MMK Increases Share of Premium Product Sales at the Russian Metal Market Conference
Denis Chernenko, Head of Marketing and Technical Support at MMK, discussed the company's sales dynamics at the Russian Metal Market conference, which took place as part of Metal Week in Moscow on 7 November.
MMK's representative outlined the main trends in the Russian flat steel market and possible directions for the Company's sales development. Amid the downturn in global markets, which is only gaining momentum, the Russian market has seen a recovery in demand since the middle of the year. The first nine months of the year saw a 4.8% increase in steel consumption in Russia compared to the same period in 2021. Therefore, even taking into account the seasonal slowdown in demand at the end of the year, it can be expected that the year-end decline will not exceed 2%. The main drivers of growth in steel consumption in Russia this year were the construction sector, due to inertial growth on the back of government support, as well as the pipe industry, which supplies products for major pipeline projects.
MMK Group's sales of finished steel products in nine months of 2022 exceeded 8 million tonnes, with 83% of sales generated in the domestic market and the CIS. The share of premium steel products in sales increased to 44% (41.8% in 2021), hot-rolled products accounted for the same proportion, while long products and billets made up 12% of sales.
As part of the development of MMK Trading House and the Company's system of steel service centres, MMK has continued with the planned geographical expansion of its subdivisions. In 2022, in addition to 33 existing offices, the Company opened three new centres in Astrakhan, Kurgan, Orenburg, with plans to launch new subdivisions in Izhevsk and the southern regions of Russia. At the same time, the Company is developing retail sales: as of today, MMK Trading House operates retail points in Magnitogorsk, Ufa and Sibai, and opened a new warehouse in Moscow in October 2022. Future plans include entering the markets of Beloretsk, Astrakhan and Irkutsk, as well as opening another retail warehouse in Ufa. The Company places particular importance in the development of its digital sales channels: MMK launched its corporate marketplace platform in April of last year, which in nine months of 2022 sold 25,600 tonnes of rolled products, attracted 1,345 new customers and saw the placement of almost 4,000 orders.
In line with the strategic development of its logistics system, MMK launched a production and logistics centre in the Togliatti Special Economic Zone (SEZ) in July 2022, with capacity to simultaneously store and process 150,000 tonnes of steel products. The launch of the facility supports the implementation of the Company's "Just-in-Time" logistics concept, which aims to ensure product delivery to the customer within only 1-2 days. The centre is planning to launch a longitudinal cutting service in December of this year and a cross-sectional cutting service in February 2023, in addition to already offering storage, unpacking and repackaging services.
MMK has strengthened its market position in part by developing its product range and expanding its sales in the premium product segment, particularly for the construction sector. The Company now offers galvanised steel for the production of cold formed steel profiles used in construction, and is developing its sales of hot-rolled products for building structures along with premium-segment prepainted steel. MMK's new developments include the production of hot-rolled steel grades with increased corrosion resistance and rolled products with a functional polymer coating that hold a special market position in Russia.
The 25th International Russian Metal Market 2022 Conference kicked off the business programme of the 28th International Industrial Exhibition Metal-Expo'2022. The event was organised by the leading industry journal "Metal Supply and Sales" with support from Metal-Expo, the Russian Ministry of Industry and Trade, the Russian Steel Association, the Association of Electrometallurgical Enterprises and the Russian Union of Metal and Steel Suppliers. The key topics of the event included trends in the development of metal markets in Russia and worldwide; market conditions; raw materials markets for ferrous metallurgy; investment programmes for rolled metal producers; the development of online trade and marketplaces in the Russian metal market, and many others. The conference was attended by more than 150 participants, including top executives and department heads of Russian and foreign steel and metal trading companies, public officials, leading market experts, representatives of analytical and information agencies, processing companies and consumers of metal products.