Press release
12 April 2021
Q1 2021 NLMK Group Trading Update
NLMK Group (LSE: NLMK, MOEX: NLMK) increased steel output by 12% qoq (+4% yoy) to 4.4 m t. Consolidated sales declined by 7% qoq to 3.9 m t (-13% yoy) driven by a decrease in commercial pig iron sales amid repairs at NLMK Lipetsk BF operations coupled with an increase in intragroup slab sales.
Q1 2021 highlights:
· Steel output grew to 4.4 m t (+12% qoq; +4% yoy) with a post-overhaul increase in NLMK equipment productivity, as well as with the completion of planned maintenance at the Russia Long Products segment.
· External sales decreased by 7% qoq (-13% yoy) to 3.9 m t with the decrease in commercial pig iron sales against the backdrop of completed overhauls at one of NLMK Lipetsk blast furnaces, and due to recovering intragroup slab deliveries to NLMK USA to meet local demand for finished rolled products (in stocks at the end of Q1). Additionally, stocks have piled up at the end of the quarter at the Black Sea ports due to unfavourable weather conditions; corresponding steel volumes will be sold in Q2 2021.
· Sales on 'home' markets increased by 4% qoq (-10% yoy) to 2.7 m t.
· Sales on export markets decreased to 1.2 m t (-21% qoq; -12% yoy) with a decline in pig iron sales and an increase in intragroup slab deliveries.
|
| Investor relations contact: Dmitriy Kolomytsyn, CFA +7 (495) 504 0504 | Media relations contact: Maria Simonova +7 (915) 322 62 25 simonova_mn@nlmk.com |
* Hereinafter, Q1 2021 output and sales figures are preliminary and can be updated. Hereinafter, NLMK Group steel output and sales on 'home' markets are shown taking into account NBH performance. Product sales are shown without taking into account NBH performance. Sales to NLMK Group's 'home' markets are understood to be sales by NLMK Group companies in the regions where the products are produced in Russia, the EU, and the US.
| NLMK Group's Q1 2021 operating performance |
| Steel output increased by 12% qoq to 4.4 m t (+4% yoy) with equipment ramp-up to full capacity following the completion of overhauls at the Lipetsk site in Q4 2020 and growth of utilization rates at the Russia Long Products segment to 97% (+5 p.p. qoq). External sales declined to 3.9 m t (-7% qoq; -13% yoy) due to reduced sales of pig iron and recovering slab deliveries to NLMK USA (241,000 t in Q1 2021) to meet local demand for finished rolled products (in stocks at the end of Q1; will be processed into finished products and sold in Q2). Sales mix: sales of semi-finished products to third parties decreased by 29% qoq (-27% yoy) to 0.7 m t with recovering slab deliveries to NLMK USA. Slab shipments to NBH decreased by 18% qoq (-35% yoy) to 0.5 m t due to the upgrade of the NLMK La Louvière Hot Strip Mill. Sales of finished products totalled Sales on 'home' markets increased by 4% qoq (-10% yoy), amounting to 2.7 m t. Sales in Russia increased by 4% qoq to 1.7 m t supported by high demand for long products. In the US, sales growth totalled 16% qoq, reaching 0.4 m t, due to increased capacity utilization. In the EU, sales decreased by 4% qoq to 0.6 m t against the backdrop of planned equipment upgrades (Appendix 14). Sales on export markets decreased by 21% qoq to 1.2 m t (-12% yoy).
