MMK Group announced its operational results for Q3 and 9 months 2011.

Total MMK Group crude steel output in Q3 2011 amounted to 3,182 thousand tons, 13% higher q-o-q; finished steel products output in Q3 2011 amounted to 2,953 thousand tons, 13% higher q-o-q.

MMK crude steel output in Q3 2011 amounted to 3,015 thousand tons (8% higher q-o-q), crude steel output in 9M 2011 amounted to 8,899 thousand tons (3% higher y-o-y). Finished steel products output in Q3 2011 amounted to 2,789 thousand tons (10% higher q-o-q). MMK finished steel products output in 9M 2011 totaled 8,023 thousand tons (4% higher y-o-y).

Output of finished steel products at MMK-Metiz in Q3 2011 rose 10% q-o-q, reaching 126 thousand tons. MMK-Metiz finished steel products output in 9M 2011 totaled 362 thousand tons (10% higher y-o-y). MMK-Metallurgy finished steel products output in Q3 2011 totaled 162 thousand tons (93% higher q-o-q). In 9M 2011 ММК-Metallurgy produced 274 thousand tons of steel products, representing a 2.5-fold y-o-y increase.

Coking coal concentrate output in Q3 2011 amounted to 849 thousand tons (18% higher q-o-q). In 9M 2011 coking coal concentrate output totaled 2,334 thousand tons (10% higher y-o-y).

In-house production of iron ore in 9M 2011 amounted to 3,633 thousand tons (8% higher y-o-y).

Finished steel products output in 9M 2011 amounted to 8,023 thousand tons, 4% higher y-o-y. The share of domestic shipments, which are a priority for MMK, amounted to 69% in 9M 2011, representing a 3 percentage point (p.p.) y-o-y increase.

Domestic shipments in Q3 2011 amounted to 1,943 thousand tons, 17% higher q-o-q, with its share totaling 70%, representing a 4 p.p. q-o-q increase.

Flat hot-rolled products in Q3 2011 amounted to 1,546 thousand tons (9% higher q-o-q). This increase was driven by growth in total output of finished steel products in Q3 2011, with MMK working at about 90% of production capacity.

Long steel shipments in 9M 2011 grew 50% y-o-y. This increase was due to higher construction sector activity levels in 2011. Long steel shipments in Q3 2011 grew 53% q-o-q thanks to the seasonal growth in construction sector activity as companies seek to complete current projects before winter.

Commercial thick plate output at Mill 5000 was 728 thousand tons in 9M 2011, 12% higher y-o-y. Commercial thick plate output at Mill 5000 in Q3 2011 came to 178 thousand tons, 27% lower q-o-q. The decrease was due to lower thick plate orders by pipe-makers due to Gazprom and Transneft postponing the purchase of large-diameter pipes to the end of 2011 and 2012.

The average realized price per ton of Mill 5000 thick plate in Q3 2011 decreased 16% q-o-q due to a decrease in the share of more expensive grades of steel for pipe-makers in the product mix and weakening of the ruble against the dollar.

Key investment project developments

Mill 2000

MMK continues construction of its new cold rolling complex (Mill 2000) in order to take advantage of the growing market for high-strength steel and to substitute imported automotive steel. The complex will use state-of-the art technologies to produce high quality cold-rolled and galvanized steel products for inner and outer car-body parts, as well as for use in production of household appliances and in the construction industry. Mill 2000 is expected to produce 2 mln. tons of finished steel products per year, including 700 thousand tons of galvanized steel.

At present Mill 2000 is ramping up to full production capacity and should produce about 300 thousand tones of cold-rolled steel in 2011. Automakers are in the process of accepting Mill 2000 products.

The second stage of the complex, which will include a continuous hot-dip galvanizing unit, a continuous annealing unit and a coil inspection unit, is slated to be commissioned in July 2012.