Russia-based Magnitogorsk Iron and Steel Works (MMK) expects the recovery of domestic demand to continue into Q3 2020 (July-September). In Q2, the country’s steel prices were hurt by the slowdown in the economy caused by the COVID-19 lockdown. Late in Q2, however, demand was on the path to recovery, states the steelmaker in its trading update released on July 14. 

The company now looks to boost its production capacity and Q3 sales volumes with the launch of Hot-Rolling Mill 2500 soon. The mill is under reconstruction since Q1.

 

In Q2, MMK produced 2.36mn mt of crude steel, down by 24pc from the prior-year quarter and 22pc from the prior quarter. Output decreased on the back of the reconstruction of Hot-Rolling Mill 2500 along with a drop in demand for metal products from key consuming industries amid COVID-19 outbreak. 

 

Steel output in H1 (Jan-June) dropped by 13.2pc to 5.3mn mt from the prior year due to lower consumption of steel and weak demand. The company’s total steel sales declined by 22pc and 19pc from the prior year and the preceding quarter, respectively, to 2.22mn mt. 

 

MMK’s pig iron output declined by 15pc to 2.89mn mt from the prior-year quarter and 11.3pc from the prior quarter. The company’s blast furnace no 2 was also undergoing an upgradation. In H1, pig iron output declined by 8.3pc to 4.4mn mt. 

 

The company’s total steel sales declined by 22pc and 19pc from the prior year and the preceding quarter, respectively, to 2.22mn mt. In the first half, sales fell by 11.9pc to 4.9mn mt compared to the prior year. The company’s High Value-Added (HVA) products’ sales accounted for the largest share of the total sales in Q2 and H1 at 1.1mn mt and 2.4mn mt, respectively. The drop in HVA sales was driven by the slowdown in Russian as well as a global business activity. Depreciation of rouble by 12.4pc from the prior year which softened steel prices in the global markets also played a role.

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