According to its Q3 IFRS financial report, OJSC Magnitogorsk Iron and Steel Works increased its steel production 5 percent year-on-year in the 3Q to 3.36 million metric tons.

The company also grew its 3Q steel product output by 3 percent quarter-on-quarter to 2.858 million metric tons. More than 78 percent of its supplies went to the highly diversified domestic market, which saw a 3 percent hike in volume.

Overall, the company’s steel output grew 2 percent quarter-on-quarter.

According to the statement, MMK expects that seasonal slowdown in business activity on the domestic market will bring down volumes of finished steel products in Q4 2012.

And with world steel prices close to their record lows, MMK does not expect a recovery in prices sooner than early 2013 with the beginning of the construction season and inventory restocking.

However, the company’s outlook remains optimistic due to improve d product mix, a strong position on the domestic market and the continued decline in prices for key raw materials.

You can download the full report here.

According to Vedomosti daily, Magnitogorsk Iron and Steel Works is aiming for higher profitability as it cuts its capex and looks at more ways to drive down costs.

The board of directors is going to meet in December to discuss the corporate strategic blueprint until 2022, with the costs reduction being the key goal in mind.

Experts admit the company has enough potential to reach its objectives, mainly due to:

·        MMK doesn't have a long list of acquisitions or aggressive expansion plans.

·        MMK is not a vertically integrated company, and with sinking prices for ore, the absence of mining assets can prove to be an advantage.

Even today it spends some $400 to produce a tonne of steel, sharing second place with NLMK and trailing behind leader Severstal, with $345.

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