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November 10, 2020

MMK’s strategy ensures progress amid global challenges

Despite the reduction in metal consumption caused by the pandemic, Magnitogorsk Iron & Steel works continues to strengthen its position in the market and increase customer satisfaction.

This was stated by Denis Chernenko, head of marketing at MMK, who spoke at the 23rd international conference Russian Metals Market in Moscow. In his report on the challenges of 2020 for the Russian steel industry, Mr Chernenko discussed MMK’s strategy during the period of global change. According to the MMK representative, the pandemic and negative economic factors have led to a reduction in metal consumption in Russia this year. For the nine months of 2020, consumption volumes decreased by 5.5% compared to the same period last year. The overall level of metal consumption in Russia may not reach pre-crisis levels until the middle of next year, Mr Chernenko said. At the same time, the main metal-consuming industries will be supported by measures taken by the state, including the implementation of the National Projects, as well as programmes to support mortgage lending and state incentives for the automotive industry, agricultural machinery and other industries. The automotive industry may demonstrate the highest recovery rates, but the main drivers in metal consumption will traditionally come fr om the construction and pipe industries.

Despite the difficulties faced by the market this year, MMK will keep working to strengthen its market position and increase customer satisfaction. MMK holds a key share in supplying the entire range of major steel-consuming industries. Based on 2019 results, MMK is a strategic supplier in such consumer sectors as the automotive industry, the pipe industry, and the car building industry. Traditionally, the key sales area for MMK Group is the domestic market, where the Company holds a 20% market share. Around 70% of MMK products are sold in the “home regions” (the Urals, Siberia and the Volga region).

In order to maintain a high level of capacity utilisation and a significant presence in all metal-consuming industries against the backdrop of a supply surplus and a difficult market environment, MMK Group has adopted a strategy to develop premium niche products. The completion of the large-scale reconstruction of MMK’s hot rolling mill 2500 in July of this year has unlocked new opportunities to implement this strategy. Putting the updated mill into operation will improve the quality of products and significantly expand the MMK brand range.

MMK continues to successfully develop its programme of mastering the production and promotion of high-strength and wear-resistant steel, as well as products made from them, manufactured under the MAGSTRONG brand. This product niche has great potential for further growth, with sales supported by import substitution and opportunities to expand the brand’s product range.

At the same time, MMK is developing its offer of accompanying products. The Company mastered the technology to produce wire rod with a diameter of 5.5mm from S2Ni2 and S3TiB steel, in order to provide MMK-METIZ with a rolling stock for manufacturing import-substituting welding wires under the MagWire brand, intended for welding high-strength steels.

Another popular premium niche product is a new generation of painted rolled products under the SteelArt brand of the MMK-Lysvensky metallurgical plant (an analogue of the well-known PrinTech brand). Additionally, MMK is developing two more niche areas in the coated rolled products segment: rolled products with a deep-matt wrinkled coating and rolled products with a double-sided enamel coating on the front side.

One of MMK’s tasks in terms of sales is to deliver the product to end consumers with whom the manufacturer does not have direct contracts for various reasons (such as low-tonnage orders or inability to receive sufficient financing). These tasks are performed by the MMK Trading House, which has a well-developed warehouse network and promotes the plant’s products among small businesses, strengthening its positions in the end-user segment, and develops market niches such as high-strength and wear-resistant rolled products. In 2019, MMK Trading House was recognised as a leader in import substitution in the Competitive Sales Leader 2019 awards. In addition, MMK Trading House has repeatedly won the Priority national award in the field of import substitution.

Another key element of increasing MMK’s competitiveness is the development of its customer focus. In this regard, MMK is developing a modern and convenient marketplace for sales of the Group's products and partners in the Russian market. The Company is also developing and implementing various digital client services as part of its digitalisation strategy, in particular, the MMK Client mobile app. Its main purpose is to inform customers online about the execution of their contract for the supply of MMK products. The client can at any moment get information on placed and shipped orders, up-to-date data on settlement balances, find out the status of their order using data from the calendar planning system, get shipment information including certificates and sent wagons, as well as receive issued invoices and payment schedules, and submit and track claims.

In addition, MMK has an electronic data exchange system with clients called EDI. Another area of development is the creation of a modern customer relationship management (CRM) system.

The introduction and development of mobile apps is not the only direction for improving production and sales activities within the framework of the Company’s sales programme, Right on Time. The key element of this strategy was the development of an automated system for operational calendar planning (AS OKPP). The AS OKPP automated control system makes it possible to calculate the shipment date at the time that orders are accepted, with an accuracy rate that satisfies both sides of the process; schedule the production and shipment of the order for both the customer and production personnel; create a customer portal wh ere the customer can see all necessary information as well as track the progress of their order for processing works online.

The 23rd international conference Russian Metals Market took place on 9th November as part of the traditional autumn metals week in Moscow. This year, due to the unfavourable epidemiological situation, the conference was held in both online and offline format. Event participants included top managers and service managers of Russian and foreign metallurgical and metal trading companies, leading market experts, representatives of analytical and information agencies, processing companies and consumers of rolled metal.

MMK Press Office 




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