NLMK the LSE-listed leading Russian steel producer announces its operational results for Q2 2012.
In Q2, NLMK Group’s steelmaking capacity utilisation rates continued to improve. Crude steel production amounted to 3.842 million t of which 93.6% was produced domestically. The production of finished steel increased to 4 million t (+7% q-o-q).
Total sales remained largely in line with the previous quarter’s level at 3.8 million tonnes. High seasonal demand from the domestic construction segment partially offset the softening in consumer activity in the export markets. Sales of long products and metalware increased substantially. Q2 domestic sales accounted for 37% of total steel product sales. The share of finished steel in total sales increased 3 p.p. QoQ to 74%. Sales of slabs to the Group’s EU and US operations increased to 0.753 million tonnes (+5.5%).
Q2 2012 operating highlights
1. Production*
2. Crude steel: 3.8 million t (+5.7% q-o-q†)
3. Finished products: 4.0 million t (+7.0%)
Sales
1. Finished products: 3.8 million t (-1.6%), including
2. Slabs: 0.9 million t (-3.8%)
3. Flat steel: 2.3 million t (-1.3%), including high-value added products: 1.4 million t
4. Long products and metalware: 0.5 million t (+20.7%)
NLMK Group
| Q2'12 | Q1'12 | Change | Q2'11 | Change | |
| Pig iron | 0.142 | 0.22 | -35.50% | 0.132 | 7.50% |
| Slabs | 0.858 | 0.892 | -3.80% | 0.409 | 109.70% |
| Flats | 2.34 | 2.371 | -1.30% | 2.14 | 9.30% |
| Long products | 0.394 | 0.327 | 20.40% | 0.389 | 1.20% |
| Metalware | 0.077 | 0.063 | 22.70% | 0.071 | 7.90% |
| Total | 3.81 | 3.872 | -1.60% | 3.165 | 20.40% |
In million tonnes
NLMK Group’s steel production in Q2 2012 increased to 3.8 million t (+5.7% q-o-q). Steelmaking facilities of the Group operated at 96% capacity, including 99% at Novolipetsk (hereinafter refers to the main production site in Lipetsk), 85% at the Long Products Division, and 90% at our international divisions.
Crude steel production at Novolipetsk grew 6%QoQ to 3.1 million tonnes. The Long Products segment’s crude steel output went up to 0.465 million tonnes +10%QoQ.
Sales remained in line with the previous quarter’s level at 3.8 million t. Domestic sales increased 7% QoQ to 1.4 million tonnes (37% of total sales) on the back of the seasonal growth in demand for long and flat products from the construction and machine building industries. The share of exports decreased by 3 p.p. to 63%, with the bulk going to our traditional markets, i.e. Europe, the US, the Middle East and South-East Asia.
Our international rolling operations accounted for 29% of the Group’s sales: NLMK Europe sold 17% and NLMK USA sold 12% of the Group’s total.
Novolipetsk (NLMK’s main production site in Lipetsk
| Q2'12 | Q1'12 | Change | Q2'11 | Change | |
| Pig iron | 0.188 | 0.211 | -0.111 | 0.195 | -0.036 |
| Slabs | 1.583 | 1.586 | -0.002 | 1.272 | 0.245 |
| Hot Rolled Steel | 0.508 | 0.52 | -0.023 | 0.43 | 0.182 |
| Cold Rolled Steel | 0.375 | 0.38 | -0.013 | 0.383 | -0.021 |
| HDG | 0.131 | 0.145 | -0.101 | 0.124 | 0.05 |
| PPGI | 0.131 | 0.115 | 0.141 | 0.123 | 0.069 |
| Dynamo steel | 0.072 | 0.059 | 0.217 | 0.076 | -0.055 |
| Transformer steel | 0.025 | 0.018 | 0.37 | 0.011 | 1.208 |
| Total | 3.012 | 3.034 | -0.007 | 2.614 | 0.152 |
In million tonnes
In Q2, Novolipetsk steelmaking capacities were running at 99% capacity. The plant’s steel output reached 3.13 million tonnes. The output of saleable slabs grew to 1.8 million t, +26% QoQ on the back of the stable slab supplies to our European and North American operations.
