DJ PJSC Magnitogorsk Iron and Steel Works: MMK Group Trading Update for Q3 and 9M 2021
PJSC Magnitogorsk Iron and Steel Works (MMK) PJSC Magnitogorsk Iron and Steel Works: MMK Group Trading Update for Q3 and 9M 2021 13-Oct-2021 / 09:00 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 Q3 and 9m of the world's largest steel producers, is pleased to announce its Trading Update for Q3 and 9M
2021 2021.
13 october 2021
Magnitogorsk, Russia
-- Pig iron output decreased slightly, by 0.6% quarter-on-quarter (q-o-q), to 2,624 thousand
tonnes.
-- Steel output remained flat quarter-on-quarter at 3,390 thousand tonnes, reflecting
favourable market conditions and the launch of the electric arc furnace facility at the Turkish
asset.
HIGHLIGHTS
Q3 2021 -- MMK Group's sales of steel products totalled 2,761 thousand tonnes, down 16.8% q-o-q,
driven by an increase in exports with longer delivery lead times.
VS Q2 2021
-- Sales of the Group's premium products were down 12.1% to 1,224 thousand tonnes, driven by
the scheduled overhaul of Mill 5000 and growth in exports of cold-rolled and galvanised steel with
longer delivery lead times.
-- MMK Coal's coal concentrate production moderately declined quarter-on-quarter to 867
thousand tonnes.
HIGHLIGHTS
9M 2021 -- Pig iron output increased by 14.8% year-on-year (y-o-y) to 7,836 thousand tonnes as blast
furnace operations were not being overhauled during this period.
VS 9M 2020
-- Steel output increased by 22.1% y-o-y to 10,091 thousand tonnes, 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 16.5% y-o-y to 8,985 thousand tonnes,
driven by favourable market conditions and the high utilisation rate of Mill 2500 after its
modernisation.
-- Sales of premium products slightly decreased year-on-year to 3,770 thousand tonnes on the
back of the scheduled overhaul of Mill 5000.
-- Production of coal concentrate increased by 15.1% y-o-y to 2,557 thousand tonnes, driven
by stronger demand from MMK amid favourable market conditions.
Global steel products market: In Q3 2021, global steel supply continued to grow while consumer demand
slackened to moderate. Prices for flat products in the Black Sea region have begun to retrace. In July
and August, China's steel output decreased in line with the government's plans to keep output flat
year-on-year, with the lower steel supply from this country benefitting global competition.
Russian steel products market: In Russia, prices in the spot market for rolled steel were slipping quite
fast throughout the third quarter, mainly due to a drop in exports amid the introduction of temporary
export duties from August until the year-end and due to a slowdown in business activity at the domestic
market.
Global iron ore market: In the third quarter, the 62% Fe index halved to USD 100-120 per tonne CFR China.
Caps on steel output introduced in China this year drove a year-on-year decrease in output by close to 10
million tonnes a month in 2H 2021, creating a glut in the previously undersupplied spot market for iron
ore while also undermining the outlook for raw material demand until at least December 2021.
MARKET Russian iron ore market: In the third quarter, demand for raw materials in Russia slightly weakened as
OVERVIEW the temporary duties on Russian steel products led to lower capacity utilisation by some steel mills.
Meanwhile, exports of quality iron ore from Russia (blast furnace pellets and direct reduced iron
pellets) to international markets remained strong, with Russian exporters able to sell in large volumes
in these segments.
Global coking coal market: In the third quarter, spot coking coal prices grew rapidly, driven by even
more pronounced shortages of premium grades in China and a deteriorating lack of raw materials for
consumers from other countries. Almost all coking coal exporters except Russia faced a range of problems
with production, processing and logistics. Due to these shortages, indices for most coal grades almost
doubled during the third quarter.
Russian coking coal market: Driven by the global market, Russian prices grew 50%-70% in the third
quarter, but the effect of the global price rise is not over yet, and domestic prices are expected to hit
record highs. In the fourth quarter, the price growth may prove even stronger amid the competing trends
in coal and rolled steel pricing.
Russian metal scrap market: The downward trend in scrap prices dominated in the Russian market in the
third quarter, following the trends in regional steel product prices. As major Russian mills have
generally completed their stockpiling of raw materials for the winter, scrap prices are expected to
continue declining in the fourth quarter.
