NLMK.L Regulatory News (NLMK)

Investor relations contact:

Dmitriy Kolomytsyn, CFA

+7 (495) 504 0 504

ir@nlmk.com

Media relations contact:

Maria Simonova

+7 (915) 322 62 25

simonova_mn@nlmk.com

NLMK Group's Q2 2021 operating performance

Steel output increased by 5% to 4.6 m t (+19% yoy) with NLMK equipment ramp-up after the overhaul.

Sales reached 4.3 m t (+11% qoq; -1% yoy) due to an increase in the export of slabs to Middle Eastern and EU markets.

Sales mix: the share of semi-finished products increased qoq against the backdrop of an increase in the supply of pig iron, billets and slabs to third parties by 57% qoq. Sales of finished products amounted to 2.7 m t (+1% qoq, +12% yoy, Appendix 2).

Sales in the 'home' markets reached 2.8 m t (+1% qoq; +19% yoy). Sales to the Russian market increased by 8% qoq to 1.8 m t (+26% yoy) with the start of the construction season. Sales in the US increased by 17% qoq amid increased shipments of NLMK slabs with a corresponding growth of rolled steel capacity utilization rates. In the EU, sales decreased by 28% qoq (-18% yoy) due to the upgrade of the NLMK La Louvière hot strip mill (a Strategy 2022 project, Appendix 14).

Sales in export markets increased by 20% qoq to 1.4 m t (-30% yoy).

NLMK Group's 6M 2021 operating performance

Steel output increased by 11% yoy with the completion of the overhauls at NLMK Lipetsk's BOF operations.

Sales amounted to 8.2 m t (-7% yoy) following the redistribution of slab supplies to NLMK USA amid a strong consumption trend in the region.

Sales mix: sales of semi-finished products to third parties decreased by 23% yoy with the resumption of slab deliveries to NLMK USA. Shipments of NBH slabs totalled 0.93 m t (-23% yoy). Sales of finished rolled products grew by 5% yoy to 5.4 m t (Appendix 2).

Sales on 'home' markets increased by 3% to 5.5 m t, supported by sales growth in Russia and the United States (Appendix 14).

Sales in export markets decreased by 23% to 2.6 m t due to the high base in the same period last year (non-traditional export markets).

GLOBAL PRICES IN Q2 2021

Average raw material prices

· Australian coking coal prices strengthened by 6% qoq (+12% yoy) amid stock replenishment in India, Japan and South Korea. By the end of the reporting period, quotations for Australian coal grew significantly against the backdrop of speculative demand from traders from the United States to resell coal to China. With the continued ban on coal imports from Australia, coking coal prices in China increased by 17% qoq (+98% yoy) due to increased steel production and limited supplies from Mongolia. Coal prices in Russia increased by 27% qoq (+34% yoy) with increased demand from China.

· The increase in prices for iron ore raw materials by 18% qoq (+113% yoy) was supported by record high volumes of steel production in China, the recovery of steelmaking in other regions and the limited supply of iron ore from Brazil.

· Scrap prices in the US and the EU improved by 8% qoq (+87% yoy) with an increase in global steel prices. The seasonal increase in scrap generation offset the trend. Dollar-denominated prices in Russia grew by 4% qoq (+84% yoy). The moderate price growth trend in Russia is associated with the seasonal growth of scrap collection in the domestic market and current export duties.

Average steel product prices

· Quotations for steel products grew in all key regions. In the US and the EU, end demand for steel was high, stocks remained lean.

· In Russia, dollar-denominated prices for uncoated flat rolled products increased by 36% qoq (+114% yoy), and by 13% qoq (+78% yoy) for rebar.

· Slab export price (FOB Black Sea) increased by 29% qoq (+154% yoy), the increase was supported by high demand and prices for finished products in international markets.

· Average flat steel prices in the US grew by 28 % qoq (+179 % yoy). In June 2021, prices for hot-rolled products reached an all-time-high, approaching $1,900/t.

· In the EU, dollar-denominated prices for flat rolled products set a record since 2008 with an increase of 44% qoq (+155% yoy).