Hot rolled steel production (including steel for further rerolling) declined by 7% as a result of the 2 week idling of the mill in June for planned repairs and upgrading. In July, production at Mill 2000 was restored and the line currently operates at close to maximum capacity.
Q2 sales were largely flat QoQ totaling 3.012 million tonnes (-0.7% q-o-q). Finished product sales (sold mainly in the domestic market) accounted for 41% (+0.4% q-o-q) of the plant’s total sales. The sales of pre-painted and dynamo steel increased by 14% and 22%, respectively, supported by growing demand in the domestic and international markets. With stronger demand in the export markets, transformer steel sales increased by 37%.
Hot-rolled steel sales declined slightly (-2%) following the decrease in production (as a result of the temporary stoppage at the mill for maintenance and upgrades). Oversupply in the domestic market and the subsequent decrease in hot-rolled steel prices at the end of Q2 were also reasons for the decline in sales.
Cold-rolled steel sales totaled 375,000 tonnes (against 380,000 t in Q1). With higher pre-painted steel sales (+14% q-o-q), galvanised steel sales declined to 131,000 tonnes (-14,000 t q-o-q) as galvanised steel is used for the production of the pre-painted coils.
Selling prices (denominated in RUB) increased by an average of 2% QoQ to 4.5% QoQ. Taking into account the RUB depreciation against USD, prices in USD terms grew by 0.5%-2%. Due to a slump in demand in the pig iron market both in Russia and abroad, NLMK idled its blast furnace (BF) #2 for maintenance. The idling of BF#2 will improve the loading efficiency for NLMK’s remaining blast furnace operations at its Lipetsk plant. NLMK Group confirms its previously announced steel production forecast for 2012 at around 15 million tonnes per year.
VIZ-Stal
| Q2'12 | Q1'12 | Change | Q2'11 | Change | |
| Transformer steel | 0.045 | 0.036 | 25.30% | 0.04 | 13.30% |
In million tonnes
The Company significantly increased its transformer steel exports as a result of growing demand. VIZ-Stal products were sold across all key export directions, including the EU, North America, the Middle East (incl. Turkey) and South-East Asia.
Q2 overall sales increased to 45,000 tonnes. The delayed recognition of export deliveries made in the end of the 1st quarter also contributed to the growth.
Transformer steel output at the plant also increased and totaled 44,000 t (+17% q-o-q).
Stoilensky
| Q2'12 | Q1'12 | Change | Q2'11 | Change | |
| Iron ore concentrate | 3.493 | 3.084 | 13.30% | 3.462 | 0.90% |
| Sinter ore | 0.416 | 0.398 | 4.60% | 0.44 | -5.30% |
In million tonnes
The mine beneficiation capacities in Q2 were running at close to maximum capacity. Stoilensky produced 3.43 million t of concentrate and 0.421 million tonnes of sinter ore.
Iron ore concentrate sales achieved a new record level of 3.493 million tonnes backed by the stable deliveries to Novolipetsk (around 82% of total concentrate sales and 36% of sinter ore sales) and substantially higher sales to third parties, including exports to China and Ukraine.
Altai-Koks
| Q2'12 | Q1'12 | Change | Q2'11 | Change | |
| Coke (dry) | 1.126 | 1.071 | 5.10% | 0.931 | 20.90% |
In million tonnes
Coke sales increased 5% QoQ to 1,126 million tonnes. About 80% (+2% q-o-q) of coke was supplied to Novolipetsk. Sales to third parties grew by around 32% to 220,000 tonnes mainly supported by stronger exports.
Coke production totaled 1,104 million t (+2% q-o-q), which corresponds to a utilisation rate of over 90%.
Including the coke produced at Novolipetsk, NLMK Group’s total coke production increased by 1% QoQ to 1.753 million tonnes. About 88% was consumed internally.
Source - NLMK
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