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MMK is Magnitogorsk Iron and Steel Works, one of the largest steel plants in the country and the main employer on which the city of Magnitogorsk depends. Unlike its competitors, the company has almost no ore base of its own and works predominantly for the domestic market. The shares trade on the Moscow Exchange under the ticker MAGN.
The works smelts steel and produces rolled products, a significant part of which goes to Russian consumers: carmakers, pipe producers, builders and household appliance manufacturers. The focus on the domestic market makes the company less dependent on export restrictions, but more dependent on the state of Russian industry.
The main difference from its competitors is the lack of full self-sufficiency in raw materials. The company buys its ore and a significant part of its coal, so a rise in raw material prices hits its margin harder than it hits its vertically integrated neighbours. The other side of the coin: when raw materials get cheaper, the gain is larger too.
The offset is high value-added products: galvanised steel, polymer-coated rolled products and products for the automotive industry. They are less sensitive to exchange prices for steel.
Hot-rolled and cold-rolled sheet, long products for construction.
Galvanised rolled products, coated rolled products, products for the automotive industry.
Rolling capacity abroad that serves the local market.
Strengths and weaknesses describe the business itself. Opportunities and threats describe what may happen around it.
The company smelts steel and produces rolled products — sheet, galvanised steel, coated rolled products and long products. The main buyers are Russian carmakers, the pipe industry, construction and household appliance manufacturers.
In two ways. First, the company is not fully self-sufficient in its own raw materials: it buys its ore, and the price of that ore has a stronger effect on its production costs. Second, its sales are oriented primarily towards the domestic market rather than towards exports.
It depends on the phase of the market. When raw materials become more expensive, such a company loses margin faster than competitors with their own mines. When they become cheaper, it gains more than they do. This is not a flaw in the model but a different risk profile.