SEGMENTAL PERFORMANCE

NLMK RUSSIA FLAT PRODUCTS [1]

Q2 2021 performance

Steel output increased by 7% qoq to 3.6 m t supported by equipment ramp-up after the overhaul. Year-on-year, steel output increased by 13% (Appendix 9).

Sales of the segment grew by 18% qoq, reaching 3.5 m t (+3% yoy) due to shipments of slabs and pig iron to export markets. The increase in the slab supply is associated with an increase in steel output and the sale of some of the inventory volumes in the Black Sea ports, which have stockpiled by the end of the previous quarter due to adverse weather conditions (Appendix 2).

Sales mix: Sales of semi-finished products to third parties increased by 61% qoq to 1 m t, due mainly to sales growth in export markets. Slab shipments to the Group companies and NBH reached 1.1 m t (+24% qoq; +89% yoy).

Shipments of finished rolled products decreased by 5% qoq to 1.4 m t (-8% yoy) against the backdrop of a decrease in the supply of hot-rolled and cold-rolled products during planned overhauls of rolling equipment (Appendix 3).

Sales markets: shipments in Russia increased by 7% qoq to 1.3 m t (+16% yoy) due to a seasonal increase in demand (Appendix 3).

Exports increased by 24% qoq to 2.3 m t (-3% yoy), due mainly to the positive slab supply trend.

6M 2021 performance

Steel output grew by 6% yoy to 6.9 m t with the completion of the NLMK Lipetsk steelmaking operations upgrade (Appendix 9).

Sales of the Segment decreased by 5% yoy to 6.5 m t against the backdrop of planned repairs at the rolling shops, and the increase in the average slab delivery period as shipments resumed to NLMK USA (Appendix 2).

Sales structure: sales of finished rolled products decreased by 6% yoy to 2.8 m t due to planned repairs of hot and cold rolling mills in H1 2021.

Sales of semi-finished products to third parties decreased by 29% yoy to 1.7 m t due mainly to a drop in export shipments of pig iron. Sales of semi-finished products to the Group companies and NBH increased by 30% yoy to 2.0 m t due to an increase in slab shipments to the United States (Appendix 3).

Sales markets: deliveries in Russia decreased by 1% yoy to 2.4 m t due to a reduction in the sales of slabs and hot rolled products due to planned repairs in the BOF Shop and HSM upgrade in Q1-Q2 2021. The decrease was almost completely offset by an increase in the sales of cold rolled products to 0.5 m t (+15% yoy) (Appendix 3).

Exports decreased by 8% yoy to 4.1 m t, due to the high base of the same period last year, when sales were redistributed to export markets due to weak demand in Russia during quarantine restrictions.

NLMK RUSSIA LONG PRODUCTS [2]

Q2 2021 performance

Steel output decreased by 2% qoq to 0.8 m t (Appendix 9). Year-on-year, steel output increased by 27%, which was due to the low base effect amid the reduction of the production programme due to the pandemic.

Sales increased by 11% qoq to 0.8 m t (+38% yoy) due to an increase in shipments to the Russian market (+10% qoq; +54% yoy), as well as amid increased sales of long products to the markets of China and Europe. Sales of finished products reached 0.7 m t (+7% qoq; +42% yoy) (Appendix 4).

Sales markets: export sales amounted to 0.3 m t (+11% qoq; +11% yoy). The volume of sales in Russia increased by 10% qoq to 0.6 m t (+54% yoy). The share of the Russian market was 69% (0 p.p. qoq; +7 p.p. yoy).

Scrap: scrap sales increased by 91% qoq to 1.5 m t (+45% yoy) due to the seasonal replenishment of scrap stocks. The Group companies accounted for 99% of total scrap sales (Appendix 4).

6M 2021 performance

Steel output increased by 23% yoy to 1.6 m t against the backdrop of a low base last year, when the production programme was reduced due to the COVID-19 pandemic.

Sales grew by 34% yoy to 1.6 m t with an uptick in activity in the construction sector (Appendix 4).

Sales markets: the Russian market accounted for 69% (+3 p.p. yoy). The volume of steel product sales in Russia increased by 40% yoy to 1.1 m t. Export sales increased by 22% yoy to 0.5 m t.

Scrap: scrap sales increased by 30% yoy to 2.4 m t with the growth of steel output in the Long Products Segment (Appendix 4).

