TIDMEVR
RNS Number : 9467E
Evraz Plc
16 April 2014
EVRAZ Q1 2014 PRODUCTION REPORT and INTERIM MANAGEMENT
STATEMENT
16 April 2014 - EVRAZ plc (LSE: EVR) today releases its
operational results for the first quarter of 2014 and the Interim
Management Statement.
Q1 2014 OPERATIONAL HIGHLIGHTS and RECENT DEVELOPMENTS:
-- Consolidated crude steel production decreased by 8% in Q1
2014 vs. Q4 2013 due to scheduled maintenance works at Russian
steel mills
-- Consequently output of gross steel products declined by 4%
due to lower availability of crude steel
-- Share of finished steel products increased to 74% in Q1 2014
vs. 69% in Q4 2013 due to redistribution of available crude steel
volumes towards production of higher margin finished products
-- Output of iron ore products in Russia decreased by 2%,
impacted by the disposal of EVRAZ VGOK in October 2013 and two
mines of Evrazruda in December 2013
-- Consolidated raw coking coal output decreased by 6% due to
repositioning of longwalls at several underground mines and
shutdown of the Abashevskaya mine. This was partially offset by the
launch of a new longwall at the Raspadskaya underground mine
-- Average prices for most of EVRAZ's steel products in Russia
decreased in the period, although since March 2014 prices have
started to increase as a result of the improving demand and the
start of the construction season
-- Average prices for the majority of steel products in North
America rose, thanks to better product mix and high demand as well
as lower imports
-- Average prices for Russian-produced iron ore products and
coking coal concentrate were flat, despite negative trends in the
global steelmaking raw materials market
-- In Q1 2014, the preliminary* capital expenditure amounted to
$158 million, compared with $185 million in Q4 2013 and $262
million in Q1 2013. The company intends to keep its annual capital
expenditures below $900 million in 2014 and beyond
-- Since 31 December 2013 up to the date of this publication the
Group's financial position has been affected by the disposal of
EVRAZ Vitkovice Steel in April 2014 for a total consideration of
$287 million and by depreciation of the Russian local currency
-- In Q2 2014, EVRAZ expects to grow the output of crude steel
and steel products at the Russian mills due to lower scheduled
downtime for maintenance and repairs
-- Hot tests are expected to be completed at the Kostanay
rolling mill by the end of April and production to commence in Q2
2014
*Estimate as EVRAZ IFRS books are not yet closed
STEEL SEGMENT
Product, '000 tonnes Q1 2014 Q4 2013 Q1 2014/ Q1 2013 Q1 2014/
Q4 2013, Q1 2013,
change change
--------------------------------- ------- ------- --------- ------- ---------
Coke (saleable) 255 283 -9.8% 356 -28.3%
Pig iron 2,991 3,158 -5.3% 3,153 -5.1%
Pig iron (saleable) 77 119 -35.3% 46 67.3%
Crude steel 3,693 4,000 -7.7% 4,069 -9.2%
Steel products, gross* 3,789 3,934 -3.7% 4,022 -5.8%
Steel products, net of re-rolled
volumes 3,374 3,738 -9.7% 3,601 -6.3%
Semi-finished products ** 867 1,155 -24.9% 928 -6.6%
Finished products 2,507 2,583 -2.9% 2,673 -6.2%
Construction products 1,218 1,250 -2.6% 1,238 -1.7%
Railway products 508 510 -0.3% 381 33.5%
Flat-rolled products 348 366 -4.9% 579 -39.9%
Tubular products 275 282 -2.5% 226 21.5%
Other steel products 159 176 -9.5% 250 -36.3%
--------------------------------- ------- ------- --------- ------- ---------
Note. Numbers in this table and the tables below may not add to
totals due to rounding.
* Gross volume of steel products in the tables includes those
re-rolled at other EVRAZ's mills. However, such volumes are
eliminated as intercompany sales for purposes of EVRAZ's
consolidated operating results.
** Consolidated production volumes of semi-finished products are
preliminary as intra-group re-rolling volumes are yet to be
finalised.
