NLMK.L Regulatory News (NLMK)

31 January 2011

NLMK Q4 2011 and 12M 2011 Trading update

NLMK, the LSE‐listed leading Russian steel producer, today announces the following regular trading update for

Q4 2011 and FY2011.

- Production,* FY20112

- Crude steel: 12.0 million tonnes (+3.6% year-on-year, hereinafter for annual figures)

- Finished products: 13.1 million tonnes (+12.4%)

- Q4 2011

- Crude steel: 3.2 million tonnes (+9.6% quarter-on-quarter, hereinafter for quarterly figures)

- Finished products: 3.8 million tonnes (+8.3%)

- Sales, FY2011

- Finished products: 12.9 million tonnes (+9.6%), including

- Slabs: 3.2 million tonnes (-17%)

- Flat products: 7.1 million tonnes (+25.2%)

- Long products: 1.3 million tonnes (+11.6%)

- Q4 2011

- Finished products: 3.6 million tonnes (+7.0%), including

- Slabs: 0.8 million tonnes (+40.8%)

- Flat products: 2.0 million tonnes (-7.9%),

 Including high-value added products: 1.2 million tonnes 

- Long products: 0.3 million tonnes (-1.7%)

In Q1 2012 we expect production output to grow 15% quarter-on-quarter, to 3.6 million tonnes, largely driven by the planned increase in utilization rates at Novolipetsk's new steelmaking capacities, as well as the completion of Electric Arc Furnace (EAF) repairs at NLMK's Long Products Division.

* - Production data for NLMK Group and the Lipetsk site is presented in the Appendix

Disclaimer

This announcement may contain a number of forward-looking statements relating to, among others, the financial condition and results of operations of the Company. Such forward-looking statements involve a number of risks and uncertainties that could cause actual results to differ materially from those suggested by them and are based on assumptions regarding the Company's present and future business strategies and the environment in which the Company and its subsidiaries operate both now and in the future. Forward-looking statements speak only as at the date of this announcement and save as required by applicable legal and/or regulatory requirements the Company expressly disclaims any obligation to release publicly any updates or revisions to any forward-looking statements.

Contacts:

NLMK

Sergey Takhiev

Head of investor relations

+7 495 915 1575

st@nlmk.com

FTI Consulting

Ben Brewerton

+44 (20) 7269 7279

About NLMK

NLMK is one of the world's leading producers of steel with 2010 revenue of $8.4 billion. In 2010 the Company produced 11.5 m tonnes of steel. NLMK production facilities located in Russia, the EU and US employ around 60,000 people.

The Company produces a wide range of steel products, including slabs and billets, hot-rolled, thick hot-rolled plates, cold-rolled, pre-painted, electrical steel (transformer grain-oriented steel and dynamo steel), and other high value added grades, as well as a wide range of long products, including rebar, wire-rod and metalware. In 2010 NLMK delivered its products to customers from over 70 countries.

NLMK shares are traded in Russia on MICEX and RTS, and, in the form of GDRs, on the London Stock Exchange.

For more information, please visit our web-site at www.nlmk.com Sales volumes2

NLMK Group:

Novolipetsk (NLMK's main production site in Lipetsk)

VIZ-Stal

Stoilensky

Altai-Koks

Long Products Division4

NLMK Europe

Strip products 6

Plate products (including DanSteel) 6

NLMK USA (including NLMK Indiana)6

1 Q4 2011 production and sales data is preliminary and subject to further update

2Excluding inter-group operations and including sales of trading companies

3 Including hot-rolled pickled steel

4Long Products Division includes the following companies: NSMMZ, UZPS and other scrap collecting facilities

5Including sales of NSMMZ

6NLMK's international business divisions (except DanSteel A/S and NLMK Indiana Inc) are part of the Group since 01 July 2011

*FY2011 data includes the performance of rolling assets that were previously part of the JV with Duferco (first 6M 2011) and is given for reference only.MANAGEMENT COMMENTS

NLMK Group's steel production in Q4 2011 amounted to 3.2 million tonnes (+9.6% quarter‐on‐quarter). The Group's steelmaking facilities were running at about 91% (97% at the Lipetsk production site; 56% at the Long Products Division; and 74% at NLMK's international divisions, including 71% at NLMK Indiana and 79% at NLMK Verona).

Blast Furnace #7 (BF-7) utilization rates at Novolipetsk (NLMK's main production site in Lipetsk) continued to increase as planned. As a result, steel output in Lipetsk grew to 2.7 million tonnes (+12% quarter-on-quarter), given the scheduled BF-5 repairs in October 2011. Launching the new BF-7 and the new BOF in Q4 allowed the Company to additionally produce some 0.4 million tonnes of slabs.

