NLMK.L Regulatory News (NLMK)

18 Jul 2007 10:00

OJSC Novolipetsk Steel18 July 2007 Novolipetsk Steel (NLMK) releases trading update for Q2 2007 OJSC Novolipetsk Steel (LSE: NLMK) today released the following regular trading update for Q2 2007. 1. Production volumes* The table below shows the production of principal steel products at NLMK's main production site for Q2 2007: Q2 2007 Q1 2007 Q2 2006 Q2 2007 /Q2 Q2 2007 / Q1 2006 2007 Amount, million metric tonnes Change (%) Pig Iron 2.109 2.338 2.322 -9.2% -9.8% Steel 2.202 2.341 2.301 -4.3% -6.0% Slabs 0.917 1.054 0.977 -6.1% -13.0% Hot-rolled steel** 0.421 0.412 0.412 2.2% 2.2% Cold-rolled steel 0.413 0.454 0.461 -10.5% -9.1% Hot dip galvanized steel 0.136 0.091 0.104 30.7% 50.0% Pre-painted steel 0.094 0.086 0.079 18.9% 8.5% Non-grain-oriented steel 0.097 0.094 0.083 17.5% 4.1% Grain-oriented steel 0.037 0.035 0.034 6.8% 5.1% ** Including HR coils supplied to other production facilities The table below shows production at NLMK's Danish subsidiary, DanSteel A/S for Q2 2007: Q2 2007 Q1 2007 Q2 2006 Q2 2007 /Q2 Q2 2007 / Q1 2006 2007 Amount, million metric tonnes Change (%) Heavy plates 0.129 0.150 0.111 16.2% -14.2% The table below shows production at VIZ-Stal: Q2 2007 Q1 2007 Q2 2006 Q2 2007 /Q2 Q2 2007 / Q1 2006 2007 Amount, million metric tonnes Change (%) Grain-oriented steel 0.048 0.045 0.045 4.8% 4.7% Non-grain-oriented steel 0.006 0.004 0.005 26.4% 69.5% The table below shows production at Stoilensky GOK: Q2 2007 Q1 2007 Q2 2006 Q2 2007 /Q2 Q2 2007 / Q1 2006 2007 Amount, million metric tonnes Change (%) Iron ore Iron ore concentrate 2.945 2.892 2.817 4.5% 1.8% Sinter ore 0.452 0.394 0.380 18.9% 14.7% The table below shows coke production at Altai-koks: Q2 2007 Q1 2007 Q2 2006 Q2 2007 /Q2 Q2 2007 / Q1 2006 2007 Coke 1.045 0.879 0.644 62.3% 18.9% * All information on Q2 2007 production volumes is preliminary and may be subject to change. 2. Realized prices* Realized prices are calculated by dividing sales revenue after transportationcosts by sales volume. Such calculation does not differentiate betweenparticular product types and grades within a product sub-category. Realizedprices are not indicative of actual contract prices and can serve as anapproximation only. All information on Q2 2007 prices is preliminary and may besubject to change. The table below shows average prices for NLMK's main steel products in Q2 2007: Q2 2007 Q1 2007 Q2 2006 Q2 2007 / Q2 Q2 2007 / Q1 2006 2007 USD per tonne (FCA)*** Change (%) Pig Iron 281,0 259,5 212,8 32,1% 8,3% Slabs 455,5 372,1 325,3 40,0% 22,4% Hot-rolled steel 596,4 524,1 506,6 17,7% 13,8% Cold-rolled steel 651,6 582,7 547,6 19,0% 11,8% Hot dip galvanized steel 981,6 955,7 791,9 24,0% 2,7% Pre-painted steel 1258,9 1136,5 931,9 35,1% 10,8% Non-grain-oriented steel 723,6 715,3 651,9 11,0% 1,2% Grain-oriented steel 3428,1 3330,1 2927,1 17,1% 2,9% The table below shows DanSteel A/S average prices: Q2 2007 Q1 2007 Q2 2006 Q2 2007 / Q2 Q2 2007 / Q1 2006 2007 USD per tonne (FCA)* Change (%) Heavy plates 741.7 747.1 543.9 36.4% -0.7% The table below shows VIZ-Stal average prices: Q2 2007 Q1 2007 Q2 2006 Q2 2007 / Q2 Q2 2007 / Q1 2006 2007 USD per tonne (FCA)* Change (%) Grain-oriented steel 3495.3 3326.5 2973.0 17.6% 5.1% Non-grain-oriented steel 919.8 945.8 917.9 0.2% -2.8% The table below shows Stoilensky GOK average prices: Q2 2007 Q1 2007 Q2 2006 Q2 