumov.do@mmk.ru Oleg Egorov +7 903 971 8837 egorov.oa@mmk.ru -----------------------------------------------------------------------------------------------------------------------
ISIN: US5591892048
Category Code: IR
TIDM: MMK
LEI Code: 253400XSJ4C01YMCXG44
Sequence No.: 117389
EQS News ID: 1218517
End of Announcement EQS News Service
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(END) Dow Jones Newswires
July 14, 2021 03:43 ET (07:43 GMT)
