NLMK ups steel output and sales in Q2, expects price drop in Q3

The Russian steelmaker Novolipetsk Steel (NLMK) has announced that in Q2 2010 its total steel product sales amounted to 2.9 million mt - up four percent quarter on quarter and 26.5 percent year on year, and said it expects its Q2 revenue to total about $2.2 billion, with the EBITDA margin to be 25‐30 percent.
 
Accordingly, in Q2 2010, NLMK saw a quarter-on-quarter increase in sales of almost all its subsidiaries, including an eight percent growth in sales of its main production site in Lipetsk, mainly due to the seasonal market recovery.
 
NLMK's domestic sales in Q2 this year reached approximately 30 percent of total sales, a three percentage point increase quarter on quarter, due to the seasonal increase in demand from the construction sector and the recovery of demand from the machine‐building sector.
 
Crude steel output rise to 2.9 million mt in Q2
 
In Q2 2010, NLMK's crude steel production was in line with the previously anticipated volume amounting to 2.9 million mt - up six percent quarter on quarter. NLMK's steelmaking facilities were running at approximately 98 percent capacity, with its main production site in Lipetsk running at 100 percent, while its long product division companies were running at about 92 percent capacity.
 
NLMK anticipates lower prices in Q3
 
NLMK said that since the end of Q2 an increased supply of steel products, coupled with unstable demand from trading companies and end-consumers primarily in a number of export markets, resulted in a price softening starting from mid-May.
 
NLMK anticipates that its sales volumes in Q3 2010 will be comparable to Q2 2010 levels, but it estimates a 10‐15 percent quarter-on-quarter decline in pricing due to the weaker market environment.
 
NLMK said also that it expects global price trends in the short and medium term to remain rather volatile. Price growth will be restrained by the still significant level of idle capacity in the global steel industry. At the same time, the high production costs of non‐integrated steel manufacturers will prompt production cuts providing support for steel prices.