MMK Group Reports Decreased Steel Output and Sales in 2024
MMK Group, one of Russia's major steel producers, has unveiled its operational results for the fourth quarter and full year of 2024. The company faced a challenging year marked by declines in steel production and sales, impacted by significant repair work on key production units and a general slowdown in market activity.
Q4 2024 Results: Decreased Production and Sales
In the fourth quarter of 2024, MMK’s crude steel output totaled 2.37 million metric tons, reflecting a decrease of 4.4% compared to the previous quarter. The company’s pig iron production also dropped by 9.9% from the third quarter, reaching 2.13 million metric tons, primarily due to major repairs carried out at three of its blast furnaces.
The impact of these repairs and a challenging market environment were further reflected in MMK’s finished steel sales, which totaled 2.36 million metric tons, a 4.7% decrease quarter on quarter. The company attributed this reduction to the combined effect of repair works, a slowdown in the Russian market, high borrowing costs, and seasonal factors, all contributing to lower demand for steel in the quarter.
Full Year 2024: Significant Declines in Steel Output and Sales
For the full year 2024, MMK’s crude steel production reached 11.19 million metric tons, a 13.8% decrease compared to 2023. The decline in output was driven by weaker steel demand at the beginning of the year, compounded by significant repair works in the rolling process. This reduction in production volumes had a cascading effect on the company’s overall performance throughout the year.
Similarly, MMK’s pig iron production for the year amounted to 9.49 million metric tons, down by 4.5% year on year, again reflecting the reduced production capacity due to repair activities.
In terms of sales, MMK’s finished steel sales in 2024 totaled 10.62 million metric tons, a 9.8% year-on-year decrease. This slowdown was attributed to a general decline in business activity, both domestically and globally, affecting demand for steel products. The company's results were further influenced by factors such as high borrowing costs, a weaker Russian market, and ongoing uncertainties in the global economy.
Impact of Repairs on Production and Sales
One of the key factors contributing to the decline in MMK’s production and sales was the significant repair work carried out at several critical production units, including its blast furnaces and rolling mills. While these repairs were necessary to maintain long-term operational efficiency, they temporarily reduced the company's production capacity, leading to lower output during key periods of the year.
MMK has stated that these repairs, combined with a reduction in demand for steel in the early part of the year, had a substantial impact on both its quarterly and annual performance. The company anticipates that the completion of these repairs will lead to improved operational efficiency in 2025, though the full effects may take time to materialize.
Slower Market Conditions and High Borrowing Costs
The steel industry in Russia, as well as globally, faced weaker demand in 2024, which also affected MMK’s financial results. Slower economic activity and the resulting reduction in steel consumption led to a decline in sales, particularly in the first half of the year. The company also noted that borrowing costs remained high, further complicating the economic environment for steelmakers like MMK.
Seasonal factors, such as lower demand in the winter months, also played a role in reducing sales during the fourth quarter, contributing to the overall downturn in the company’s results.
Outlook for 2025
Looking forward, MMK is cautiously optimistic about its prospects in 2025. The completion of essential repairs and improvements to its production facilities should help enhance operational efficiency, potentially boosting output and sales in the coming year. However, the company remains mindful of ongoing challenges in the global and domestic markets, particularly in terms of demand and borrowing costs.
Despite the challenges faced in 2024, MMK continues to be a significant player in the Russian steel industry and is positioning itself for a recovery in 2025 as market conditions stabilize.