|
| Global prices in Q1 2021: |
| Average raw material prices: · Australian coking coal prices grew by 15% qoq (-19% yoy) amid active restocking by steel producers outside of China at the start of the year. In China, coking coal prices increased by 48% qoq (+39% yoy) due to the current ban on imports from Australia, as well as disruptions in supplies from Mongolia. By the end of the reporting period, there was a decline in prices against the backdrop of restrictions on steel production in one of the key regions of China, coupled with an increase in the local supply of coking coal. Dollar-denominated coal prices in Russia increased by 41% qoq (-19% yoy), following global prices, and fuelled by Chinese consumers' interest in Russian grades of coking coal. · Iron ore prices grew by 27 % qoq (+85% yoy), supported by strong demand in China and a seasonal shortage of scrap steel. · Scrap prices in the US and EU increased by 29% qoq (+62% yoy) due to limited supply, impacted by seasonal factors, and reduced scrap generation in the automotive sector. In Russia, dollar-denominated prices increased by 34% qoq (+53% yoy) due to high steelmaking capacity utilization rates amid a shortage of raw materials caused by abnormally cold weather in a number of regions. Average steel product prices: · There was an increase in steel product prices across all key regions, due to the continued recovery in business activity, resulting in steel product demand outstripping supply. The high price of the raw materials basket served as an additional factor. · In Russia, dollar-denominated prices for uncoated flat steel grew by 44% qoq (+39% yoy); rebar prices grew by 44% qoq (+52% yoy). · Slab prices (FOB Black Sea) increased by 31% qoq (+65% yoy), following the growth in demand in export markets. · Average flat steel prices in the US grew by 53% qoq (+89% yoy). Prices for hot-rolled products at the end of March reached all-time highs, approaching $1,500/t. · In the EU countries, dollar-denominated flat steel prices increased by an average of 34% qoq (+58% yoy), reaching peak values since 2008. |
| SEGMENTAL PERFORMANCE |
| NLMK RUSSIA FLAT PRODUCTS1 |
| Q1 2021 performance |
| Steel output grew by 12% qoq (flat yoy) to 3,3 m t as equipment reached full capacity after the completion of overhauls at the NLMK Lipetsk BOF operations in Q4 2020 (Appendix 9). Sales in the Segment were down by 6% qoq to 3.0 m t (-14% yoy) due to lower pig iron sales amid repairs at NLMK Lipetsk BF operations and stocks piling up in the Black Sea ports due to bad weather conditions (Appendix 2). Sales mix: sales of semis to third parties decreased by 33% qoq to 0.6 m t (-36% yoy), while sales to NLMK Group companies and NBH grew to 0.9 m t (+25% qoq; -6% yoy) amid recovering slab supplies to NLMK USA. Finished steel sales decreased by 4% qoq to 1.5 m t (-4% yoy), due to inventory growth driven by a higher share of export shipments with longer sales recognition periods. (Appendix 3). Sales markets: sales in Russia declined by 3% qoq to 1.2 m t (-15% yoy) amid seasonally lower demand (Appendix 3). Product exports were down by 7% qoq to 1.8 m t (-13% yoy) due to lower pig iron sales. The main export destinations in Q1 2021 were the EU, Turkey, the US, and Mexico.
|
| NLMK RUSSIA LONG PRODUCTS2 |
| Q1 2021 performance |
| Steel output increased by 11% qoq to 0.8 m t (+20% yoy) (Appendix 9) against the low base of the previous quarter, when planned maintenance was underway. Sales increased by 8% qoq to 0.7 m t (+30% yoy), due mainly to strong demand for rebar from service centres on the Russian market (Appendix 4). Finished products accounted for 86% of the sales (flat qoq; -9 p. p. yoy). Sales of finished products grew by 8% qoq to 0.6 m t (+18% yoy). Sales markets: sales on the Russian market reached 0.5 m t (+17% qoq; +27% yoy), due to large traders restocking their rebar inventories amid expectations of further growth in demand. The share of the Russian market was 69% (+5 p.p. qoq; -2 p.p. yoy). Export sales totalled 0.2 m t. Scrap: scrap sales decreased seasonally vs. the previous quarter by 41% to 0.8 m t (+8% yoy). NLMK Group companies accounted for 98% of total scrap sales (Appendix 4).
|
[1] NLMK Russia Flat companies include NLMK Lipetsk, VIZ-Steel, and Altai-Koks. Export sales are calculated including the corresponding share of trading companies.