In Q4 the Group's sales grew 7% quarter-on-quarter to 3.6 million tonnes, driven by increased steel product sales from the Lipetsk site on the back of stable sales by NLMK's international assets which totalled 0,935 million tonnes (-1% quarter-on-quarter).

The Group's domestic sales grew 11% quarter-on-quarter to 1,263 million tonnes, or 35% of total sales, supported by stable demand in the Russian market, particularly from the construction industry and service centres.

Exports accounted for 65% of sales, with the bulk going to our traditional markets, Europe, the Middle East and South-East Asia.

The steel market weakened on the back of the seasonal slowdown in a number of regions. In addition, the process of destocking initiated in mid Q3 by trading companies and end consumers in Europe. As a consequence dollar prices in the export markets decreased in the range of 2-10%.

The Group's steel production grew 3.6% to 12 million tonnes, mostly driven by the launch of the new BF-7 (and a new BOF) in H2 2011 at the Lipetsk site.

Following the consolidation of the JV with Duferco rolling assets in H2 2011, total annual sales grew more significantly to a record 12.9 million tonnes. This had an impact on the growth of HVA sales that reached 4.5 million tonnes (+29% year-on-year). This growth was additionally supported as the new pre-painting line at Novolipetsk reached design capacity.

FY2011 domestic sales reached a record 4.5 million tonnes, topping the previous peak of 3.8 million tonnes set in 2008 (+20%). The Company held a share of 47% in the domestic pre-painted steel market, 20% in galvanized steels, 32% in cold-rolled steels, and 14-17% in the rebar and wire rod market.

NLMK Group businesses produced 7.3 million tonnes of finished products, including 4.8 million tonnes by Russian companies and 2.5 million tonnes by foreign assets (since the consolidation of the JV with Duferco starting from July 1, 2011), accounting for 37% and 19%, respectively, of total steel output.

2011 slab deliveries to the Group's international rolling assets, including the JV with Duferco, consolidated in H2, totalled 1.6 million tonnes.

Novolipetsk (NLMK's main production site in Lipetsk)

Q4 crude steel production amounted to 2.7 million tonnes, +12% quarter-on-quarter, due to stable demand and higher utilization rates at the new blast furnace. Steelmaking facilities were running at 97% capacity.

Novolipetsk sales performance was slightly better compared to Q3 (2.6 million tonnes sold), with flat steel products accounting for around 45%. Hot-rolled sales were down 4% quarter-on-quarter on the back of the seasonal drop in demand. Traditionally, during these periods the Company performs scheduled repairs. Nonetheless, pre-painted and non-grain oriented (dynamo) steel sales were higher than in Q3: +1% and 20%, respectively. Transformer steel sales contracted mildly (-5% quarter-on-quarter).

Average sales prices were down 3%-10%, pressured by the seasonal slowdown in the domestic market from the construction sector, as well as the weakening conditions in our export markets. This did not apply to pre-painted and electrical steels that were in stable demand throughout Q4.

In 2011 steel product sales grew 5.5%. High value added product sales increased 2%, driven by the stable demand in the domestic market from construction and machine-building companies, including car manufacturers. Year-on-year slab sales grew almost 5% to a record 4.1 million tonnes as the Company started up BF-7 and launched its new BOF. A third of slabs were delivered to NLMK Europe's rolling assets.

VIZ-Stal

In Q4 transformer steel sales grew 2% quarter-on-quarter to 44,000 tonnes, with approximately 77% going to export. Output remained in line with Q3 (42,400 tonnes).

In 2011 VIZ-Stal's output and sales of transformer steel totalled 171,000 and 169,000, respectively, roughly 10% up year-on-year, driven by the gradually recovering demand. Sales were additionally supported by the significant quality improvements achieved through the Company's ongoing equipment and process upgrade programs.

In mid-2011, VIZ-Stal launched a new Reverse Cold Rolling Mill supplied by Andritz-Sundwig, completing another stage of its program aimed at expanding its capacity and producing new high quality grades of transformer steel.

Stoilensky

In Q4 the Plant's mining and processing capacities continued to run at high utilization rates. Iron ore concentrate production was 12% higher than in Q4 2010, totalling 3.463 million tonnes. This was driven by the launch of an additional 2 mtpy Beneficiation Section in mid 2011.

Iron ore concentrate sales, the bulk of which went to Novolipetsk (89% of total sales), were almost flat sequentially (-3% quarter-on-quarter) at 3.4 million tonnes. Sinter ore sales increased 5% quarter-on-quarter, with 35% going to Novolipetsk.

2011 iron ore concentrate production increased 11% to 13.3 million tonnes; sinter ore production was 1.7 million tonnes, an 105,000 tonne decrease year-on-year.