2007 / Q2 Q2 2007 / Q1 2006 2007 USD per tonne (FCA)* Change (%) Iron ore Iron ore concentrate 65.3 64.3 36.4 79.4% 1.6% Sinter ore 26.2 23.6 19.1 37.4% 11.0% The table below shows the Altai-koks average prices: Q2 2007 Q1 2007 Q2 2006 Q2 2007 / Q2 Q2 2007 / Q1 2006 2007 USD per tonne (FCA)* Change (%) Coke 119.1 116.6 107.5 10.8% 2.1% * Excluding transportation costs 3. Management Board comments The decrease in pig iron, steel and slabs production volumes during Q2 2007 ascompared with the previous quarter was due to temporary underperformance atNLMK's Blast Furnace #6. Measures were taken to restore production levels by theend of July. The total crude steel production volume in 2007 is expected toreach the previous year's level of around 9.1 million tonnes. At the same time, production volumes of flat rolled products increased above thelevels of both the previous quarter as well as the corresponding period of lastyear. The increase in HRC and pre-painted steel production volumes during Q22007 as compared to Q1 2007 was due to the completion of scheduled maintenanceactivities performed at our rolling facilities earlier this year. An increaseof production volumes of pre-painted steel as compared to Q2 2006 was due toproductivity growth. The productivity growth resulted from utilizing hot dipgalvanizing lines for the optimal product mix. The apparent decrease in heavy plate production volumes at DanSteel A/S(Denmark) during Q2 2007 as compared with Q1 2007 was due to the change of theproduct mix focused on higher value added heavy plate grades which are ingreater demand on the market. The decrease of production is also attributable tothe Easter holidays. During Q2 2007 VIZ-Stal non-grain-oriented steel production volumes grew by69.5% compared with Q1 2007 and by 26.4% versus Q2 2006 as a result of increasedorders for low-alloy and intermediate-alloy steels. In Q2 2007, Stoilensky GOK increased production volumes as compared with Q1 2007volumes. Sinter ore production volumes grew in Q2 2007 against Q1 2007 and Q22006 due to favorable mining and geological conditions of the deposit. In Q2 2007 coke production grew by 62.3% compared to Q2 2006, as a new cokebattery was put into operation at the end of 2006. The increase in cokeproduction at Altai-koks during Q2 2007 compared to Q1 2007 is due to growingdemand for coke on core markets. The main drivers of increased prices during Q2 2007 as compared with Q1 2007were the influence of seasonal factors on the domestic market and movement onthe export markets. A strong iron ore pricing environment in Q2 2007 resulted in a 79.4% increase inStoilensky GOK average iron ore concentrate prices, as compared to Q2 2007. Theaverage prices for Altai-koks' products also showed a positive dynamic duringthe reporting period as compared to the corresponding period of last year. 4. Outlook We expect price stabilization for NLMK's key products in Q3 2007. By the end ofQ3 2007, there is a possibility of price softening on domestic and exportmarkets. We believe NLMK's financial results in Q2 2007 will improve compared to both Q12007 and Q2 2006. According to our estimates 2007 sales revenue and EBITDA willexceed 2006 level. For further information: NLMKAnton Bazulev +7 495 915 1575 Financial DynamicsJon Simmons +44 207 831 3113 This information is provided by RNS The company news service from the London Stock Exchange