NLMK.L Regulatory News (NLMK)

12 Apr 2007 10:42

OJSC Novolipetsk Steel12 April 2007 Novolipetsk Steel (NLMK) releases trading update for Q1 2007 OJSC Novolipetsk Steel (LSE: NLMK) today released the following regular trading update for Q1 2007. 1. Production volumes* The table below shows the production of principal steel products at NLMK's main production site: Q1 2007 Q4 2006 Q1 2006 Q107 /Q106 Q107 /Q406 Amount, mln metric tonnes Change (%) Pig Iron** 2,338 2,273 2,201 6,2% 2,9% Steel 2,341 2,317 2,290 2,2% 1,1% Slabs 1,063 1,061 0,978 8,6% 0,2% Hot-rolled steel*** 0,414 0,357 0,449 -7,7% 16,1% Cold-rolled steel 0,453 0,408 0,420 7,9% 10,9% Hot dip galvanized steel 0,091 0,122 0,092 -1,7% -25,9% Pre-painted steel 0,086 0,090 0,081 7,1% -3,7% Non-grain-oriented steel 0,095 0,080 0,087 8,6% 19,5% Grain-oriented steel 0,035 0,036 0,035 -0,1% -1,7% The table below shows production at NLMK's Danish subsidiary, DanSteel A/S: Q1 2007 Q4 2006 Q1 2006 Q107 /Q106 Q107 /Q406 Amount, mln metric tonnes Change (%) Heavy plates 0,149 0,149 0,114 31,5% 0,9% The table below shows production at VIZ-Stal: Q1 2007 Q4 2006 Q1 2006 Q107 /Q106 Q107 /Q406 Amount, mln metric tonnes Change (%) Non-grain-oriented steel 0,004 0,004 0,005 -22,6% -8,8% Grain-oriented steel 0,045 0,045 0,044 3,2% 0,0% The table below shows production at Stoilensky GOK: Q1 2007 Q4 2006 Q1 2006 Q107 /Q106 Q107 /Q406 Amount, mln metric tonnes Change (%) Iron ore Iron ore concentrate 2,892 2,857 2,720 6,3% 1,2% Sinter ore 0,394 0,389 0,262 50,4% 1,3% The table below shows coke production at Altai-koks: Q1 2007 Q4 2006 Q1 2006 Q107 /Q106 Q107 /Q406 Amount, mln metric tonnes Change (%) Coke 0,879 0,916 0,593 48,3% -4,0% * All information on Q1 2007 production volumes is preliminary and may be subject to change; ** Including pig iron for steelmaking and for sale *** Including HR coils supplied to VIZ-Stal 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 Q1 2007 prices is preliminary and may besubject to change. The table below shows average prices for NLMK's main steel products: Q1 2007 Q4 2006 Q1 2006 Q107 /Q106 Q107 /Q406 USD per tonne (FCA)* Change (%) Pig Iron 259,5 246,9 180,4 43,8% 5,1% Slabs 372,1 414,7 253,5 46,8% -10,3% Hot-rolled steel 524,1 563,6 426,2 23,0% -7,0% Cold-rolled steel 582,6 618,3 507,8 14,7% -5,8% Hot dip galvanized steel 955,6 914,4 744,0 28,5% 4,5% Pre-painted steel 1 136,5 1 088,3 880,0 29,1% 4,4% Non-grain-oriented steel 715,3 715,2 597,6 19,7% 0,0% Grain-oriented steel 3 331,3 3 279,6 2 891,5 15,2% 1,6% The table below shows DanSteel A/S average prices: Q1 2007 Q4 2006 Q1 2006 Q107 /Q106 Q107 /Q406 USD per tonne (FCA)* Change (%) Heavy plates 747,0 709,0 540,0 38,3% 5,4% The table below shows VIZ-Stal average prices: Q1 2007 Q4 2006 Q1 2006 Q107 /Q106 Q107 /Q406 USD per tonne (FCA)* Change (%) Non-grain-oriented steel 945,8 933,9 869,1 8,8% 1,3% Grain-oriented steel 3326,4 3223,2 2859,9 16,3% 3,2% The table below shows Stoilensky GOK average prices: Q1 2007 Q4 2006 Q1 2006 Q107 /Q106 Q107 /Q406 USD per tonne (FCA)* Change (%) Iron ore Iron ore concentrate 64,3 61,9 33,0 94,8% 3,7% Sinter ore 23,6 22,3 18,8 25,8% 6,0% The table below shows the Altai-koks average prices: Q1 2007 Q4 2006 Q1 2006 Q107 /Q106 Q107 /Q406 USD per tonne (FCA)* Change (%) Coke 116,6 109,2 109,0 7,0% 6,8% * Excluding transportation costs 3. Management Board comments The increase in HRC and CRC production volumes during Q1 2007 as compared to Q42006 was due to the completion of scheduled maintenance activities performed atour rolling facilities in October and November 2006. In addition, scheduledmaintenance in Q1 2007 at our hot dip galvanizing lines caused a decrease incoated steel output, as compared to Q4 2006. In Q1 2007, Stoilensky GOK maintained production volumes at the level of theprevious quarter. Iron ore concentrate and sinter ore production volumes grewin Q1 2007 against Q1 2006 by 6.3% and 50.4% respectively, due to commissioningof the first stage of section four of the Stoilensky GOK beneficiating plant,coupled with good mining conditions of the deposit. The apparent slight decrease in coke production at Altai-koks during Q1 2007compared to Q4 2006 is due to the fewer number of calendar days in Q1 2007against Q4 2006. At the same time, coke production grew by 48.3% compared to Q12006, as new coke battery #5 was put into operation at the end of 2006. Semi-finished and lower-value-added NLMK products showed greater pricevolatility in Q1 2007 than high value-added product. Slab prices demonstratedthe most substantial fluctuations, decreasing by 10.3% in Q1 2007 as compared tothe previous quarter, while HDG, pre-painted and grain-oriented steel pricesshowed a positive dynamic. Seasonal price deterioration in the domestic market as well as soft exportprices for the majority of Q1 2007 resulted in lower slab, HRC and CRC pricelevels as compared to Q4 2006. As the majority of HDG and pre-painted steel issold domestically, average prices for these products showed some growth in Q12007 due to continuously robust domestic demand. Overall, Q1 2007 average priceswere considerably higher then those in Q1 2006. A strong domestic iron ore pricing environment in Q1 2007 resulted in a 3.7%increase in Stoilensky GOK average iron ore concentrate prices, as compared toQ4 2006. The prices for Altai-koks' products also showed a positive dynamicduring the reporting period. 4. Outlook We believe that export prices for most of NLMK's steel products will stabilizearound the March-April 2007 level. This anticipated increase in export prices aswell as seasonal factors in Russia will spur domestic price growth in Q2 2007.According to our estimates, there is a possibility of price softening towardsthe end of 2007. We believe NLMK's financial results in Q1 2007 will improve as compared to Q12006 and largely remain at the level of Q4 2006. Taking into account the currentprice forecast, we expect NLMK's EBITDA in 2007 to remain around the level of2006. NLMK will announce Q1 2007 US GAAP results in June 2007. For further information: NLMK Anton Bazulev +7 495 915 1575 Financial Dynamics Jon Simmons +44 207 831 3113 This information is provided by RNS The company news service from the London Stock Exchange