MINING AND PROCESSING OF RAW MATERIALS

Q2 2021 performance

Iron ore raw materials output increased by 5% qoq to 5.1 m t (+4% yoy) with an increase in equipment productivity and higher demand for raw materials at NLMK Lipetsk (Appendix 12).

Iron ore sales grew by 8 % qoq to 5.2 m t (+6 % yoy), following the increase in production.

Sales to third parties increased to 277,000 t (-39% yoy) with an increase in the production of iron ore raw materials and the sale of some of the previous quarter volumes accumulated in the ports.

6M 2021 performance

Iron ore raw materials output increased by 5% yoy to 10 m t (Appendix 12

Iron ore raw materials sales increased by 5% yoy to 10 m t, following the increase in production (Appendix 5).

Sales of iron ore raw materials to third parties decreased by 43% yoy to 0.3 m t due to the growth of NLMK Lipetsk's demand for raw materials.

NLMK USA

Q2 2021 performance

Segment sales increased by 17% qoq to 0.5 m t (+52% yoy) due to an increase in the supply of NLMK slabs and the corresponding recovery of rolled steel production utilization rates in a strong market (Appendix 6).

6M 2021 performance

Sales totalled 0.9 m t (+8% yoy) amid recovering demand for steel in the United States compared to the same period last year (Appendix 6).

NLMK DANSTEEL:

Q2 2021 performance

Sales decreased by 7% qoq to 0.16 m t (+33% yoy) against the backdrop of order book optimization, as well as the high base of Q1 2021, when a part of the volumes shipped at the end of last year was recognized (Appendix 7).

6M 2021 performance

Sales increased by 17% yoy to 0.34 m t with the recovery of steel demand in the EU (Appendix 7).

JOINT VENTURE - NLMK Belgium Holdings (NBH) [3]

Q2 2021 performance

Sales decreased by 34% qoq to 0.3 m t (-30% yoy) amid the planned upgrade of the NLMK La Louvière HSM (Strategy 2022 project) (Appendix 8).

6M 2021 performance

Shipments decreased by 23% yoy to 0.8 m t (Appendix 8).

Production, m t

Q2 2021

Q1 2021

QoQ

Q2 2020

YoY

6M 2021

6M 2020

YoY

Crude steel production (w/o NBH)

4.523

4.307

5%

3.809

19%

8.829

7.980

11%

Crude steel production (with NBH)

4.582

4.365

5%

3.855

19%

8.948

8.065

11%

Capacity utilization

96%

95%

+1 p.p.

91%

+5 p.p.

95%

93%

+2 p.p.

Sales, m t

Semi-finished steel 5

1.609

1.217

32%

1.928

-17%

2.826

3.680

-23%

Finished steel

2.720

2.690

1%

2.424

12%

5.410

5.177

5%

Flat

2.041

2.056

-1%

1.946

5%

4.097

4.160

-2%

Longs and metalware

0.679

0.635

7%

0.478

42%

1.314

1.017

29%

Total consolidated sales

4.329

3.908

11%

4.352

-1%

8.237

8.857

-7%

Sales to home markets of the Group 6

66%

70%

-4 p.p.

53%

+13 p.p.

68%

61%

+7 p.p.

Sales to external markets

34%

30%

+4 p.p.

47%

-13 p.p.

32%

39%

-7 p.p.

For information: slab sales to foreign subsidiaries and affiliates

1.130

0.911

24%

0.598

89%

2.041

1.568

30%

Segment sales

Russian Flat Products

3.527

2.997

18%

3.432

3%

6.524

6.902

-5%

Russian Long Products

0.818

0.740

11%

0.594

38%

1.558

1.163

34%

Mining

5.159

4.785

8%

4.880

6%

9.944

9.484

5%

NLMK USA

0.502

0.431

17%

0.330

52%

0.933

0.867

8%

Dansteel

0.162

0.174

-7%

0.122

33%

0.336

0.286

17%

For information: NBH Sales

0.329

0.495

-34%

0.468

-30%

0.824

1.073

-23%

Sales, m t

Q2 2021

Q1 2021

QoQ

Q2 2020

YoY

6M 2021

6M 2020

YoY

Pig iron

0.134

0.032

> 100%

0.368

-63%

0.166

0.659

-75%

Slabs incl.