MMK GROUP'S CONSOLIDATED RESULTS
thousand tonnes Q3 2021 Q2 2021 % 9M 2021 9M 2020 % Crude steel production 3,390 3,401 - 0.3 10,091 8,263 22.1 Steel segment Russia 3,331 3,401 - 2.1 10,033 8,263 21.4 Steel segment Turkey 59 - - 59 - - Pig iron production 2,624 2,640 - 0.6 7,836 6,823 14.8 Coal concentrate production 867 874 - 0.8 2,557 2,222 15.1 Iron ore production 802 790 1.5 2,222 2,255 - 1.5 Finished products sales, 2,761 3,320 - 16.8 8,985 7,710 16.5 including: Slabs and billets 45 74 - 39.3 172 20 774.6 Long products 249 316 - 21.4 834 977 - 14.7 Flat hot-rolled products 1,255 1,538 - 18.4 4,220 2,913 44.9 Premium products, including: 1,224 1,392 - 12.1 3,770 3,800 - 0.8 Thick plate (Mill 5000) 164 251 - 35.0 580 639 - 9.3 Flat cold-rolled products 186 203 - 8.5 573 663 - 13.6 Downstream products, including: 875 938 - 6.7 2,617 2,498 4.8 Tinplate 42 43 - 2.1 129 131 - 1.3 Galvanised steel 514 538 - 4.5 1,490 1,275 16.9 Polymer-coated steel 131 158 - 17.1 439 517 - 15.1 Band 30 35 - 13.7 100 89 12.9 Formed section 21 17 22.3 64 87 - 25.8 Pipe 14 24 - 41.1 51 59 - 13.6 Metalware 109 118 - 7.8 333 307 8.5 Other metal products 2 4 - 48.2 10 33 - 68.9 Share of premium products 44.3% 41.9% 42.0% 49.3%
CONSOLIDATED PRICES
FOR METAL PRODUCTS
USD/tonne Q3 2021 Q2 2021 % 9M 2021 9M 2020 %
Average price per tonne: 1,057 944 12.0 904 551 64.1
Slabs and billets 612 626 - 2.2 604 255 136.9
Long products 845 762 10.9 745 465 60.2
Flat hot-rolled products 942 880 7.0 817 462 76.8
Premium products, including: 1,237 1,073 15.3 1,052 643 63.6
Thick plate (Mill 5000) 918 746 23.1 772 596 29.5
Flat cold-rolled products 1,088 989 10.0 938 553 69.6
Downstream products, including: 1,329 1,179 12.7 1,139 678 68.0
Tinplate 1,109 849 30.6 897 722 24.2
Galvanised steel 1,356 1,198 13.2 1,151 655 75.7
Polymer-coated steel 1,605 1,482 8.3 1,395 786 77.5
Band 1,207 1,028 17.4 1,000 610 63.9
Formed section 1,156 1,149 0.6 1,038 675 53.8
Pipe 1,004 969 3.6 915 514 78.0
Metalware 1,058 893 18.5 926 629 47.2
Other metal products 1,763 1,426 23.6 1,449 695 108.5
+ 12.0% Q-o-Q
Average selling prices for Q3 2021 grew by 12.0% q-o-q to USD 1,057 per tonne amid the ongoing upward
AVERAGE trend in global prices for metal products. Year-on-year, prices grew by 64.1% to USD 904 per tonne,
SELLING PRICE driven by favourable market dynamics and due to last year's low base.
MMK GROUP'S PERFORMANCE
ACROSS CORE SEGMENTS
STEEL SEGMENT RUSSIA
thousand tonnes Q3 2021 Q2 2021 % 9M 2021 9M 2020 %
Crude steel production 3,331 3,401 - 2.1 10,033 8,263 21.4
Pig iron production 2,624 2,640 - 0.6 7,836 6,823 14.8
Finished products sales, 2,692 3,288 - 18.1 8,833 7,336 20.4
including:
Slabs and billets 45 74 - 39.3 172 20 774.6
Long products 249 316 - 21.4 834 977 - 14.7
Flat hot-rolled products 1,396 1,721 - 18.9 4,687 3,038 54.3
Premium products, including: 1,014 1,177 - 14.8 3,141 3,301 - 4.9
Thick plate (Mill 5000) 164 251 - 35.0 580 639 - 9.3
Flat cold-rolled products 199 203 - 2.1 586 673 - 13.0
Downstream products, including: 641 723 - 11.3 1,975 1,989 - 0.7
Tinplate 42 43 - 2.1 129 131 - 1.3
Galvanised steel 325 350 - 7.3 945 897 5.4
Polymer-coated steel 97 131 - 25.6 353 386 - 8.5
Band 30 35 - 13.7 100 89 12.9
Formed section 21 17 22.3 64 87 - 25.8
Pipe 14 24 - 41.1 51 59 - 13.6
Metalware 109 118 - 7.8 324 307 5.6
Other metal products 2 4 - 49.4 8 32 - 76.1
Share of premium products 37.3% 35.8% 35.6% 45.0%
- 18.1% Q-o-Q
sales of Sales of finished steel products in Q3 2021 were down 18.1% q-o-q to 2,692 tonnes, due to the increase
finished in exports with longer delivery lead times. The 20.4% y-o-y increase in sales to 8,833 thousand tonnes
products in Q3 2021 was due to the completion of Hot-Rolling Mill 2500's modernisation.
