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NLMK is one of the largest steel producers in Russia, built around the Novolipetsk Metallurgical Combine. The group's distinguishing feature is a split production chain: the steel is smelted in Russia, while part of the finished rolled product is made at plants abroad. The shares trade on the Moscow Exchange under the ticker NLMK.
The company makes steel and rolled products under a model the industry calls international integration: the semi-finished product — the slab — is produced at the Russian site, where raw materials and energy are cheap, and it is rolled into finished sheet by plants in Europe and the United States, closer to the customer. This model gives access to high-priced markets without building a full production cycle there.
Production costs are supported by the company's own ore base: a significant part of its iron ore requirement is covered by its own mining and processing plant.
As across the whole of ferrous metallurgy, demand is cyclical and is driven by construction, pipeline projects and machine building. Swings in profit are therefore the norm for the industry here, not a sign of problems at a particular company.
The core output: hot-rolled and cold-rolled sheet, galvanised steel, coated steel.
Rebar and metalware for construction.
An iron ore mining and processing plant that covers a significant part of the group's requirement.
Rolling capacity outside Russia that runs on Russian semi-finished steel.
Strengths and weaknesses describe the business itself. Opportunities and threats describe what may happen around it.
The company smelts steel and turns it into rolled products — sheet, galvanised steel, coated steel, rebar. Part of the finished output is made at the group's foreign plants from Russian semi-finished steel.
A slab is a semi-finished steel product with a rectangular cross-section. It pays to smelt it where raw materials and energy are cheap, and to roll it into finished sheet closer to the customer. This is how the company gains access to high-priced markets without building a full production cycle there.
Demand for steel is driven by construction and industry, and both are cyclical. In an upturn both orders and prices rise; in a downturn both fall, while costs come down more slowly.