OJSC Magnitogorsk MMK MMK Group Trading Update for Q3 and First 9M 2012

  OJSC Magnitogorsk (MMK) - MMK Group Trading Update for Q3 and First 9M 2012

RNS Number : 0753P
OJSC Magnitogorsk Iron &Steel Works
19 October 2012




                                      

                                      

                                      

                                      

                                      

                       Magnitogorsk Iron & Steel Works



19 October 2012

          MMK Group Trading Update for Q3 and First 9 Months of 2012



MMK Group operational highlights



                    Production, thousand tonnes
          Products            Q3 '12 Q2 '12  %   9M '12 9M '11  %
MMK Group crude steel          3,357  3,294   2% 10,068  9,087  11%
MMK crude steel                3,187  3,012   6%  9,316  8,899   5%
MMK Metalurji crude steel        170    282 -40%    752    188   4x
MMK Group steel products       3,072  3,062 0.3%  9,154  8,299  10%
MMK steel products             2,858  2,776   3%  8,400  8,023   5%
MMK-Metiz steel products         129    142  -9%    380    362   5%
MMK Metalurji steel products     211    284 -26%    748    272 2.7x
 MMK Group HVA products  1,276  1,209   6%  3,668  3,035  21%
 MMK Group HVA products share    40%    39%         39%    37%
Belon coal concentrate           985    761  29%  2,521  2,334   8%
Iron ore                       1,021  1,107  -8%  3,176  3,680 -14%

§ MMK Group crude steel output in  9M 2012 amounted to 10,068 thousand  tonnes 
(11% higher y-o-y).

§ MMK  Group finished  steel products  output  in 9M  2012 amounted  to  9,154 
thousand tonnes (10% higher y-o-y).

§ MMK Group finished steel products output in Q3 2012 totalled 3,072  thousand 
tonnes (0.3% higher q-on-q).

§ MMK finished steel products output in Q3 2012 totalled 2,858 thousand tonnes
(3% higher q-on-q).

§ MMK-Metiz finished steel  products output in Q3  2012 totalled 129  thousand 
tonnes.

§ MMK-Metalurji  finished  steel  products  output in  Q3  2012  totalled  211 
thousand tonnes.

§ MMK Group  High-Value-Added (HVA) steel  products in 9M  2012 increased  21% 
y-o-y and reached 3,668 thousand tonnes. HVA production in Q3 2012 amounted to
1,276 thousand tonnes, up 6% q-o-q.

§ Coking coal concentrate output in 9M 2012 amounted to 2,521 thousand  tonnes 
(8% higher y-o-y).  In Q3  2012 coking  coal concentrate  output totalled  985 
thousand tonnes, up 29% q-o-q.

§ In-house  consumption of  iron ore  in 9M  2012 amounted  to 3,176  thousand 
tonnes (down 14% y-o-y).





[1] MMK Group is understood as OJSC MMK together with subsidiaries; OJSC MMK
is referred to as MMK


[2]MMK-Metiz products manufactured from products supplied by MMK are not
included in the finished products of MMK Group





Steel segment

ММК

                         Production, thousand tonnes
               Products                 Q3 '12 Q2 '12  %   9M '12 9M '11  %
Cast iron                                2,571  2,557   1%  7,607  7,219   5%
Crude steel                              3,187  3,012   6%  9,316  8,899   5%
Finished products output, incl.:         2,858  2,776   3%  8,400  8,023   5%
Slabs and billets                            1      1    -     47     56 -15%
Long products                              484    451   7%  1,336  1,127  19%
Flat hot-rolled products                 1,388  1,416  -2%  4,185  4,364  -4%
High value-added (HVA) products, incl.:    985    908   8%  2,832  2,476  14%
Thick plate (mill 5000)                    179    195  -8%    623    728 -14%
Flat cold-rolled products                  379    304  25%  1,000    725  38%
Downstream products, incl.:                426    409   4%  1,209  1,022  18%
                              Tin plate     40     33  21%    110    105   5%
                       Galvanized steel    177    144  23%    480    364  32%
                    Colour-coated steel     94     94   0%    253    196  29%
                                   Band     37     37  -1%    104     70  48%
                         Formed section     53     77 -31%    191    203  -6%
                                  Pipes     25     24   4%     72     39  83%
Shipments by market:
                       Domestic market*  2,237  2,162   3%  6,433  5,507  17%
                                 Export    621    614   1%  1,967  2,515 -22%
                             Average prices, USD
                                        Q3 '12 Q2 '12  %   9M '12 9M '11  %
Average price per tonne:
Slabs and billets                            -      -    -    505    555  -9%
Long products                              626    626   0%    633    699  -9%
Flat hot-rolled products                   545    590  -8%    578    668 -14%
High value-added (HVA) products, incl.:    848    896  -5%    879  1 008 -13%
Thick plate (mill 5000)                    900    916  -2%    917  1 112 -17%
Flat cold-rolled products                  650    712  -9%    694    795 -13%
Downstream products, incl.:              1,003  1,023  -2%  1,012  1,086  -7%
                              Tin plate  1,120  1,120   0%  1,112  1,154  -4%
                       Galvanized steel    972  1,018  -4%    991  1,026  -3%
                    Colour-coated steel  1,224  1,253  -2%  1,239  1,287  -4%
                                   Band    747    790  -6%    797  1 038 -23%
                         Formed section    922    905   2%    922    984  -6%
                                  Pipes    742    764  -3%    753    865 -13%
Average price per tonne, incl.:           663    696  -5%    688    777 -11%
                        Domestic sales*    712    744  -4%    742    855 -13%
                           Export sales    486    528  -8%    510    605 -16%

