The Mariupol Ilyich steel plant (MMKI UZ) posted a net loss of UAH700m for 1H09, according to the company's CEO Vladimir Boyko. This contrasts sharply with a net profit of almost UAH1.6bn for the same period of 2008. However, in July the company reportedly operated profitably for the first time since production and prices collapsed in 4Q08.
MMKI posted a net loss of UAH334m in 1Q09. The reported total loss for 1H09 suggests that the company's situation in 2Q was even worse. However, positive results for July suggest that a 13% increase in crude steel production (to 400tpm or 67% of capacity utilisation) and a 17% rise in prices for hot-rolled coil (HRC), MMKI's main product, to US$470/t fob Black Sea compared with June, were enough to bring the company out of the red. We expect positive performance to be maintained in August-September as volumes have already been contracted at higher prices. MMKI is considered to be one of the highest cost steel producers in Ukraine. Although its balance sheet is free of debt, the margins suffer from low efficiency and a huge social cost burden. MMKI and other Ukrainian steel mills are expected to report full 1H09 results in September.