Russian steel major MMK Group plans to divert part of its domestic metal sales to export markets if domestic market premiums disappear due to the economic impact of COVID-19.
Based on the current macroeconomic situation, Magnitogorsk Iron and Steel Works (MMK) expects no critical impact on sales in its primary markets. However, the company has not ruled out adverse effects on business activities in and outside Russia, if the pandemic worsens.
Domestic Vs Exports
In Russia, the price of finished steel may reach export parity in the next 2 to 3 months and normalise the premium available in the domestic market. In such case, MMK may allocate part of its domestic metal sales to the export markets. In 2019, of the 650,000mt steel products sold; 605,000mt was sold to Russian companies and 53,000mt to CIS countries, as reported by Davis Index. The company supplies steel mainly to international car manufacturers based in Russia.
Amid the planned production cuts taken up to control the spread of the virus, MMK is conducting equipment repair and maintenance works. The company has suspended foreign trips and restricted its employees from business trips within Russia. There are restrictions on business visits and all meetings are to be held remotely.
MMK group’s basic raw materials and equipment and spare supplies have not been impacted by the virus. The company expects minimal impact of the pandemic on investment projects for 2020.