- 21.4% Q-o-Q
Sales of long products in Q3 2021 were down 21.4% q-o-q to 249 thousand tonnes reflecting a slowdown in
sales of long business activity and replenishment of inventories. Year-on-year, sales decreased by 14.7% to 834
products thousand tonnes amidst scheduled repairs of rolling equipment.
- 18.9% Q-o-Q
Sales of hot-rolled products decreased 18.9% q-o-q in Q3 2021 to 1,396 thousand tonnes, due to the
sales of increase in exports with longer delivery lead times. The 54.3% y-o-y increase in sales for 9M 2021 to
hot-rolled 4,687 thousand tonnes was driven by the production growth at Hot-Rolling Mill 2500 following its
products modernisation.
- 14.8% Q-o-Q
Sales of premium products in Q3 2021 decreased by 14.8% q-o-q to 1,014 thousand tonnes due to the
sales of increase in exports with longer delivery lead times. The share of premium products grew to 37.3% of the
premium sales portfolio. Year-on-year, sales decreased by 4.9% to 3,141 thousand tonnes as inventories were
products being replenished.
- 35.0% Q-o-Q Sales volumes of thick plates from Mill 5000 were down 35.0% q-o-q to 164 thousand tonnes, held back by
the scheduled overhaul during the quarter. Y-o-y sales for 9M 2021 fell 9.3% to 580 thousand tonnes,
sales of Mill following a change in the order mix and equipment repairs.
5000 products
- 2.1% Q-o-Q
Sales of cold-rolled products in Q3 2021 were down by 2.1% q-o-q to 199 thousand tonnes, due to an
sales of increase in exports. The 13.0% y-o-y decrease in sales for 9M 2021 to 586 thousand tonnes was due to
cold-rolled higher sales of coated steel amid higher margins and the replenishment of inventories.
products
- 2.1% Q-o-Q Sales of tinplate in Q3 2021 decreased by 2.1% q-o-q to 42 thousand tonnes amid ongoing highs in
equipment utilisation. Sales of tinplate for 9M 2021 decreased slightly year-on-year to 129 thousand
sales of tonnes.
tinplate
- 7.3% Q-o-Q
sales of The decrease in the sales of galvanised steel in Q3 2021 by 7.3% q-o-q to 325 thousand tonnes was due to
galvanised the increase in exports with longer delivery lead times. For 9M 2021, sales increased by 5.4% y-o-y to
steel 945 thousand tonnes, supported by favourable market conditions.
- 25.6% Q-o-Q
Sales of polymer-coated steel decreased by 25.6% q-o-q to 97 thousand tonnes, reflecting last quarter's
SALES OF high base and slowdown in the business activity of major consumers. Year-on-year, sales were down 8.5%
POLYMER-COATED to 353 thousand tonnes, due to the increase in sales of galvanised steel promising higher margins.
STEEL
STEEL SEGMENT TURKEY
thousand tonnes Q3 2021 Q2 2021 % 9M 2021 9M 2020 %
Crude steel production 59 - - 59 - -
Finished products sales, 249 221 12.9 665 522 27.7
including:
Flat hot-rolled products 26 6 359.0 35 12 181.6
Premium products, including: 223 215 3.6 631 509 24.0
Flat cold-rolled products - - - - - -
Downstream products, including: 223 215 3.6 631 509 24.0
Galvanised steel 189 187 0.8 545 378 44.1
Polymer-coated steel 34 27 23.2 86 131 - 34.5
Share of premium products 89.4% 97.4% 94.8% 97.6%
Intersegment sales from Steel segment Russia 180 189 - 4.6 514 147 249.3
+ 12.9% Q-o-Q
SALES OF The sales of finished products in the Turkish steel segment in Q3 2021 were up 12.9% q-o-q to 249
FINISHED thousand tonnes, reflecting the favourable market conditions and the launch of the hot-rolling complex in
PRODUCTS July. At the same time, exports remained high and exceeded domestic sales in Turkey.