2.014

1.514

33%

1.571

28%

3.529

3.236

9%

Slab sales to foreign subsidiaries and affiliates

1.130

0.911

24%

0.598

89%

2.041

1.568

30%

to NLMK USA, NLMK Dansteel

0.679

0.432

57%

0.126

> 100%

1.111

0.361

> 100%

to NBH

0.451

0.479

-6%

0.472

-5%

0.930

1.206

-23%

Hot-rolled steel

0.607

0.666

-9%

0.764

-20%

1.274

1.405

-9%

Cold-rolled steel

0.323

0.387

-17%

0.322

0%

0.711

0.738

-4%

Galvanized steel

0.212

0.184

15%

0.185

15%

0.396

0.400

-1%

Pre-painted steel

0.096

0.081

20%

0.096

0%

0.177

0.193

-9%

Dynamo steel

0.062

0.065

-4%

0.062

1%

0.127

0.134

-5%

Transformer steel

0.077

0.067

15%

0.065

18%

0.144

0.135

7%

incl. VIZ-Steel

0.046

0.038

20%

0.041

12%

0.085

0.078

8%

Total products

3.527

2.997

18%

3.432

3%

6.524

6.902

-5%

Coke sales from Altai-Koks

0.816

0.774

5%

0.821

-1%

1.590

1.651

-4%

incl. to Novolipetsk

0.714

0.664

8%

0.685

4%

1.379

1.374

0%

Sales, m t

Q2 2021

Q1 2021

QoQ

Q2 2020

YoY

6M 2021

6M 2020

YoY

Russian market

1.250

1.164

7%

1.079

16%

2.414

2.443

-1%

Semi-finished products

0.219

0.199

10%

0.176

24%

0.418

0.466

-10%

Hot-rolled steel

0.446

0.414

8%

0.412

8%

0.859

0.905

-5%

Cold-rolled steel

0.250

0.262

-5%

0.187

33%

0.512

0.444

15%

Galvanized steel

0.206

0.179

15%

0.177

16%

0.385

0.376

2%

Pre-painted steel

0.095

0.080

19%

0.096

0%

0.176

0.193

-9%

Dynamo steel

0.023

0.021

12%

0.020

15%

0.044

0.038

14%

Transformer steel

0.011

0.010

11%

0.011

5%

0.021

0.020

4%

Export markets

2.276

1.833

24%

2.353

-3%

4.110

4.459

-8%

Semi-finished products

1.930

1.348

43%

1.762

10%

3.277

3.430

-4%

Hot-rolled steel

0.162

0.253

-36%

0.352

-54%

0.415

0.500

-17%

Cold-rolled steel

0.074

0.125

-41%

0.135

-45%

0.199

0.294

-32%

Galvanized steel

0.005

0.005

0%

0.008

-28%

0.011

0.024

-55%

Pre-painted steel

0.001

0.001

92%

0.000

> 100%

0.001

0.001

82%

Dynamo steel

0.039

0.044

-12%

0.042

-6%

0.083

0.095

-13%

Transformer steel

0.066

0.057

15%

0.055

20%

0.123

0.115

7%

Total sales

3.527

2.997

18%

3.432

3%

6.524

6.902

-5%

Sales, m t

Q2 2021

Q1 2021

QoQ

Q2 2020

YoY

6M 2021

6M 2020

YoY

Billet

0.139

0.105

33%

0.116

20%

0.244

0.146

67%

Rebar

0.524

0.508

3%

0.370

42%

1.032

0.759

36%

Sections

0.008

0.002

> 100%

0.012

-31%

0.010

0.040

-75%

Wire rod

0.067

0.062

8%

0.044

53%

0.129

0.101

27%

Metalware

0.080

0.063

27%

0.053

52%

0.143

0.118

22%

Total steel products

0.818

0.740

11%

0.594

38%

1.558

1.163

34%

Ferrous and non-ferrous scrap, incl.