2 NLMK Russia Long companies include NLMK Ural, NLMK Metalware, NLMK Kaluga, and scrap collecting facilities. Export sales of long products are calculated taking into account the corresponding share of trading companies' sales.
| MINING AND PROCESSING OF RAW MATERIALS |
| Q1 2021 performance |
| Iron ore output decreased by 1% qoq (+4% yoy) to 4.8 m t due to maintenance works in January 2021 (Appendix 12). Iron ore sales declined by 1% qoq to 4.8 m t (+4% yoy), following output volumes. (Appendix 5). Sales to third parties totalled 22,000 t (-84% qoq; -70% yoy) due to higher NLMK Lipetsk needs. |
|
NLMK USA |
| Q1 2021 performance |
| Sales in the Segment increased by 16% qoq to 0.43 m t (-20% yoy), due to higher sales of hot-rolled and galvanized steel driven by higher demand across all main sectors. The strike at NLMK Pennsylvania ended in March (Appendix 6). |
| NLMK DANSTEEL |
| Q1 2021 performance |
| Sales increased to 0.17 m t (+23% qoq, +6% yoy) backed by continued recovery in demand from the wind energy, transport machine building, and the automotive industries in the EU. (Appendix 7). |
|
|
|
JOINT VENTURE - NLMK Belgium Holdings (NBH)3 |
| Q1 2021 performance |
| Sales declined by 10% qoq to 0.5 m t (-18% yoy), due to lower shipments of hot-rolled products against the backdrop of the planned NLMK La Louvière Hot Strip Mill upgrade (Strategy 2022 project). (Appendix 8). |
|
|
|
|
Note: data to the diagrams is presented in tables in the Appendix, and is also available as a separate Excel sheet.
3 NBH assets include producers of plate NLMK Clabecq (Belgium), NLMK Verona (Italy) and producers of strip products NLMK La Louvière (Belgium) and NLMK Strasbourg (France).
Appendices
Appendix 1. NLMK Group operating highlights
| Production, m t | Q1 2021 | Q4 2020 | QoQ | Q1 2020 | YoY |
| Crude steel production (without NBH) | 4.307 | 3.863 | 11% | 4.171 | 3% |
| Crude steel production (with NBH) | 4.365 | 3.904 | 12% | 4.211 | 4% |
| Capacity utilization | 95% | 94% | +1 p.p. | 95% | 0 p.p. |
| Sales, m t |
|
|
|
|
|
| Semi-finished steel 5 | 1.217 | 1.616 | -25% | 1.751 | -30% |
| Finished steel | 2.690 | 2.604 | 3% | 2.753 | -2% |
| Flat | 2.056 | 2.018 | 2% | 2.214 | -7% |
| Long and metalware | 0.635 | 0.587 | 8% | 0.539 | 18% |
| Total consolidated sales | 3.908 | 4.220 | -7% | 4.505 | -13% |
| Sales to home markets of the Group 6 | 70% | 64% | +6 p.p. | 69% | +1 p.p. |
| Sales to external markets | 30% | 36% | -6 p.p. | 31% | -1 p.p. |
| For information: slab sales to foreign subsidiaries and affiliates | 0.911 | 0.728 | 25% | 0.970 | -6% |
| Segment sales |
|
|
|
|
|
| Russia Flat Products | 2.997 | 3.172 | -6% | 3.469 | -14% |
| Russia Long Products | 0.740 | 0.682 | 8% | 0.569 | 30% |
| Mining | 4.785 | 4.819 | -1% | 4.604 | 4% |
