Improved economic activity boosts NLMK’s H1 operational results

by on

Novolipetsk Steel (NLMK) reported a 10.8% increase year over year in its crude production for H1 2021. The steelmaker benefited from stronger demand, as economies in Russia and abroad restarted economic activity, the group said.

Volatility is the name of the game. Do you have a steel buying strategy that can handle the ups and downs?

NLMK ramps up production

Postmodern Studio/Adobe StockTotal crude production across all NLMK’s steelmaking assets came to 8.94 million metric tons, compared with 8.07 million tons over the same time in 2020, the group said in its July 13 operational results.

Rebuilding work on the converter shop at NLMK’s main site in Lipetsk also helped to raise production, the group added. Its capacity percentage averaged to 95.5%, up from 93% over the first six months of 2020.

NLMK has a crude steel capacity of 17 million metric tons per year. The majority of that volume comes from Lipetsk, which can pour up to 12.4 million metric tons per year. The crude steel is then cast into slab for rolling hot and cold rolled coil transformer and dynamo steel, as well as pre-painted.

Lipetsk also supplies its slabs to assets in Europe and the United States for further rolling into coils or plate.

In addition, NLMK Indiana’s EAF can produce 770,000 metric tons of liquid steel, which it casts into slab and rolls into hot rolled coil.

The group can also pour 2 million metric tons per year of crude from two electric arc furnaces at NLMK Ural and an additional 1.5 million metric tons from one EAF at NLMK Kaluga, respectively 50 kilometers west of Yekaterinburg and 200 kilometers southwest of capital city Moscow.

NLMK Ural casts billet for sales and for rolling into rebar and further downstream into wire rod. NLMK Kaluga also produces billet for sale and as feedstock to produce rebar as well as sections.

Sales down 7%

NLMK’s sales across the group in H1 fell 7% to almost 8.24 million metric tons from 8.86 million metric tons, NLMK indicated. The drop was due to scheduled repairs on Lipetsk’s rolling mills in April and an increase in average transit times of slabs to the United States, following the resumption of deliveries there.

Total flat sales fell 1.5% to over 4.09 million metric tons from about 4.16 million metric tons, the group noted.

Sales of long products were almost 30% higher in H1 at 1.31 million metric tons, led by rising activity in the construction sector.

Long sales in Q2 saw the largest increase of all segments with a 42% rise to 679,000 metric tons from 478,000 metric tons over the same time in 2020.

Housing starts in Russia jumped 28.4% year over year to 2.88 million square meters from over 2.23 million square meters, news agency TASS reported on July 1, citing official statistics.

May alone saw housing starts rise to 5 million square meters, up from slightly less than 3.75 million square meters, the TASS report added.

The domestic market was the main target of NLMK’s sales, averaging 68% of volumes in H1 (up from 61% over the same time 2020).

“Volumes in the first half of 2020 were reallocated in favor of exports due to weak demand in Russia during the quarantine restrictions,” the company noted.

Remaining volumes in each case went to the export market.

Sales on the Russian market in Q2 rose 26% year over year to 1.8 million metric tons with the start of the construction season, NLMK stated.

U.S. sales rose 17% quarter on the back of an increase in NLMK slab shipments and an increase in the utilization of rolled products.

Modernization work on NLMK’s La Louvière hot rolling mill in Belgium pushed down Q2 sales in the E.U. segment by 18% on the year, the group noted.

The MetalMiner Best Practice Library offers a wealth of knowledge and tips to help buyers stay on top of metals markets and buying strategies.

Leave a Comment

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.