Sales were up 27.7% y-o-y to 665 thousand tonnes driven by the release of pent-up demand that built up
throughout the pandemic and the lockdown restrictions of 2020.
COAL MINING SEGMENT
thousand tonnes Q3 2021 Q2 2021 % 9M 2021 9M 2020 %
Coking coal mining 1,232 1,098 12.3 3,612 3,168 14.0
Coking coal processing 1,483 1,496 - 0.9 4,336 3,886 11.6
Mined 1,206 1,068 12.9 3,452 3,568 - 3.3
Purchased 212 358 - 40.8 683 318 114.6
Toll 66 70 - 6.6 201 - -
Coking coal concentrate 867 874 - 0.8 2,557 2,222 15
+ 12.3% Q-o-Q Coking coal production in Q3 2021 amounted to 1,232 thousand tonnes, up 12.3% y-o-y, due to the
completion of face transfer operations at the Kostromovskaya mine. Coking coal production increased by
COKING COAL 14.0% y-o-y to 3,612 thousand tonnes as MMK's demand for concentrate grew.
PRODUCTION
- 0.8% Q-o-Q
Coking coal concentrate production in Q3 2021 slightly increased quarter-on-quarter to 867 thousand
COKING COAL tonnes. Coal concentrate production was up 15.1% y-o-y to 2,557 thousand tonnes amid higher demand
CONCENTRATE from MMK.
PRODUCTION
MMK GROUP'S
SUSTAINABILITY PERFORMANCE (ESG)
HIGHLIGHTS -- In August 2021, MMK's sustainability report made it into the top five among global
steelmakers. The ESG Reporting Awards 2021 by ESG Investing recognised MMK Group's non-financial
reporting among the world's best in the Metals & Mining category.
-- On 19 August 2021, MMK published its full ESG Data Pack affirming its commitment to
openness and transparency in engagements with all external communities, from buyers and suppliers to
investors, authorities, employees and other stakeholders.
-- On 16 September 2021, MMK and SMS group GmbH signed a Memorandum of Understanding that
states both companies' intention to cooperate in order to reduce - potentially to zero - CO2
emissions.
Q3 2021 Q2 2021 % 9M 2021 9M 2020 %
LTIFR 0.61 1.16 - 47.4 0.98 0.67 46.3
Gross air emissions, thousand tonnes 47.2 46.6 1.3 141.4 122.8 15.1
Specific air emissions, kg/tonne 14.2 13.7 3.4 14.1 14.9 - 5.1
+ 46.3% Y-o-Y
ltifr The LTIFR for 9M 2021 increased by 46.3% y-o-y to 0.98, reflecting an increase in the number of
ice-related accidents amidst more abrupt temperature changes in early 2021 as compared to 2020. The Group
continues to implement initiatives to address the root causes of accidents and improve the production
safety culture.
Specific air emissions for 9M 2021 decreased by 5.1% y-o-y to 14.1 kg per tonne, driven by an increase in
- 5.1% Y-o-Y the share of scrap in the charge on the back of increased steel output by the EAF Shop.
SPECIFIC AIR Specific air emissions increased by 3.4% to 14.2 kg per tonne due to an increase in sinter production as
EMISSIONS no equipment repairs were carried out during the quarter.
-- A retracement started in the global market, which, coupled with the seasonal business
slowdown in Russia, will exert pressure on the Group's sales in the fourth quarter. However, the
increase in output by the Turkish asset will support sales.
-- High utilisation of equipment that manufactures premium products will be beneficial for the
Group's sales portfolio, including an increase in capacity utilisation rate of Mill 5000 amid higher
demand from pipe industry.
OUTLOOK
-- CAPEX for Q4 2021 is expected to grow 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 Q4 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
??K 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 20.2%.
KEY UPCOMING EVENTS IN 2021
Veronika Kryachko
+7 915 380 6266 Financial calendar
kryachko.vs@mmk.ru
25 October Q3 and 9M 2021 IFRS financials
26-28 October Non-deal roadshow (NDR), online
ESG DEPARTMENT Yaroslava Vrubel +7 982 282 9682 vrubel.ys@mmk.ru COMMUNICATIONS DEPARTMENT Dmitry Kuchumov +7 985 219 2874 kuchumov.do@mmk.ru Oleg Egorov +7 903 971 8837 egorov.oa@mmk.ru
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ISIN: US5591892048 Category Code: TST TIDM: MMK LEI Code: 253400XSJ4C01YMCXG44 Sequence No.: 124185 EQS News ID: 1240350 End of Announcement EQS News Service =------------------------------------------------------------------------------------
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October 13, 2021 03:00 ET (07:00 GMT)