1.546

0.808

91%

1.069

45%

2.354

1.817

30%

to NLMK Ural

0.590

0.324

82%

0.412

43%

0.915

0.739

24%

to NLMK Kaluga

0.392

0.270

45%

0.265

48%

0.661

0.437

51%

to Novolipetsk

0.549

0.199

> 100%

0.371

48%

0.748

0.598

25%

Sales, m t

Q2 2021

Q1 2021

QoQ

Q2 2020

YoY

6M 2021

6M 2020

YoY

Iron ore concentrate

2.895

2.621

10%

2.941

-2%

5.516

5.507

0%

incl. to Novolipetsk

2.727

2.621

4%

2.489

10%

5.348

4.980

7%

Sinter ore

0.353

0.265

33%

0.254

39%

0.619

0.505

23%

incl. to Novolipetsk

0.244

0.243

0%

0.254

-4%

0.487

0.505

-3%

Pellets

1.911

1.899

1%

1.685

13%

3.809

3.473

10%

incl. to Novolipetsk

1.911

1.899

1%

1.685

13%

3.809

3.473

10%

Total iron ore

5.159

4.785

8%

4.880

6%

9.944

9.484

5%

Sales, m t

Q2 2021

Q1 2021

QoQ

Q2 2020

YoY

6M 2021

6M 2020

YoY

Hot-rolled steel

0.297

0.292

2%

0.140

> 100%

0.589

0.420

40%

Cold-rolled steel

0.082

0.044

88%

0.083

-1%

0.126

0.195

-35%

Galvanized steel

0.122

0.095

29%

0.107

14%

0.217

0.253

-14%

Total NLMK USA 8

0.502

0.431

17%

0.330

52%

0.933

0.867

8%

Sales, m t

Q2 2021

Q1 2021

QoQ

Q2 2020

YoY

6M 2021

6M 2020

YoY

Thick plates

0.162

0.174

-7%

0.122

33%

0.336

0.286

17%

Sales, m t

Q2 2021

Q1 2021

QoQ

Q2 2020

YoY

6M 2021

6M 2020

YoY

Hot-rolled steel

0.098

0.236

-59%

0.264

-63%

0.334

0.626

-47%

Cold-rolled steel

0.005

0.008

-34%

0.006

-15%

0.013

0.016

-17%

Coated steel

0.051

0.074

-32%

0.053

-5%

0.125

0.131

-5%

Total flat steel

0.153

0.318

-52%

0.323

-53%

0.471

0.772

-39%

Semi-finished (ingots)

0.021

0.021

1%

0.014

47%

0.042

0.029

46%

Thick plates

0.155

0.156

-1%

0.130

19%

0.311

0.271

15%

Total steel products

0.329

0.495

-34%

0.468

-30%

0.824

1.073

-23%

Production, m t

Q2 2021

Q1 2021

QoQ

Q2 2020

YoY

6M 2021

6M 2020

YoY

Lipetsk site

3.557

3.331

7%

3.145

13%

6.887

6.470

6%

NLMK Long Products

0.777

0.789

-2%

0.610

27%

1.566

1.269

23%

incl. NLMK Kaluga

0.310

0.333

-7%

0.272

14%

0.644

0.528

22%

NLMK Indiana (NLMK USA)

0.189

0.187

2%

0.053

> 100%

0.376

0.241

56%

NLMK Group (without NBH)

4.523

4.307

5%

3.809

19%

8.829

7.980

11%

for information

NBH, NLMK Europe (EAF)

0.060

0.059

2%

0.046

30%

0.119

0.085

40%

NLMK Group (with NBH)