| NLMK USA | 0.431 | 0.370 | 16% | 0.537 | -20% |
| DanSteel | 0.174 | 0.142 | 23% | 0.164 | 6% |
| Forreference: NBH Sales | 0.495 | 0.549 | -10% | 0.605 | -18% |
5 Including commercial pig iron, slabs and billets
6 Home markets: Russia for the Russian assets of NLMK Group, North America for NLMK USA, and the EU market for NLMK DanSteel and NBH
Appendix 2. NLMK Russia Flat Products sales by product
| Sales, m t | Q1 2021 | Q4 2020 | QoQ | Q1 2020 | YoY |
| Pig iron | 0.032 | 0.437 | -93% | 0.292 | -89% |
| Slabs incl. | 1.514 | 1.229 | 23% | 1.665 | -9% |
| Slab sales to foreign subsidiaries and affiliates | 1.911 | 0.728 | 25% | 0.970 | -6% |
| to NLMK USA, NLMK DanSteel | 0.432 | 0.146 | > 100% | 0.235 | 83% |
| to NBH | 0.479 | 0.582 | -18% | 0.734 | -35% |
| Hot-rolled steel | 0.666 | 0.701 | -5% | 0.641 | 4% |
| Cold-rolled steel | 0.387 | 0.374 | 3% | 0.416 | -7% |
| Galvanized steel | 0.184 | 0.203 | -9% | 0.216 | -15% |
| Pre-painted steel | 0.081 | 0.082 | -2% | 0.097 | -17% |
| Dynamo steel | 0.065 | 0.068 | -4% | 0.072 | -10% |
| Transformer steel | 0.067 | 0.078 | -14% | 0.070 | -4% |
| incl. VIZ-Steel | 0.038 | 0.045 | -14% | 0.037 | 4% |
| Total products | 2.997 | 3.172 | -6% | 3.469 | -14% |
| Coke sales from Altai-Koks | 0.774 | 0.775 | 0% | 0.829 | -7% |
| incl. to NLMK Lipetsk | 0.664 | 0.532 | 25% | 0.689 | -4% |
Appendix 3. NLMK Russia Flat Products sales by region and product
| Sales, m t | Q1 2021 | Q4 2020 | QoQ | Q1 2020 | YoY |
| Russian market | 1.162 | 1.200 | -3% | 1.363 | -15% |
| Semi-finished products | 0.197 | 0.122 | 62% | 0.289 | -32% |
| Hot-rolled steel | 0.414 | 0.497 | -17% | 0.493 | -16% |
| Cold-rolled steel | 0.262 | 0.270 | -3% | 0.257 | 2% |
| Galvanized steel | 0.179 | 0.198 | -10% | 0.199 | -10% |
| Pre-painted steel | 0.080 | 0.081 | -1% | 0.097 | -17% |
| Dynamo steel | 0.021 | 0.018 | 13% | 0.018 | 12% |
| Transformer steel | 0.010 | 0.014 | -26% | 0.010 | 3% |
| Export markets | 1.833 | 1.972 | -7% | 2.106 | -13% |
| Semi-finished products | 1.348 | 1.544 | -13% | 1.668 | -19% |
| Hot-rolled steel | 0.253 | 0.203 | 25% | 0.148 | 71% |
| Cold-rolled steel | 0.125 | 0.104 | 20% | 0.159 | -21% |
| Galvanized steel | 0.005 | 0.006 | -4% | 0.017 | -67% |
| Pre-painted steel | 0.001 | 0.001 | -46% | 0.000 | 33% |
| Dynamo steel | 0.044 | 0.050 | -11% | 0.054 | -18% |
| Transformer steel | 0.057 | 0.064 | -11% | 0.060 | -5% |
| Total sales | 2.995 | 3.172 | -6% | 3.469 | -14% |
Appendix 4. NLMK Russia Long Products sales by product
| Sales, m t | Q1 2021 | Q4 2020 | QoQ | Q1 2020 | YoY |
| Billet | 0.105 | 0.095 | 10% | 0.030 | > 100% |
| Rebar | 0.508 | 0.477 | 7% | 0.389 | 31% |
| Sections | 0.002 | 0.000 | > 100% | 0.028 | -93% |
| Wire rod | 0.062 | 0.045 | 37% | 0.057 | 8% |
