The Russian steel producer Magnitogorsk Iron and Steel Works (MMK) plans in June this year to raise its rolled steel product prices for the domestic car industry by 10-15 percent, MMK chairman Victor Rashnikov said on Tuesday, May 18, Ural-press-inform has reported.
"In June we will have to raise prices for automakers by 10-15 percent. For the current month we are not making increases," said Mr. Rashnikov.
According to the MMK chairman, the increase of its prices for carmakers is a result of the rise in iron ore prices. "Iron ore companies have increased their iron ore prices by 90 percent. Currently, these prices are higher than during the 2008 crisis," he said.
In Q1 2010, MMK was operating with a profitability of 15-18 percent. The increase in iron ore prices has led to a decrease in the company's profitability of up to eight to nine percent, even though the plant has raised its domestic prices by 18 percent and its export prices by 40 percent. "If we do not increase the prices for rolled steel products, then we will find ourselves in a situation of negative profitability," Mr. Rashnikov said. With regard to the future, the plant's chairman said that he cannot yet make projections, as previously iron ore prices were formed on a yearly basis, but are now formed on a quarterly basis.