Magnitogorsk Iron & Steel Works (MMK) announces its production results for the 4th quarter and 12 months of 2007

    1.   Production

    Major products output

Steel products output of MMK grew by 7.6% in 2007 compared to 2006 and amounted to 12.2 mln tons. It is the record level of production in MMK history.

The slight decrease of cast iron output is due to repairs and upgrading of blast furnaces. The crude steel production increased by 6.5% year-on-year because of increasing production at the electric arch furnaces. The faster growth of steel making capacity compared to MMK's present rolling capacity led to growth in commercial slabs and billets production. Extension of long products and colour-coated steel output is also due to reaching full capacities of the production facilities. The demand factor influenced the production volumes of tin plate and formed sections.

The cast iron output came slightly down in Q4 2007 because of reconstruction works at blast furnace ¹9 which has the highest production capacity. Insignificant production decrease of hot-rolled steel and formed sections is also called forth by planned repairs of the facilities; reduced long-products and colour-coated steel output is accounted for by seasonally weakening demand for these product types.

    2.      Average prices

The prices are indicative and do not consider either steel grade and quality characteristics or sales markets. Average prices calculation is based on division of revenue by volume.

Prices continued to be in the growth phase in 2007. The average prices growth for MMK in 2007 compared to 2006 is first of all related to the shift in the geographical sales of its products towards the domestic market. The latter is traditionally characterized by higher price levels. The share of MMK domestic sales amounted to 60% in 2007 while the absolute production figure grew by 857 thousand tons.

Seasonal weakening of construction influenced the demand for construction products (long products, galvanized steel, colour-coated steel and pipes) which led to slight decrease in prices for these product types in Q4 compared to Q3.