| Metalware | 0.063 | 0.065 | -2% | 0.065 | -3% |
| Total steel products | 0.740 | 0.682 | 8% | 0.569 | 30% |
| Ferrous and non-ferrous scrap, incl. | 0.808 | 1.380 | -41% | 0.747 | 8% |
| to NLMK Ural | 0.324 | 0.482 | -33% | 0.328 | -1% |
| to NLMK Kaluga | 0.270 | 0.412 | -35% | 0.172 | 57% |
| to NLMK Lipetsk | 0.199 | 0.467 | -57% | 0.227 | -12% |
Appendix 5. Mining Division sales
| Sales, m t | Q1 2021 | Q4 2020 | QoQ | Q1 2020 | YoY |
| Iron ore concentrate | 2.621 | 2.879 | -9% | 2.566 | 2% |
| incl. to NLMK Lipetsk | 2.621 | 2.749 | -5% | 2.491 | 5% |
| Sinter ore | 0.265 | 0.253 | 5% | 0.250 | 6% |
| incl. to NLMK Lipetsk | 0.243 | 0.244 | 0% | 0.250 | -3% |
| Pellets | 1.899 | 1.687 | 13% | 1.788 | 6% |
| incl. to NLMK Lipetsk | 1.899 | 1.687 | 13% | 1.788 | 6% |
| Total iron ore | 4.785 | 4.819 | -1% | 4.604 | 4% |
Appendix 6. NLMK USA sales
| Sales, m t | Q1 2021 | Q4 2020 | QoQ | Q1 2020 | YoY |
| Hot-rolled steel | 0.292 | 0.251 | 17% | 0.280 | 4% |
| Cold-rolled steel | 0.044 | 0.050 | -13% | 0.111 | -61% |
| Galvanized steel | 0.095 | 0.069 | 37% | 0.146 | -35% |
| Total NLMK USA 7 | 0.431 | 0.370 | 16% | 0.537 | -20% |
7 NLMK USA also sells non-significant volumes of merchant slabs not included into total rolled steel sales.
Appendix 7. NLMK DanSteel sales
| Sales, m t | Q1 2021 | Q4 2020 | QoQ | Q1 2020 | YoY |
| Thick plates | 0.174 | 0.142 | 23% | 0.164 | 6% |
Appendix 8. NBH (associated companies) sales
| Sales, m t | Q1 2021 | Q4 2020 | QoQ | Q1 2020 | YoY |
| Hot-rolled steel | 0.236 | 0.334 | -29% | 0.362 | -35% |
| Cold-rolled steel | 0.008 | 0.010 | -23% | 0.010 | -19% |
| Coated steel | 0.074 | 0.065 | 14% | 0.077 | -4% |
| Total flat steel | 0.318 | 0.409 | -22% | 0.449 | -29% |
| Semi-finished (ingots) | 0.021 | 0.013 | 58% | 0.014 | 45% |
| Thick plates | 0.156 | 0.127 | 23% | 0.141 | 11% |
| Total steel products | 0.495 | 0.549 | -10% | 0.605 | -18% |
Appendix 9. NLMK Group steel output
| Production, m t | Q1 2021 | Q4 2020 | QoQ | Q1 2020 | YoY |
| NLMK Lipetsk | 3.331 | 2.970 | 12% | 3.325 | 0% |
| NLMK Long Products | 0.789 | 0.708 | 11% | 0.659 | 20% |
| incl. NLMK Kaluga | 0.333 | 0.349 | -5% | 0.256 | 30% |
| NLMK Indiana (NLMK USA) | 0.187 | 0.185 | 1% | 0.188 | -1% |
| NLMK Group (without NBH) | 4.307 | 3.863 | 11% | 4.171 | 3% |
| For reference |
|
|
|
|
|
| NBH, NLMK Europe (EAF) | 0.059 | 0.041 | 43% | 0.039 | 50% |
| NLMK Group (with NBH) | 4.365 | 3.904 | 12% | 4.211 | 4% |
Appendix 10. NLMK Group steel product output (without NBH)
| Production, m t | Q1 2021 | Q4 2020 | QoQ | Q1 2020 | YoY |
| Merchant pig iron | 0.091 | 0.316 | -71% | 0.342 | -73% |
| Merchant slabs | 1.192 | 1.164 | 2% | 1.413 | -16% |
| Flat steel | 2.096 | 2.024 | 4% | 2.240 | -6% |
| Merchant billets | 0.088 | 0.124 | -29% | 0.040 | > 100% |