89% and 35% of iron ore concentrate and sinter ore were delivered to the main site in Lipetsk, and the remainder sold to the third parties.

The Company continues to implement its development project aimed at further expanding its mining and beneficiation (+ 4 million tonnes of concentrate) capacities, and building the new 6 mtpy Pelletizing Plant, expected to become operational in 2014.

Altai-Koks

In Q4 coke output and sales remained sequentially flat at 998,000 and 1,019 million tonnes. 79% went to Novolipetsk, with the remaining part sold to other consumers in the domestic and export markets.

In 2011 the Company produced 3.78 million tonnes of coke (+13% year-on-year). Coke sales totaled 3.8 million tonnes, with the bulk (69%) delivered to Novolipetsk, where pig iron and steelmaking capacities were expanded in 2011.

Together with coke produced at Novolipetsk, NLMK Group's total coke production increased by 9% year-on-year to 6.34 million tonnes. About 82% was consumed in-house, with the remaining part sold to external consumers.

NLMK Long Products

In Q4 sales fell by 12% to 339,000 tonnes, due to the seasonal contraction of demand from construction.

Steel output remained sequentially flat at 276,000 tonnes. While one of its two EAFs was undergoing repairs, the Company partially covered its billet needs by purchases from external suppliers, which allowed it to maintain a significant part of its market share. In the end of January 2012, following repairs to the transformer, the second EAF was re-launched, and currently both EAFs with a total capacity of 2.2 million tonnes are running as planned.

Q4 long steel prices went down as expected (4-9%), pressured bu the seasonal contraction in demand from construction in the domestic market.

FY2011 NLMK Long Product sales totaled 1.6 million tonnes of long flats and billets, 40,000 tonnes up year-on-year despite the fact that the Company's steelmaking capacities were running at 50% in H2 2011 after one of its two EAFs was stopped. Finished product sales grew 15% year-on-year to 1.55 million tonnes; rebar sales grew 35.5% to 1.18 million tonnes.

A complete set of EAF equipment has arrived and is being installed at the Company's Kaluga Mini Mill site. As part of the project in 2012, EAF and rolling complexes will be put in operation, with an output of up to 1.5 mtpy of liquid steel, as well as long products and profiles.

NLMK International operating performance

In Q4 NLMK International's sales remained stable at 935,000 tonnes, insignificantly (-1%) down quarter-on-quarter. Steel production totalled 196,000 tonnes, including 130,000 at NLMK Indiana, where the EAF was running at around 71%, and around 67,000 at Verona (part of NLMK Europe Plate Products).

NLMK Europe

Strip Products

Q4 strip product sales for NLMK La Louviere, NLMK Coating and NLMK Strasbourg totalled 328,000 tonnes (+14% quarter-on-quarter); the Hot Strip Mill was running at around 50%, -4 p.p.

The product mix remained largely unchanged.

Q4 2011 pricing trends were inconsistent across products. On average, euro prices remained in line with Q3 2011.

In the beginning of Q1, demand in the flat steel market grew as end consumers continued to refill their stock, reduced during H2 2011.

Plate Products (incl. NLMK DanSteel)

Sales remained sequentially flat. Consolidated thick plate sales at NLMK DanSteel, NLMK Verona and NLMK Clabecq amounted to 243,000 tonnes. Q4 thick plate output contracted mildly quarter-on-quarter due to somewhat weaker demand. Rolling capacities were running at around 57%. Besides plates, NLMK Verona produced 67,000 tonnes (+12% quarter-on-quarter) of steel, with the bulk being processed into finished products and the rest, around 13,000 tonnes, sold as billets.

Euro prices for the products of the segment fell an average 3%, in line with market trends.

NLMK Clabecq continued to increase capacity utilization rates at its new 250,000 tpy Quenching & Tempering Line to manufacture better quality thick plates. The Line was launched in mid-Q4 2011.

NLMK USA (incl. NLMK Indiana)

NLMK's North American sales contracted mildly as consumers and service centres continued to destock: Q4 sales totalled 364,000 tonnes (-13% quarter-on-quarter), while average sales prices fell an average 6%. Prices picked up somewhat at the end of 2011, the trend crossing over to 2012.

US assets produced around 367,000 tonnes of flat steel products (-15% quarter-on-quarter). NLMK Indiana's EAF was running at around 71%. The overall capacity utilization rate for its hot strip mills was around 56%

In 2011 NLMK Indiana set a new Annual tonnage record in the history of the Company of over 673,000 cast tons.

For more information:

NLMK

Investor Relations:

+7 (495) 915‐1575

e‐mail: ir@nlmk.com

Appendix

NLMK Group Q4 20116 production:

Novolipetsk production volumes in Q4 2011:

6 Excluding inter-group operations

7Including hot-rolled pickled steel