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MMK Group Trading Update for Q4 and FY 2019

Steel News - Published on Fri, 24 Jan 2020

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Russian steel maker Magnitogorsk Iron & Steel Works announced its Trading Update for Q4 and FY 2019. Pig iron output increased by 1.7% QoQ due to improved productivity of blast furnaces. Steel output was down by 3.9% QoQ due to the seasonal decline in demand. MMK Group’s total sales of finished products totalled 2,781 thousand tonnes, down 4.0% QoQ. FY 2019 HIGHLIGHTS - Pig iron output increased by 1.6% YoY. This was due to a reduction in the volume of maintenance work at blast furnace facilities compared to last year. Steel output was down by 1.6% YoY due to decreased demand for steel as a result of the reconstruction of Mill 2500. MMK Group’s total sales of finished products totalled 11,316 thousand tonnes, down 3.0% YoY

MARKET REVIEW - In the end of Q4 2019, there was a recovery of prices on the global market for hot- rolled steel amid an increase in consumer demand, with shipments being scheduled for early 2020. The improved export prices environment resulted in growth in spot prices for hot-rolled steel in Russia in January 2020. However, the growth rate was slower compared to the global market due to seasonal factors.

OUTLOOK - The Company expects a favourable pricing environment on the domestic market in Q1 2020. This should be supported by favourable pricing conditions on the Asian markets, as well as a significant increase in prices for rolled steel in Turkey as a result of higher prices for imported ferrous scrap, limited supply of hot-rolled steel in the Black Sea region and a number of other positive factors. The Company expects that prices for key raw materials in Q1 2020 will be similar to the end of 2019 levels, which should be supported by stabilization on the iron ore market following the 2019 peaks, as well as the supply surplus on the coal concentrate market. The Company’s management expects that the above-mentioned factors will have a positive impact on MMK Group’s performance in Q1 2020, despite seasonally weak demand, as well as reconstruction work at hot-rolling Mill 2500 which will be initiated in March 2020 in line with the current investment programme. The Company’s performance should be also supported by measures to increase operational efficiency and high capacity utilization of high-margin production units.

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Posted By : Rabi Wangkhem on Fri, 24 Jan 2020
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