| Long products | 0.597 | 0.506 | 18% | 0.544 | 10% |
| Metalware | 0.072 | 0.064 | 11% | 0.068 | 6% |
| Total products | 4.135 | 4.198 | -2% | 4.647 | -11% |
Appendix 11. NLMK Russia Flat Products steel product output
| Production, m t | Q1 2021 | Q4 2020 | QoQ | Q1 2020 | YoY |
| Merchant pig iron | 0.091 | 0.316 | -71% | 0.342 | -73% |
| Merchant slabs | 1.624 | 1.311 | 24% | 1.649 | -2% |
| Hot-rolled steel | 0.696 | 0.702 | -1% | 0.674 | 3% |
| Cold-rolled steel | 0.408 | 0.403 | 1% | 0.404 | 1% |
| Galvanized steel | 0.189 | 0.203 | -7% | 0.209 | -9% |
| Pre-painted steel | 0.097 | 0.077 | 27% | 0.109 | -11% |
| Dynamo steel | 0.062 | 0.062 | -2% | 0.062 | -1% |
| Transformer steel | 0.067 | 0.072 | -6% | 0.065 | 4% |
| Total steel products | 3.235 | 3.145 | 3% | 3.513 | -8% |
Appendix 12. Output of main raw materials
| Production, m t | Q1 2021 | Q4 2020 | QoQ | Q1 2020 | YoY |
| Coke | 1.375 | 1.397 | -2% | 1.448 | -5% |
| NLMK Lipetsk | 0.599 | 0.608 | -1% | 0.606 | -1% |
| Altai-Koks | 0.775 | 0.788 | -2% | 0.841 | -8% |
| Iron ore | 4.841 | 4.920 | -2% | 4.618 | 5% |
| Iron ore concentrate | 2.800 | 2.836 | -1% | 2.589 | 8% |
| Sinter ore | 0.266 | 0.252 | 6% | 0.255 | 4% |
| Pellets | 1.775 | 1.832 | -3% | 1.774 | 0% |
| Ferrous scrap | 0.428 | 0.678 | -37% | 0.374 | 14% |
Appendix 13. NLMK Group steel product sales (without NBH)
| Sales, m t | Q1 2021 | Q4 2020 | QoQ | Q1 2020 | YoY |
| Semi-finished | 1.217 | 1.616 | -25% | 1.751 | -30% |
| Pig iron | 0.030 | 0.437 | -93% | 0.292 | -90% |
| Slabs | 1.082 | 1.083 | 0% | 1.430 | -24% |
| Billet | 0.105 | 0.096 | 9% | 0.030 | > 100% |
| Flat steel | 2.056 | 2.018 | 2% | 2.214 | -7% |
| Plate | 0.175 | 0.145 | 21% | 0.164 | 7% |
| Hot-rolled steel | 0.957 | 0.947 | 1% | 0.921 | 4% |
| Cold-rolled steel | 0.431 | 0.424 | 2% | 0.528 | -18% |
| Galvanized steel | 0.279 | 0.273 | 2% | 0.362 | -23% |
| Pre-painted steel | 0.081 | 0.082 | -2% | 0.097 | -17% |
| Transformer steel | 0.067 | 0.078 | -14% | 0.070 | -4% |
| Dynamo steel | 0.065 | 0.068 | -4% | 0.072 | -10% |
| Long products | 0.635 | 0.587 | 8% | 0.539 | 18% |
| Long | 0.572 | 0.522 | 10% | 0.474 | 21% |
| Metalware | 0.063 | 0.065 | -2% | 0.065 | -3% |
| Total steel products | 3.908 | 4.220 | -7% | 4.505 | -13% |
Appendix 14. NLMK Group home and export steel product sales (with NBH)
| Sales, m t | Q1 2021 | Q4 2020 | QoQ | Q1 2020 | YoY |
| Home | 2.733 | 2.628 | 4% | 3.022 | -10% |
| Russia | 1.676 | 1.604 | 4% | 1.767 | -5% |
| USA | 0.431 | 0.370 | 16% | 0.537 | -20% |
| EU | 0.626 | 0.654 | -4% | 0.718 | -13% |
| Export | 1.188 | 1.507 | -21% | 1.354 | -12% |
| Total steel products | 3.921 | 4.135 | -5% | 4.375 | -10% |
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our Privacy Policy.