Davis Index: Market Intelligence for the Global Metals and Recycled Materials Markets

Russian steelmaker NLMK plans to raise its production capacity by 1 mn mt in 2021 after its blast furnace upgrades at the Lipetsk plant are completed later this year. 


NLMK’s dependence on expensive and scarce coal grades will be assisted by the construction of the coal charge stamping unit at Altai-Koks.


The company said in its earnings report on Feb 11 that it benefited by $261mn in structural gains in 2020 driven by the Strategy projects that began in 2019.  However, its revenue declined last year by the weak demand and fall in finished steel prices in Q2 and Q3 2020. The share of semi-finished products increased by 5pc points to 40pc during the year. 


Steel production increased marginally by 0.9pc to 15.7mn mt in 2020 against 15.5mn mt in 2019, excluding output from NBH Steel. Including the latter’s production, the company’s output tallied at 15.8mn mt compared to 15.7mn mt during the same timeframe. 


Steel sales climbed by 2.6pc to 17.5mn mt in 2020 from 17.1mn mt in 2019. Of the total sales semi-finished steel shipments increased by 16.2pc to 7mn mt in 2020, flat products declined by 3.5pc to 8.2mn mt, and longs fell by 8.6pc to 2.3mn mt on an annual basis. 


High value-added product sales made up a large part of the company’s total revenue at 34pc followed by slabs at 22pc, HRC at 18.7pc, and longs at 9pc. The remaining revenue came from pig iron, billets, and transportation services. 


Of the total shipments, 38.1pc or 6.7mn mt were made in Russia followed by 17.8pc or 3.1mn mt to the EU, 14.1pc or 2.5mn mt to North America, 12.7pc or 2.2mn mt to the Middle East, and 10.9pc or 1.9mn mt to South East Asia. 


NLMK’s revenue declined by 12pc to $9.2bn in 2020 against the previous year, though Q4 2020 benefited from the recovery in steel demand due to restocking in the global supply chain and higher prices on limited finished steel supplies globally. Revenue increased by 3pc to $2.4bn in Q4 against the same year-ago quarter and rose by 7pc against the preceding quarter. 


NLMK’s EBITDA margin increased by five percentage points to 29pc in 2020 against the year-ago margin. EBITDA rose by 3pc to $2.6bn during the same period supported by operational efficiencies, a weaker ruble, and a refund from the US Department of Commerce under a settlement agreement. Net profits fell by 8pc to $1.2bn as joint ventures encountered losses. 


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