Gallery collapse spares NLMK’s steel sales

NLMK says work is progressing to repair the collapsed iron ore conveyor gallery at Stoilensky plant, which supplies the firm’s principal Lipetsk steelworks. The steelmaker estimates repairs will take 15 days, after which it will take 24 hours to achieve full capacity of the gallery and another 24 hours to reinstate the full processing cycle.

The firm’s dispatches of steel products will not be impacted by the incident, NLMK says, but merchant pig iron dispatches may be affected. The company’s iron ore needs are currently met by existing stocks and external supply has been secured. Kallanish learns that Metalloinvest is supplying the feedstock, and market participants say it is likely the China import price was used as a benchmark.

Stoilensky’s conveyor gallery collapsed on 7 September, halting the iron ore processing chain and leaving NLMK with just ten days of iron ore to supply Lipetsk (see Kallanish passim). This plant produces all of the company’s merchant metallic and semi-finished products, including slab for its European re-rolling assets. Its monthly needs are around 200,000-230,000 tonnes.

Provided the repairs and recommissioning go according to plan, there is unlikely to be any effect on finished product sales and prices, although some degree of support to pig iron merchant prices is expected. Following the incident, some CIS pig iron suppliers have withheld from entering into direct negotiations, and some reviewed their offers upwards to around $355-365/t fob Black Sea, depending on the market. One Russian supplier voiced offers at $380-390/t fob to all markets.