7 Dec 2009 19:49

NLMK expects higher Q4 costs due to scrap, coal prices, stronger ruble

MOSCOW. Dec 7 (Interfax) - Novolipetsk Steel (NLMK) expects production costs to rise in Q4 2009 due to higher prices for scrap metal and coal and the stronger ruble, the steel maker's spokesman, Anton Bazulev, said during a conference call.

"9M 2009 production costs (excluding depreciation and amortization) amounted to $2.673 billion (-41% year-on-year). The decline in expenses was mostly attributable to lower raw material prices from third parties as well as to cost reduction measures that were partially offset by the inventories accumulated in high pricing environment of the last year," NLMK said in an earnings report.

"Q3 2009 production costs grew by $207 million (+26% quarter-on-quarter) while the sales volume increased by 37%. Our approach in planning for raw material purchases and higher utilization rates allowed us to maintain Q3 2009 production cost of 1 tonne of steel slightly below the previous quarter level decreasing it from $203 in Q2 2009 to around $199."