A seasonal dip in demand depressed PJSC Magnitogorsk Iron & Steel Works' production of crude steel by 3.9% in the fourth quarter of 2019 compared to the previous quarter, while its sales of finished products declined 4.0% to 2.8 million tonnes.
Output of the alloy totaled 3.1 Mt in the final quarter of the year, bringing full-year production to 12.5 Mt, a drop of 1.6% from 2018, the Russian steelmaker, known as MMK, said in a Jan. 21 news release.
Fourth-quarter 2019 output exceeded VTB Capital analysts' estimates, according to a same-day note. BCS Global Markets' analysts said lower-than-expected volumes and realized prices would pressure MMK's financial results for the period.
Finished product sales contracted 3.0% to 11.3 Mt in 2019, flat hot-rolled product sales dropped 7.5% to 4.5 Mt, and high-value-added product sales rose 0.9% to 5.5 Mt. Sales of long products shrank 2.7% to 1.4 Mt.
Shipments within Russia and the Commonwealth of Independent States climbed 7.4% to 9.7 Mt in 2019, despite a 10.5% quarter-over-quarter slump in the fourth quarter to 2.3 Mt. The share of sales to the domestic markets rose to 88.5% in 2019 from 79% the previous year.
Exports plummeted 47.2% to 1.3 Mt during the year but rebounded 77.0% to 435,000 in the last quarter.
Magnitogorsk's average selling price slipped 5.2% to US$589 per tonne in 2019 and fell 13.3% to US$534/t in the fourth quarter of 2019. The company attributed the full-year decline to a significant correction in global steel prices, which peaked in the middle of the quarter.
The realized prices were stronger than BCS Global Markets had estimated. Magnitogorsk expects favorable pricing on the domestic market in the first quarter of 2020 and expects raw material prices to hold steady.
The company also said it will restart Mill 2500 in March. It was recently refurbished as part of MMK's investment program. MMK said in November 2019 that it expected capital expenditure to be US$900 million in 2019 and to remain at that level until 2024. The current phase of its 2016-to-2025 strategy focuses on improving efficiency, while a previous phase focusing on production expansion has essentially been completed.
Russia's largest steelmaker, PJSC Novolipetsk Steel, recently reported a modest 1% recovery in its crude steel output for the fourth quarter of 2019, compared to previous quarter. Its full-year output fell 10% to 15.7 Mt, from 17.5 Mt in 2018.