4.582

4.365

5%

3.855

19%

8.948

8.065

11%

Production, m t

Q2 2021

Q1 2021

QoQ

Q2 2020

YoY

6M 2021

6M 2020

YoY

Merchant pig iron

0.157

0.091

72%

0.422

-63%

0.248

0.764

-68%

Merchant slabs

1.338

1.192

12%

1.365

-2%

2.530

2.778

-9%

Flat steel

2.104

2.096

0%

1.978

6%

4.200

4.219

0%

Merchant billets

0.111

0.088

26%

0.097

15%

0.199

0.137

45%

Long products

0.579

0.597

-3%

0.436

33%

1.176

0.980

20%

Metalware

0.074

0.072

3%

0.053

38%

0.145

0.121

20%

Total products

4.362

4.135

5%

4.351

0%

8.497

8.999

-6%

Production, m t

Q2 2021

Q1 2021

QoQ

Q2 2020

YoY

6M 2021

6M 2020

YoY

Merchant pig iron

0.157

0.091

72%

0.422

-63%

0.248

0.764

-68%

Merchant slabs

2.017

1.624

24%

1.491

35%

3.640

3.140

16%

Hot-rolled steel

0.652

0.696

-6%

0.751

-13%

1.348

1.425

-5%

Cold-rolled steel

0.323

0.408

-21%

0.343

-6%

0.731

0.747

-2%

Galvanized steel

0.213

0.189

12%

0.212

0%

0.402

0.421

-5%

Pre-painted steel

0.090

0.097

-7%

0.112

-19%

0.188

0.221

-15%

Dynamo steel

0.057

0.062

-8%

0.066

-14%

0.118

0.128

-8%

Transformer steel

0.074

0.067

10%

0.069

8%

0.142

0.134

6%

Total steel products

3.582

3.235

11%

3.467

3%

6.818

6.980

-2%

Production, m t

Q2 2021

Q1 2021

QoQ

Q2 2020

YoY

6M 2021

6M 2020

YoY

Coke

1.408

1.375

2%

1.438

-2%

2.782

2.886

-4%

Novolipetsk

0.606

0.599

1%

0.605

0%

1.205

1.211

0%

Altai-Koks

0.802

0.775

3%

0.833

-4%

1.577

1.675

-6%

Iron ore

5.067

4.841

5%

4.861

4%

9.908

9.479

5%

Iron ore concentrate

2.842

2.800

1%

2.877

-1%

5.642

5.466

3%

Sinter ore

0.326

0.266

23%

0.260

25%

0.592

0.515

15%

Pellets

1.899

1.775

7%

1.724

10%

3.674

3.498

5%

Scrap

0.744

0.428

74%

0.509

46%

1.173

0.883

33%

Sales, m t

Q2 2021

Q1 2021

QoQ

Q2 2020

YoY

6M 2021

6M 2020

YoY

Semi-finished

1.609

1.217

32%

1.928

-17%

2.826

3.680

-23%

Pig iron

0.133

0.030

> 100%

0.368

-64%

0.163

0.659

-75%

Slabs

1.337

1.082

23%

1.445

-7%

2.419

2.875

-16%

Billet

0.139

0.105

33%

0.116

20%

0.244

0.146

67%

Flat steel

2.041

2.056

-1%

1.946

5%

4.097

4.160

-2%

Plate

0.163

0.175

-7%

0.122

33%

0.338

0.286

18%

Hot-rolled steel

0.904

0.957

-6%

0.904

0%

1.861

1.825

2%

Cold-rolled steel

0.406

0.431

-6%

0.405

0%

0.837

0.933

-10%

Galvanized steel

0.334

0.279

20%

0.292

14%

0.613

0.653

-6%

Pre-painted steel

0.096

0.081

20%

0.096

0%

0.177

0.193

-9%

Transformer steel

0.077

0.067

15%

0.065

18%

0.144

0.135

7%

Dynamo steel

0.062

0.065

-4%

0.062

1%

0.127

0.134

-5%

Long products

0.679

0.635

7%

0.478

42%

1.314

1.017

29%

Long

0.599

0.572

5%

0.426

41%

1.171

0.900

30%

Metalware

0.080

0.063

27%

0.053

52%

0.143

0.118

22%

Total steel products

4.329

3.908

11%

4.352

-1%

8.237

8.857

-7%

Sales, m t

Q2 2021

Q1 2021

QoQ

Q2 2020

YoY

6M 2021

6M 2020

YoY

Home

2.771

2.733

1%

2.325

19%

5.504

5.347

3%

Russia

1.817

1.676

8%

1.447

26%

3.492

3.214

9%

USA

0.502

0.431

17%

0.330

52%

0.933

0.867

8%

EU

0.451

0.626

-28%

0.548

-18%

1.078

1.266

-15%

Export

1.424

1.188

20%

2.023

-30%

2.612

3.377

-23%

Total steel products

4.194

3.921

7%

4.348

-4%

8.116

8.723

-7%