Annual Report 2010 - Magnitogorsk Iron & Steel Works

"After the construction of the Formula-1track is completed, our sportsmenand motor sport fans will have a newexcellent site for training and holdingvarious competitions".Vladimir Putin, October 14, 2011, duringthe meeting with Formula-1 promoterBernie EcclestoneФото -Константин БредниковGrowth will be driven by direct and indirectgovernment support, such as expansion of militaryorders as well as higher volumes of housing androad construction. The so-called “national projects,”in particular, construction of facilities for the 2014Winter Olympics in Sochi, the APEC summit inVladivostok (2012), the World University Games inKazan (2013) and the World Football Championship(2018) will contribute significantly to demand in thecoming years. All these construction projects willrequire large quantities of steel, which means Russiansteel mill capacities will be significantly utilized.The annual growth in steel consumptionin Russia in2011-2012 is expected to reach 5-10%. GRAPH 812 00010 0008 0006 0004 0002 0000Russia's Steel Consumption by Sector, ,000 tonnes+18% +6% +10%+10%GRAPH 8+14% +14%+9%+24%Pipe-making Cosntruction Machine-building Metalwareplants2009 г. 2010 г. 2011 г. (est.) 2012 г. (est.)ExportWhile production increased in 2010, MMK's exportshipments for the year decreased 17% comparedto 2009.GRAPH 9 GRAPH 9In 2010 steel shipments to Asia and the Far Eastdecreased by 56% compared to 2009 due toincreased steel productionin these countries.This shifted the geography of our exports towardsItaly, UK and Poland in Europe (+52% compared to2009), as well as Brazil and Columbia in Central andLatin America (+82% compared to 2009), due tothe more favourable pricing in these countries.Exports to the Middle East decreased slightly (-8%vs.2009), with the bulk of shipments going to Iran andTurkey.MMK's key export products are hot rolled (80%) andcold rolled (11%) flat products.4 5004 0003 5003 0001 5001 000500MMK's Exports By Region, ,000 tonnes35%11%43%-56%+52%-8%-17%19%20%48%2008 2009 2010Central and Latin AmericaAfricaNorth AmericaAsia and Far EastEUMiddle East36