* includes CIS sales

§ Finished steel products output in Q3 2012 amounted to 2,858 thousand tonnes,
which is 3% more that in Q2  2012. Sales to the high-priority domestic  market 
increased by 3% in volume,  accounting for more than  78% of all shipments  in 
Q3.

§ In 9M 2012  production of high-value-added (HVA)  products increased by  14% 
from 9M 2011.  This growth  was largely  driven by  an increase  in output  of 
cold-rolled, galvanized and colour-coated steel products.

§ The volume of HVA  sales in Q3 2012 amounted  to 985 thousand tonnes, up  8% 
from Q2.

§ In Q3 2012 there were no sales of slabs to third parties.

§ Shipments  of long  steel products  in 9M  2012 amounted  to 1,336  thousand 
tonnes, which represents a 19% increase y-o-y. This growth was driven by  the 
recovery in demand for steel  from the construction industry. Furthermore,  in 
9M 2012 growth in long  product sales was also generated  by a 5% increase  in 
sales at the  Metiz division of  MMK Group -  MMK-Metiz, which processes  long 
steel products produced by MMK.

§ In Q3 2012 shipments of long steel products were up 7% q-o-q.

§ The volume of finished  products from Mill 5000 in  Q3 2012 decreased by  8% 
compared to Q2 2012 and amounted to  179 thousand tonnes. The lower volume  of 
shipments of flat hot-rolled products was a result of lower volumes of  orders 
from pipe makers due to the postponement of oil and gas projects.

§ The  production and  shipment  volume of  cold-rolled  products in  Q3  2012 
increased by 25% compared to  Q2 2012 due to the  launch of the Mill 2000  and 
also thanks  to growth  (more than  30%)  of shipments  of metal  products  to 
customers in the automotive sector.

§ The increase in shipments of galvanized steel and colour-coated products  in 
9M 2012 by 32% and 29% y-o-y, respectively, is related to the recovery of  the 
construction industry in Russia.

§ Thanks  to the  improvement in  product mix  in Q3  2012 and  the growth  in 
shipment volumes  and share  of  sales to  the  domestic market,  the  company 
succeeded in minimizing the effect of price deflation in export markets.



MMK-Metiz

                    Production, thousand tonnes
           Products             Q3 '12 Q2 '12  %   9M '12 9M '11 %
Finished steel products, incl.:    129    142  -9%    380    362 5%
        Products from MMK steel    126    140 -10%    374    358 4%

§ Production of finished  steel products at  MMK-Metiz in 9M  2012 grew by  5% 
y-o-y to reach 380 thousand tonnes. This growth is attributable to the general
recovery in sectors  of the  economy like construction  and metallurgy,  which 
contain main consumers of MMK-Metiz's.

§ Production of finished  steel products at MMK-Metiz  in Q3 2012 amounted  to 
129 thousand tonnes.



ММК Metalurji

                         Production, thousand tonnes
                Products                 Q3 '12 Q2 '12  %   9M '12 9M '11  %
Crude steel                                 170    282 -40%    752    188   4x
Finished products of ММК Metalurji,                    -26%           272
incl.:                                      211    284         748        2.7x
Flat cold-roll products                      49    125 -61%    293     72   4x
HVA products, incl.:                        161    159   1%    456    197 2.3x
                        Galvanized steel     60     81 -26%    217    115  89%
                     Colour-coated steel    101     79  28%    238     82 2.9x

§ Steel smelting in Q3  2012 totalled 170 thousand  tonnes, which is 40%  less 
than in Q2 2012.

§ The sale of  finished products from  MMK's operations in  Turkey in Q3  2012 
amounted to 211 thousand tonnes, which is 26% lower than in Q2 2012.

§ This decrease largely stemmed from the lower output of commercial hot-rolled
products, the production of which  is not economically sustainable in  current 
market conditions.

§ The 26%  q-o-q decrease  in galvanized  steel production  in Q3  2012 was  a 
result of an increase in the production of higher margin colour-coated steel.

