23 Aug 2023 12:09

MMK to produce 12 mln t of steel in 2023, expects record shipments

MOSCOW. Aug 23 (Interfax) - The Magnitogorsk Iron & Steel Works (MMK) expects to conclude this year with record shipments to the Russian market and other CIS countries and produce about 12 million tonnes of steel.

The group sold about 1 million tonnes per month in the second quarter and plans to maintain this pace in the third quarter, MMK investor relations manager Ilya Nechayev said on the Gazprombank Investments Telegram channel.

The company shipped about 800,000 tonnes of steel to the domestic market in the second quarter, compared to about 600,000-700,000 tonnes per month in 2019 and 2021, he said. Sales in CIS countries rose to 120,000-150,000 tonnes from 100,000-120,000 tonnes.

Nechayev said that MMK has historically had a substantial share of the Russian market and it has now "expanded sales to traditional clients, as well as on near abroad markets. The company has received orders from truck makers, including Kamaz, among others, he said.

"We saw the growth of industrial production and, basically, took advantage of it, concurrently expanding our client base, increasing shipments," Nechayev said.

It was reported earlier that MMK produced 3.06 million tonnes and 3.5 million tonnes of steel in the first and second quarters, respectively, and sold 2.8 million tonnes and 3.1 million tonnes.

Asked about the situation at the company's MMK Metalurji plant in Turkey, Nechayev said the macroeconomic situation in Turkey, high inflation, the depreciation of the local currency and decline in economic activity do not make it possible to make long-term forecasts, but the division's results this year will be "fairly modest."

He also said that MMK expects domestic prices for rolled steel in the third quarter to remain on par with the second quarter, when they recovered from the low of 45,000 rubles/tonne (FCA) seen in the first quarter. The price level will support the balance of demand and supply, as well as continued heavy spending, he said.

"We see strong demand in Russia and see an opportunity for steelmakers to meet this demand," Nechayev said.

"Pricing is also affected by costs. In the third quarter prices fell somewhat for coal concentrate, but iron ore products have no plans to drop in price and scrap traditionally has high prices. Given that the second and third quarters are traditionally the season for stockpiling winter reserves, scrap prices will also not fall in the near future. This affects steelmakers' cost side and also supports prices for metal in order to maintain their profitability," Nechayev said.

Commenting on the previously announced construction of a blast furnace, which was scheduled to start in 2022-2023, he said the project is being postponed because the company is looking for a new equipment supplier following the imposition of sanctions. The pool of suppliers is now being determined. MMK chief executive Pavel Shilyaev said at the beginning of this year that capital expenditures on this project will exceed 90 billion rubles.

Nechayev also said that MMK is not currently discussing changes to its dividend policy, while the board of directors might revisit dividend payments at the end of the year at the earliest, as MMK shareholder and chairman Viktor Rashnikov said earlier.

MMK is also "generally intent on publication of financial statements" and does not rule out the possibility of disclosing them before the end of this year, he said.

"We realize that this situation is not normal and that investors need to understand what's happening with the company, how its finances are doing. At the moment we are assessing for ourselves the full range of what we would like to and what we can disclose," Nechayev said.