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Russian Magnitka expects high profits and further rise in steel prices

Russia / Ferrous metallurgy

Measures to improve operational efficiency as part of the updated strategic initiatives will have a positive impact on the profitability of Magnitogorsk Iron and Steel Works in 1Q2021.

Russian Magnitka expects high profits and further rise in steel prices

According to the press service of the Magnitogorsk Iron and Steel Works (MMK), a steady level of demand in the domestic and international markets will have a positive impact on sales volumes in Q1 2021. At the same time, the utilization of units for the production of premium products will remain at the maximum level.

MMK recalled that in Q4 2020, prices in the global market reached multi-year highs due to shortages in key regions of the world. The recovery of the Chinese economy amid continuing investment in infrastructure kept domestic demand and prices for rolled steel at a high level until the end of 2020.

At the end of the 4th quarter of 2020, there was a sharp increase in prices for rolled metal products in the warehouse market of the Russian Federation due to high demand from end consumers and an increase in world quotations for metal products. The unexpectedly strong growth in quotations of metallurgical raw materials also had a great impact on prices.

In the 4th quarter of 2020, prices for scrap metal in the Russian Federation increased significantly by 35-40%, and the needs of Russian metallurgists in scrap metal were not fully met. At the end of January, an increased rate of 4 duties on the export of scrap from the Russian Federation will come into force. But taking into account the low availability of scrap in the winter, a significant decrease in prices in the 1st quarter of 2021 is not predicted.

A significant increase in prices for metallurgical raw materials and positive dynamics of quotations for metal products on world markets will support the growth of prices for metal products of the MMK Group in the first quarter, the company predicts.

PJSC "Magnitogorsk Metallurgical Plant" is one of the world's largest steel producers and occupies a leading position among the enterprises of the ferrous metallurgy of Russia. The assets of the MMK Group in the Russian Federation represent a large metallurgical complex with a full production cycle, from the preparation of iron ore raw materials to the deep processing of ferrous metals. MMK manufactures a wide range of steel products with a predominant share of high value-added products.

MMK is one of the industry leaders in terms of production costs and profitability. MMK's debt burden is the smallest in the industry. The Net Debt /EBITDA ratio at the end of 2019 is -0.13x.

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