Magnitogorsk Iron & Steel Works, one of Russia's leading steel producers, has announced a substantial reduction in steel production for the third quarter of 2024. The company reported a 26.6% decline quarter-on-quarter, producing 2.48 million metric tons of steel. This downturn is largely due to major repairs on its blast furnace, along with a marked decline in purchasing activity within Russia. Several economic factors have contributed to this situation, including rising interest rates, the conclusion of the preferential mortgage program, and unfavorable conditions in Turkey's steel market.
As a direct consequence of these challenges, MMK decided to suspend steel production at its MMK Metalurji facility in Turkey during the last quarter. The company's data reveals that sales of metal products also dropped significantly, declining by 18.7% to 2.48 million metric tons. This downturn highlights the ripple effects of both domestic and international market conditions on MMK's operations.
The premium products segment, which includes high-value items such as cold-rolled and coated rolled products, experienced a notable decrease as well. Sales in this category fell by 14.8% to 1.19 million metric tons. This decline is particularly concerning given the sensitivity of the construction sector to the current macroeconomic landscape, which is heavily influenced by the aforementioned economic pressures.
Looking ahead, MMK anticipates that its production capabilities will be further impacted in the fourth quarter of 2024. Major repairs to the blast furnace, along with planned extensive repairs to the converter, are expected to hinder output. Moreover, the ongoing effects of high key interest rates are likely to dampen investment activity, and the reduction in mortgage availability will continue to affect purchasing decisions in the Russian market. However, MMK does foresee stable consumption levels in the automotive and machine manufacturing sectors.
In terms of specific production figures, MMK's output of pig iron also saw a decrease, dropping by 10.9% to 2.36 million metric tons in Q3 2024. Coal concentrate production fell by 16% to 518,000 metric tons, reflecting broader challenges within the materials sector. Conversely, iron raw material production showed a slight increase, rising by 17.1% to 667,000 metric tons, indicating some resilience in that segment.