RUSSIA
Product, '000 tonnes Q1 2014 Q4 2013 Q1 2014/ Q4 2013, change Q1 2013 Q1 2014/ Q1 2013, change
---------------------------------- -------- -------- ------------------------- -------- -------------------------
Coke (saleable) 111 117 -5.5% 148 -25.5%
Pig iron 2,591 2,760 -6.1% 2,748 -5.7%
Pig iron (saleable) 74 110 -32.8% 44 69.8%
Crude steel 2,666 2,986 -10.7% 2,948 -9.6%
Steel products, gross 2,649 2,780 -4.7% 2,726 -2.8%
Steel products, net of re-rolled
volumes 2,582 2,754 -6.2% 2,640 -2.2%
Semi-finished products 1,086 1,214 -10.6% 1,173 -7.4%
Finished products 1,497 1,540 -2.8% 1,467 2.0%
Construction products 993 1,016 -2.2% 993 0.0%
Railway products 376 380 -1.0% 261 44.1%
Other steel products 127 144 -11.7% 213 -40.2%
---------------------------------- -------- -------- ------------------------- -------- -------------------------
In Q1 2014, pig iron and crude steel output decreased by 6% and
11% respectively compared to Q4 2013 due to scheduled maintenance
works at blast furnaces and converters of both EVRAZ ZSMK and EVRAZ
NTMK.
Lower production of crude steel led to a decrease in production
of steel products, with the output of semi-finished products
affected the most - a decline of 11%, and finished goods - by
3%.
The scheduled maintenance works at EVRAZ ZSMK and EVRAZ NTMK
also led to a year-on-year decrease in output, while the production
of railway products rose due to increased production of rails at
the new EVRAZ ZSMK rail mill.
In Q2 2014, crude steel production is expected to increase
compared to Q1 2014 due to lower downtime on scheduled maintenance
works. The output of finished goods, in particular construction
products, is also expected to increase on the back of stronger
seasonal demand.
In Q1 2014, selling prices for semi-finished steel products
increased reflecting stronger demand in the global steel market,
mostly from South East Asia. Average domestic prices for steel
products were lower than in Q4 2013 due to the depreciation of the
local currency, but began to rise in March 2014 reflecting growing
seasonal demand.
Average selling prices
$/tonne (ex works) Q1 2014 Q4 2013 Q1 2013
-------------------------- -------- -------- --------
Coke 128 137 178
Pig iron 305 317 291
Steel products
Semi-finished products 406 399 419
Construction products 569 632 674
Railway products 775 847 910
Other steel products 594 644 651
-------------------------- -------- -------- --------
NORTH AMERICA
Product, '000 tonnes Q1 2014 Q4 2013 Q1 2014/ Q4 2013, change Q1 2013 Q1 2014/ Q1 2013, change
---------------------------------- -------- -------- ------------------------- -------- -------------------------
Crude steel 494 510 -3.2% 562 -12.2%
Steel products, net of re-rolled
volumes 647 701 -7.7% 707 -8.5%
Construction products 86 78 9.6% 85 1.2%
Railway products 132 130 1.9% 120 10.3%
Flat-rolled products 154 211 -27.0% 276 -44.2%
Tubular products 275 282 -2.5% 226 21.5%
---------------------------------- -------- -------- ------------------------- -------- -------------------------
In Q1 2014, crude steel output decreased by 3% compared to Q4
2013 due to maintenance downtime at EVRAZ Regina in January 2014.
The year-on-year 12% decrease in quarterly steel production is
related mainly to suspension of the EVRAZ Claymont operations from
Q4 2013.
Total steel products' and flat-rolled products' output decreased
by 8% and 27% compared to Q4 2013, respectively, mostly due to
suspension of the Claymont plant and scheduled maintenance works at
the Portland mill.
Production of rails increased following the completion of
capacity expansion project at the Pueblo rail mill by 2% and 10%
compared to Q4 2013 and Q1 2013 respectively. The rail mill has
been operating at its new uprated capacity of 526,000 tonnes of
rails per annum since 2013 year-end.
Production of tubular goods decreased by 3% quarter-on-quarter
reflecting normal seasonal trends and increased by 22% compared to
Q1 2013, mainly due to stronger demand for ERW line pipes and
higher production of larger diameter pipes as a result of improved
operational performance.
In Q1 2014, production of construction products grew by 10%,
supported by market demand.
Prices in North America, except for tubular goods, improved
throughout the quarter as a result of better product mix and high
demand as well as lower imports level in the flat-rolled market.
The decrease in average tubular prices was driven by CAD weakening
against USD and import increases.
In Q2 2014 output of tubular goods is expected to be in line
with Q1 2014 despite seasonal factors driven by strong order books
both for OCTG and larger diameter pipes. The rail order book is
full through Q2 2014. Flat-rolled product volumes will be affected
by the planned Regina steel shop maintenance.
