MMK Group update on steel segment
FY 2014 highlights
Crude steel output in FY 2014 increased by 9.1% YoY and totalled 13,031,000 tonnes.
In FY 2014, shipments of finished products totalled 11,650 thousand tonnes, up 9.2% YoY. This growth was driven by increased sales volumes for hot rolled products, thick plate and galvanised rolled products.
A favourable pricing environment on commodities markets and the decline in the ruble during 2014 supported growth in MMK’s shipment volumes on the Russia+CIS and export markets by 595,000 tonnes and 389,000 tonnes, respectively. At the same time the share of the domestic market decreased slightly, to 82.3%.
Export sales of finished products in FY 2014 amounted to 2,063,000 tonnes, up 23.2% YoY.
In FY 2014, capacity utilization of long steel production facilities remained 99%, driving shipments of 1,827,000 tonnes of long products to customers.
Due to significant growth in domestic and export sales in FY 2014, shipments of hot rolled products increased by 16.3% YoY to 5,403,000 tonnes.
Sales of HVA products in FY 2014 were supported by higher output of thick plate (mill 5000) and continued growth in galvanised steel output.
As a result, sales of HVA products in FY 2014 increased by 3.5% YoY and totalled 4,345,000 tonnes. The share of HVA products in total shipments volumes in FY 2014 slightly decreased to 37.3%.
Growth in orders for thick plate for production of large diameter pipes in 2014 resulted in a significant increase in mill 5000 production volumes. Sales of thick plate in FY 2014 increased by 9.6% YoY to 924,000 tonnes. Key customers included pipemakers supplying the Power of Siberia and Southern Corridor projects.
Strong demand for construction products and a continued deficit of galvanised steel products on the domestic market supported an increase in sales of galvanised steel by 14.1% (above average sales growth rates) to 1,116,000 tonnes.
The average dollar sales price in FY 2014 decreased by 9.4% YoY. Key factors included a traditional lag in the recovery of Russian market sales prices to parity with export prices (due to the decline of the ruble) and continued negative pressure on global steel prices as a result of a global surplus of production facilities. At the same time, ruble prices on the Russian market in 2014 increased by 8.6% YoY.
Q4 2014 highlights
Crude steel output in Q4 2014 decreased 309 thousand tonnes or 9.1% QoQ. Out of this 9% approximately 6% related to a scheduled maintenance of BF #8 (December 2015) and oxygen converter (November-December 2015). Seasonal slowdown of the demand resulted in another 3% of the decline.
In Q4 2014, shipments of finished products decreased by 7.3% QoQ.
Long products sales in Q4 2014 declined by 13,000 tonnes, primarily due to a seasonal reduction in shipments to MMK-Metiz.
In Q4 2014 sales of cold rolled products increased by 28,000 tonnes or 8.3% QoQ. This was primarily driven by an increase in shipments to customers in the pipemaking and automotive industries by 15,900 tonnes and 8,600 tonnes, respectively.
The decline in sales of thick plate from mill 5000 in Q4 2014 by 13.2% QoQ or 36,000 tonnes was due to changes in product mix in customer orders, resulting in a larger share of better quality, but less productive product mix.
In Q4 2014, sales of HVA products declined at a slower rate than overall volumes (-3.9% versus - 7.3%), due to higher demand for coated products from traders, who were replenishing long-term stocks in anticipation of domestic prices growth.
Source – Strategic Research Institute