The rise in exports last year was due to the US market, which took over a third of total exports by volume, compensating the fall in Asian demand and leading to the anti-dumping proceedings, which have now issued in a decision to force reduction of Russian steel imports to the US by 5 times next year compared with 1998. The company's main Russian customers are in the Central, Volga and Ural regions and are mainly in the machine-building industry. The target market will be Russian automakers, which now buy cold-rolled sheet abroad. MMC also plans to launch a new converter in 2002, which will make it possible to increase output of liquid steel and reduce production costs. In 1999 MMC is showing much higher sales and the currency translation effect on profits has faded.
Most profits are due to export sales.
MMC may have to resort to price cuts, particularly in Asia, in order to gain market share in face of tough competition from other Russian and Ukrainian producers. Accounts receivable will be considerably reduced by the end of this year due to the effects of devaluation and the ability of debtors to settle their obligations in conditions of economic growth. Reduction of accounts payable is less likely due to MMC's need for investment resources. The stake was transferred to third parties by Magnitogorsk Steel without MMC's consent, and the shares were then arrested by a decision of the Chelyabinsk Arbitration Court. Scant trading in MMC shares at the end of 1999 is partly due to the shortage of free-float.