Maintenance, high demand boost NLMK Group’s Q1 production and sales

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NLMK plant

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Russian steelmaking group Novolipetsk Steel (NLMK) reported a 4.1% year-over-year rise in its Q1 crude steel production.

The jump came partly due to completion of maintenance on its long products facility at the Lipetsk site.

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NLMK output rises in Q1

The group tapped 4.37 million metric tons of liquid steel in Q1 2021. Meanwhile, it tapped just over 4.21 million metric tons in Q1 2020, NLMK said.

Crude production rose 12.1% quarter on quarter, however, from 3.9 million metric tons.

Average capacity utilization across all of NLMK’s hot ends in Russia, Italy and the United States averaged 94.5% in Q1. The figure is unchanged from the previous quarter and year over year, the group indicated.

NLMK can produce 17 million metric tons per year of crude steel. That comes mainly from its main integrated site at Lipetsk, about 465 kilometers southeast of capital city Moscow. That asset also casts slab for further rolling at the plant or for export to subsidiary rolling mills in Europe and the United States.

The group also has electric arc furnaces in Russia at NLMK Kaluga, NLMK Ural, at its Italian site NLMK Verona and at NLMK Indiana in the United States.

Indiana can produce 770,000 metric tons per year of crude via one electric arc furnace. Estimated crude capacity from the 68-tonne EAF at Verona is about 500,000 metric tons per year.

NLMK’s consolidated sales, including semi-finished and finished products, fell 3% on the year to 3.91 million metric tons from 4.5 million metric tons.

Quarter-over-quarter sales were 14% lower from 4.22 million metric tons, the group said.

A decrease in commercial pig iron sales due to repairs to blast furnace operations at Lipetsk, plus an increase in intragroup slab sales, impacted sales results, NLMK said.

The group’s consolidated flat sales rose by 2% in Q1, however, to about 2.06 million metric tons from 2.02 million metric tons in Q4 2020. Those sales are down 7% from the more than 2.21 million metric tons the group sold in Q1 2020.

NLMK Russia Long Products, the only segment of the group that produces finished and longs, saw the highest increases in consolidated quarter on quarter at 635,000 metric tons, up 8% from 587,000 metric tons.

Year over year, the increase rises to 18% from 539,000 metric tons.

Strong demand

Strong demand by service centers on the Russian market, along with high-volume traders restocking their inventories in anticipation of increased demand in the construction market, powered the increases.

Flat product sales in the United States rose 16% to 431,000 metric tons in Q1 compared with Q4 2020. High demand for HRC and hot dipped galvanized coil led the increase.

The total, however, fell by 20% from the 537,000 metric tons sold in Q1 2020.

“Sales in that segment increased by 16% quarter on quarter to 430,000 metric tons [off 20% on the year], due to higher sales of hot-rolled and galvanized steel driven by higher demand across all main sectors. The strike at NLMK Pennsylvania ended in March,” the group stated.

Price rises

Average flat steel prices in the United States rose 89% year over year in Q1. HRC prices approached $1,500 per metric ton toward the end of March, NLMK said.

Those same prices were also up 53% quarter over quarter.

Prices grew across all key regions. Economic activity continued to recover and demand for product outstripped supply.

“The high price of the raw materials basket served as an additional factor,” NLMK stated in the report.

“I think that higher steel and commodity prices will continue for several months, but they can’t stay high forever,” one analyst told MetalMiner.

Elsewhere around Europe

Plate sales from NLMK’s DanSteel plant, near Denmark’s capital city of Copenhagen, rose 6% in Q1 to 174,000 metric tons. Demand recovery in the wind, transport machine building and automotive sectors within the European Union paced the rise.

Meanwhile, quarter over quarter, sales rose 23%.

NLMK Belgium Holdings (NBH) fell 18% on the year to 495,000 metric tons from 605,000 metric tons. The drop resulted from lower shipments of hot-rolled products against the backdrop of the planned NLMK La Louvière Hot Strip Mill upgrade, the group stated.

Besides La Louvière, NBH’s assets include NLMK Strasbourg European strip manufacturers, NLMK Manage Service Center, as well as plate manufacturers NLMK Clabecq and the NLMK Verona sites.

NBH produces HRC, CRC, coated steels, heavy plate and ingots.

NBH is a joint venture between NLMK Group (49%) and the Belgian state-owned investment fund SOGEPA (49%); the remaining 2% are treasury shares.

Sales from the NLMK Russia Flat Products division, not including slabs, fell 14% to almost 3 million metric tons from 3.47 million metric tons, the group said.

Quarter over quarter sales fell 6% from 3.17 million metric tons. The company attributed the drop to lower pig iron sales as a result of blast furnace repairs at the Lipetsk site. It also cited poor weather conditions at Black Sea ports earlier in the three months.

Inventory growth, driven by a higher share of export shipments with longer lead times, also impacted finished sales, the group added.

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