§ Colour-coated steel production increased by 28% from Q2 2012 to Q3 2012 as a
result of the seasonal  resurgence of the construction  sector as well as  the 
implementation of a program to bring  the Turkish asset to a profitable  level 
through the production of HVA products.



Mining segment

COAL

Belon

                Production, thousand tonnes
       Products         Q3 '12 Q2 '12  %   9M '12 9M '11  %
Coking coal              1,610  1,226  31%  4,128  3,656 13%
                  Mined  1,258    753  67%  3,011  2,897  4%
              Purchased    352    473 -26%  1,117    759 47%
Coking coal concentrate    985    761  29%  2,521  2,334  8%

§ The  higher volume  of coking  coal mined  by MMK  (up 67%)  in Q3  2012  in 
comparison to  Q2  2012  was  related to  the  conclusion  of  scheduled  mine 
maintenance at the end of Q2 2012.

§ Production of coking  coal concentrate in Q3  2012 amounted to 985  thousand 
tonnes. This increase  in production by  29% in  comparison to Q2  2012 was  a 
result of the higher volume of MMK-mined coal in Q3 2012.

§ On the  whole in 2012,  despite the maintenance  work, production of  coking 
coal concentrate should remain at the same level seen in 2011.



Iron Ore

                         Production, thousand tonnes
                Products                 Q3 '12 Q2 '12  %   9M '12 9M '11  %
Iron ore (consumed at MMK), incl.:        1,021  1,107  -8%  3,176  3,680 -14%
 MMK iron ore base at Bakal*          91    139 -35%    335    369  -9%
 MMK iron ore base in                378    458 -17%  1,303  1,589 -18%
Magnitogorsk
 Slag processing                     553    511   8%  1,519  1,722 -12%

* since the end of Q2 2011 shipments from Sosnovsky iron ore field are
included in shipments from MMK iron ore base in Magnitogorsk

§ Captive iron ore consumption in Q3  2012 decreased 8% q-o-q and amounted  to 
1,021 thousand tonnes

§ Consumption of iron ore coming from Bakal in Q3 2012 amounted to 91 thousand
tonnes, which is a 35% decrease from Q2 2012. This was a result of the sale of
the Bakal mine in August 2012,  and the subsequent exclusion of this  supplier 
from the tally of captive iron ore consumption.

§ Output from slag  processing rose 8%  q-o-q in Q3 2012  and amounted to  553 
thousand tonnes.  The  12%  y-o-y  decrease  in the  use  of  iron  from  slag 
processing in 9M 2012  largely stemmed from a  number of improvements made  to 
reduce waste of primary resources and improve the quality of the agglomerate.



Key investment projects of MMK Group

Mill 2000

The launch  of the  second stage  of  MMK's new  cold rolling  complex,  which 
includes     a     continuous     hot-galvanizing     unit,     a     combined 
annealing/hot-galvanizing unit, and  a coil inspection  and slitting line,  in 
July 2012 marked the conclusion of construction of the Mill 2000 complex.

At present the mill is beginning  to produce new types of products  (cold-roll 
and galvanized),  which  is  already  having an  impact  in  terms  of  larger 
production volume and higher share of HVA products in MMK's portfolio.

At the  same time,  negotiations  are underway  on product  certification  and 
contract terms with enterprises from automotive industry.



Outlook

In Q4 2012 sales volumes for finished products can be influenced by a seasonal
decline in business activity on the domestic market.

The growth in demand for steel in  Russia and the world in general along  with 
the increasing production capacity of MMK  Group in Turkey make it  reasonable 
to expect higher sales volumes for MMK Group in 2012 in comparison to 2011.



The publication of consolidated results under IFRS for MMK Group for Q3 and 9M
2012 is scheduled for late November 2012.



                                    * * *



About MMK

Open Joint Stock Company MMK is among the world's largest steel producers  and 
is one of the leaders of Russia's steel industry. The company's operations  in 
Russia include  a  large  steel  producing  complex  encompassing  the  entire 
production chain, from  preparation of  iron ore to  downstream processing  of 
rolled steel. MMK turns out a broad range of steel products with a predominant
share of higher value added products. In 2011 the MMK Group produced 12.2  mln 
tonnes of crude  steel and  11.2 mln tons  of commercial  steel products.  MMK 
Group revenue in 2011 stood at USD9.306 bn and EBITDA at USD 1.336 bn.



Contacts:



Investor Relations Department:



Andrey Serov, Head of IR
tel.: +7 (3519) 24-52-97
E-mail: serov.ae@mmk.ru



Communications Department:



Kirill Golubkov           Polina Rudyaeva          Alexander Proskurov

tel.: +7 (916) 675 3081   tel.: +7 (916) 675 3081   tel.: +7 (3519) 24-63-03

E-mail:                   E-mail:                   E-mail:
golubkov.kv@mmk.ru        rudyaeva.pi@mmk.ru        proskurov.as@mmk.ru





                     This information is provided by RNS
           The company news service from the London Stock Exchange

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