Annual Report 2011 - Magnitogorsk Iron & Steel Works ...

2011 /
ANNUAL REPORT
About Us Sales Markets
Finances
Risks
Social Sphere
Management
Information
Construction Sector
The relatively sluggish activity seen in the construction sector in 2010 persisted in the first half of 2011,
but the third quarter saw a positive trend in investments.
In total, according to the Ministry of Economic Development, construction increased in value terms by
5.1 % year-on-year.
Housing construction totalled 62.3 million sq m, 6.6 % up on 2010 (compared to a 2.4 % year-on-year
decline in 2010).
Consumption of long products in the construction sector increased by 16.6 % in 2011 year-on-year, while
total shipments of long products by MMK increased by 27 %.
Outlook
Forecasts suggest that Russia’s steelmaking sector will continue its fast growth in the coming years,
with steel consumption in the country likely to increase by 14 % by 2013 compared to the level of 2011.
An important growth factor will be direct and indirect government spending, such as record military
orders and higher volumes of housing and infrastructure construction.
Significant funds spent on providing social services and improving living standards should increase
domestic demand for durables.
Ongoing construction of facilities for “national projects” – in particular the 2013 World University
Games, the 2014 Olympic Winter Games and the football World Cup in 2018 – will also contribute to
demand for steel products.
Export
In 2011 export shipments increased by 8 % year-on-year.
Demand from the Middle East was a major source of export growth. Shipments increased by 44 %, and
as a share of MMK’s total exports the region increased from 48 % to 64 %. Key countries for MMK in the
region are Iran (47 % of total export volumes) and Turkey (11 %).
MMK Exports by Region, ‘000 tonnes
Shipments to Asia and the Far East fell due to the growth of domestic steel production in those countries.
Exports to China and India over the last three years have reached their lowest historical volumes. In
2011 MMK’s largest customer in the region was Vietnam, accounting from 5 % of total exports. Further
development of the local steelmaking industry may close this market for us.
In 2011, shipments to Europe fell by just 40,000 tonnes despite the economic slowdown and shutdowns
of steelmaking plants in the region. The biggest European buyer of MMK’s products is Italy (9 % of total
exports).
Key Importers of MMK Steel Products, ‘000 tonnes
Key export products are hot rolled products (81 %). High value added products account for 9 % of
exports.
30 31
5,000
4,000
3,000
2,000
1,000
0
3,000
2,500
2,000
1,500
1,000
500
0
25%
12%
50%
29%
20%
38%
11%
35%
43%
20%
19%
48%
18%
10%
64%
2007 2008 2009 2010 2011
14%
9%
7%
6%
7%
27%
7%
11%
8%
33%
9%
11%
47%
2009 2010 2011
Vietnam
India
China
Brazil
Italy
Turkey
Iran
Central and Latin America
Africa
North America
Europe
Asia and Far East
Middle East