UPDATE 2-Russia's MMK expects steel output decline
* Q2 loss widens from $49 mln loss in Q2 2012
* Says volatile market to hit Q3, slashes capex to $500 mln
* Shares down 1.2 pct
MOSCOW, Aug 28 (Reuters) - Russian steelmaker MMK said on Wednesday its steel production would shrink by 5-7 percent in the third quarter and forecast that volatile markets would weigh on earnings as it posted a larger than expected second-quarter loss.
Like other steelmakers around the world, MMK has suffered a dramatic change of fortune since the 2008 financial crisis sent prices tumbling.
"MMK Group's financial results for Q3 will be affected by high levels of volatility on the raw materials and steel markets," the company said in a statement.
The expected drop in steel output was due to a decision to bring forward scheduled blast furnace repairs, MMK's deputy director of finance and economics, Alexander Andrianov, said on a conference call.
The firm made a second-quarter net loss of $155 million, worse than analyst expectations for a loss of $21 million, largely due to a weakening of the rouble.
MMK made a loss of $49 million in the second quarter of 2012.
The company, controlled by billionaire Viktor Rashnikov, said second-quarter revenue fell 5 percent quarter on quarter to $2.2 billion. Earnings before interest, taxes, depreciation and amortisation (EBITDA) rose 14 percent to $291 million.
The company attributed the rise in EBITDA to lower production costs and declining prices of steelmaking ingredients such as iron ore and coking coal, which Andrianov forecast would fall a further 10 percent in the third quarter.
MMK said it would slash capital expenditure in 2013 to $500 million from $600 million.
Shares in MMK, which have lost over 70 percent of their value since their peak in early 2011, were trading down 1.2 percent at 1405 GMT, underperforming a broader index of Russian shares.
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