MMK fails to meet production goals
The inflated prices of raw materials such as coal and iron ore forced Russian steelmaker Magnitogorsk Iron & Steel Works (MMK) to reduce production levels for certain products. A company release details that the steelmaker failed to meet planned cast iron and steel production targets in January and February. The largest shortfall was in February, when the company only achieved 96.9% of planned cast iron production. MMK cited the poor performance of the blast-furnace plant as being one of the main reasons behind the companys sub par performance. The domestic price for coal rose nearly 52% from December 2004 to March 2005, forcing MMK to turn to lower quality substitutes. This resulted in sporadic failures of the blast furnace, thus preventing MMK from reaching its production goals. In addition to the coal problem, the company faces an equally troublesome quandary regarding iron ore. Since the end of last year, Russian ore prices have soared from $40 to $110 per ton. Possible contract price revisions in April may lead the largest ore producers to raise their prices even higher.