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Kallanish Kallanish

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January, 18th 2020

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JUL 15

NLMK upgrades slash output, but first-half sales rise


NLMK's consolidated second-quarter crude steel output declined -5% on-quarter and -9% on-year to 4 million tonnes. This was on the back of ongoing upgrades to the flagship Russian Lipetsk works’ blast furnace and oxygen converter shop, the company says in a note sent to Kallanish.

First-half-of-2019 crude steel output of 8.2mt was -6% down on-year, but consolidated sales were up 4% on-year at 8.9mt on higher finished steel demand in the Russian market. Sales in Q2 fell, however, by -7% on-quarter and -3% on-year mainly on lower semi-finished products sales due to the upgrades.

NLMK's home markets sales – to Russia, Europe and the US – increased by 11% on-quarter in Q2 to 3mt, as seasonal demand supported sales for both long and flat products in Russia. This pushed overall home markets sales share up 14 percentage points on-quarter and 9pp on-year to 71%. Export sales dropped -40% on-quarter and -26% on-year to 1.2mt on lower slab sales due to overhauls at Lipetsk.

Sales from the Russian segment fell -10% on-quarter and -11% on-year in Q2, with finished products sales volumes down -8% on-quarter and -6% on-year to 1.4mt. Exports shrunk in favour of meeting the Russian market's seasonally-high demand. Sales of slab – NLMK's major export product – decreased on BF and BOF upgrades, while billet sales shrunk on higher demand for rebar in the Russian market. This dragged total semis product sales in Q2 down -12% on-quarter and -15% on-year to 1.67mt. 

Russian Q2 exports fell -9% on-quarter, while rising 1% on-year to 2.4mt. This came as semis exports fell -19% on-quarter and -8% on-year to 1.73mt. But exports of hot rolled coil rose 62% on-quarter and 48% on-year to 312,000t, while CRC exports grew 19% on-quarter and 71% on-year to 197,000t.

US sales were down -3% on-quarter and -8% on-year to 580,000t on lower deliveries in anticipation of falling prices. Belgian NBH sales were up 20% on-quarter and 7% on-year to 620,000t, pegged by a 17% quarterly plate sales increase to 170,000t, which was still -16% down on-year as capacity utilisation recovered after the strike at NLMK Clabecq. Hot rolled strip Q2 sales were up by 22% on-quarter and 19% on-year to 450,000t, on higher industrial manufacturers' demand.