Trading Update for Q3 2006

11 Oct 2006 13:22

OJSC Novolipetsk Steel11 October 2006 Novolipetsk Steel (NLMK) releases trading update for Q3 2006 OJSC Novolipetsk Steel (LSE: NLMK) today released the following regular trading update for Q3 2006. 1. Production* The table below shows the production volume of NLMK's principal steel products on its main site: Q3 2006 Q2 2006 Q3 2005 Change (%) Amount Amount Amount Q306 /Q305 Q306 /Q206 (in million of metric tonnes, except for percentages) Pig Iron 2,247 2,322 1,911 17,6% -3,2% Steel 2,218 2,301 2,095 5,9% -3,6% Slabs** 0,850 0,977 0,727 16,9% -13,0% Hot-rolled steel** 0,361 0,359 0,523 -31,0% 0,5% Cold-rolled steel** 0,465 0,451 0,461 0,8% 3,1% Hot dip galvanized steel* 0,112 0,104 0,057 94,6% 7,3%* Pre-painted steel** 0,092 0,079 0,073 26,1% 16,5% Non-grain-oriented steel* 0,092 0,083 0,074 24,5% 11,0%* Grain-oriented steel** 0,037 0,034 0,031 20,8% 8,5% The table below shows the principal product tonnage produced at NLMK's Danish subsidiary, DanSteel A/S: Q3 2006 Q2 2006 Q3 2005 Change (%) Amount Amount Amount Q306 /Q305 Q306 /Q206 (in million of metric tonnes, except for percentages) Heavy plates 0,096 0,111 0,085 12,2% -13,4% The table below shows the production volume of NLMK's mining segment: Q3 2006 Q2 2006 Q3 2005 Change (%) Amount Amount Amount Q306 /Q305 Q306 /Q206 (in million of metric tonnes, except for percentages) Iron ore Iron ore concentrate 2,911 2,817 2,689 8,3% 3,3% Sinter ore 0,346 0,380 0,200 73,0% -8,9% Coal Coking coal 0,678 0,605 0,632 7,3% 12,1% Energy coal 0,137 0,141 0,192 -28,5% -2,8% Other raw materials 0,211 0,201 0,238 -11,5% 5,0% The table below shows the principal product tonnage produced at Altai-koks: Q3 2006 Q2 2006 Q3 2005 Change (%) Amount Amount Amount Q306 /Q305 Q306 /Q206 (in million of metric tonnes, except for percentages) Coke 0,807 0,644 0,581 38,9% 25,3% * All information on Q3 2006 production volumes is preliminary and may be subject to change; ** Saleable products 2. Realized prices* Realized prices are calculated by dividing sales revenue by sales volume. Suchcalculation does not differentiate between particular product types and gradeswithin a product sub-category. Realized prices are not indicative of actualcontract prices and can serve as an approximation only. All information on Q32006 prices is preliminary and may be subject to change. The table below shows the average price realized for each of NLMK's main steelproducts: USD per tonne (FCA)* Change (%) Q3 2006 Q2 2006 Q3 2005 Q306 /Q305 Q306 /Q206 Pig Iron 258 213 209 23,3% 20,9% Slabs 454 326 249 82,3% 39,3% Hot-rolled steel 585 507 418 40,1% 15,4% Cold-rolled steel 630 548 517 21,8% 14,9% Hot dip galvanized steel 936 793 775 20,7% 18,1% Pre-painted steel 1 037 933 901 15,0% 11,1% Non-grain-oriented steel 680 652 650 4,7% 4,3% Grain-oriented steel 3 234 2 927 2 657 21,7% 10,5% The table below shows the DanSteel A/S average heavy plate prices: USD per tonne (FCA)* Change (%) Q3 2006 Q2 2006 Q3 2005 Q306 /Q305 Q306 /Q206 Heavy plates 778 681 829 -6,2% 14,2% The table below shows the average price realized for each of NLMK's main miningproducts prices: USD per tonne (FCA)* Change (%) Q3 2006 Q2 2006 Q3 2005 Q306 /Q305 Q306 /Q206 Iron ore Iron ore concentrate 54,0 36,3 39,3 37,6% 49,0% Sinter ore 20,7 19,4 17,9 15,7% 6,4% Coal Coking coal 54,3 52,5 51,1 6,2% 3,3% Energy coal 19,3 11,4 13,8 39,6% 68,5% The table below shows the Altai-koks average coke prices: USD per tonne (FCA)* Change (%) Q3 2006 Q2 2006 Q3 2005 Q306 /Q305 Q306 /Q206 Coke (moisture 6%) 104,1 107,7 113,0 -7,8% -3,3% * Excluding freight charge 3. Management Board comments Q3 2006 was marked by a substantial increase in steel production compared withQ3 2005. The greater volumes of high value-added products combined with decreasein hot-rolled steel production on q-o-q basis have resulted in improved salesmix. Despite a slight decrease in pig iron and crude steel production during Q3 2006compared to Q2 2006, the production of high value-added products increasedduring the reporting period. The reduction of pig iron and crude steelproduction is explained by planned mid-year maintenance activities. The decreasein production at DanSteel A/S in Q3 2006 compared to previous quarter is alsoattributable towards planned maintenance activities. As for NLMK's mining and coke-chemical segments, iron ore concentrate, cokingcoal and coke production in Q3 2006 rose compared to both Q2 2006 and Q3 2005. The favorable market environment during Q3 2006 resulted in growing prices formost of company's products in comparison with the previous quarter. Thecompany's average prices throughout the product portfolio in Q3 2006 were higherthan during Q3 2005. 4. Outlook NLMK's consolidated sales revenue in Q3 2006 will benefit from rising steelprices compared with Q2 2006 and Q3 2005. In addition, Q3 2006 sales revenuewill reflect the consolidation of VIZ-Stal since mid-August 2006. The increase in the company's average prices combined with greater volumes ofhigh value-added products in Q3 2006 will result in improved operating profitcompared with the previous quarter. In Q4 2006 we expect the market to stabilizealthough there is a possibility that prices may decline. NLMK will announce its US GAAP results for the 9 months ended 30 September 2006in the first week of December. 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