Average selling prices
$/tonne (ex works) Q1 2014 Q4 2013 Q1 2013
------------------------- -------- -------- --------
Construction products 790 746 792
Railway products 983 925 935
Flat-rolled products 915 839 874
Tubular products 1,292 1,310 1,381
------------------------- -------- -------- --------
UKRAINE
Product, '000 tonnes Q1 2014 Q4 2013 Q1 2014/ Q4 2013, change Q1 2013 Q1 2014/ Q1 2013, change
----------------------------- -------- -------- ------------------------- -------- -------------------------
Coke (saleable) 145 166 -12.9% 208 -30.3%
Pig iron 248 237 4.7% 231 7.4%
Pig iron (saleable) 3 9 -67.9% 2 19.8%
Crude steel 253 239 5.5% 244 3.5%
Steel products 214 223 -3.8% 211 1.6%
Semi-finished products 121 111 8.7% 83 45.0%
Finished products 94 112 -16.2% 128 -26.6%
Construction products 74 91 -19.2% 106 -30.3%
Other steel products 20 21 -2.7% 22 -9.2%
----------------------------- -------- -------- ------------------------- -------- -------------------------
In Q1 2014, output of pig iron and of crude steel rose by 5% and
by 6% respectively compared to Q4 2013 and by 7% and 4%
respectively compared to Q1 2013 as a result of increased
efficiency of blast furnaces due to operational improvements in the
melting process, coke quality and less downtime for repairs.
Production of steel products decreased by 4% compared to Q4
2013, when rolling mills used ingots from stock which added
additional tonnages of steel products in Q4 2013. Production of
semi-finished grew by 9% due to increased demand and more
favourable pricing in export markets, while production of finished
products, mainly construction products, fell by 19% following a
drop in export volumes of construction products to Russia due to
the growing substitution on the part of Russian domestic
producers.
Selling prices decreased in Q1 2014 due to the devaluation of
local currencies in Ukraine and Russia.
Average selling prices
$/tonne (ex works) Q1 2014 Q4 2013 Q1 2013
-------------------------- -------- -------- --------
Coke (saleable) 179 199 214
Pig iron 351 352 389
Steel products
Semi-finished products 449 452 475
Construction products 583 611 610
Other steel products 894 788 894
-------------------------- -------- -------- --------
EUROPE
Product, '000 tonnes Q1 2014 Q4 2013 Q1 2014/ Q4 2013, change Q1 2013 Q1 2014/ Q1 2013, change
---------------------------------- -------- -------- ------------------------- -------- -------------------------
Crude steel 131 102 28.6% 140 -6.7%
Steel products, gross 129 114 13.4% 254 -49.1%
Steel products, net of re-rolled
volumes 129 114 13.4% 247 -47.7%
Construction products 22 28 -22.9% 14 55.6%
Flat-rolled products 103 83 24.5% 228 -54.8%
Other steel products 5 3 44.7% 5 -15.1%
---------------------------------- -------- -------- ------------------------- -------- -------------------------
In Q1 2014, production of crude steel increased by 29% compared
to Q4 2013 as EVRAZ Vitkovice Steel's steel shop was operative in
only the first two months in Q4 2013 as a result of weak year-end
demand for steel products, in particular plate, in Europe. Demand
improved in Q1 2014 and was reflected in an increase in production
of flat-rolled products quarter-on-quarter by 25%, as well as in
prices.
On 3 April 2014, EVRAZ sold EVRAZ Vitkovice Steel for a total
consideration of $287 million.
Operations at EVRAZ Palini e Bertoli in Italy remained suspended
throughout Q1 2014.
Average selling prices
$/tonne (ex works) Q1 2014 Q4 2013 Q1 2013
------------------------- -------- -------- --------
Construction products 891 892 890
Flat-rolled products 724 707 683
------------------------- -------- -------- --------
SOUTH AFRICA
Product, '000 tonnes Q1 2014 Q4 2013 Q1 2014/ Q4 2013, change Q1 2013 Q1 2014/ Q1 2013, change
----------------------------- -------- -------- ------------------------- -------- -------------------------
Pig iron 152 161 -5.6% 174 -12.5%
Crude steel 150 164 -8.6% 175 -14.5%
Steel products 149 116 28.1% 124 20.5%
Semi-finished products 9 0 n/a 0 n/a
Finished products 141 116 20.8% 124 13.6%
Construction products 43 37 16.8% 41 5.5%
Flat-rolled products 90 72 25.9% 74 21.9%
Other steel products 7 8 -8.3% 9 -19.7%
----------------------------- -------- -------- ------------------------- -------- -------------------------
In Q1 2014, the output of pig iron by EVRAZ Highveld decreased
by 6% compared to Q4 2013 and by 13% compared to Q1 2013, due to a
blast furnace undergoing a major repair in H2 2013 and the first
two months of 2014. Because of this and due to pig iron quality
issues in Q1 2014, crude steel production decreased by 9% vs. Q4
2013 and by 15% vs. Q1 2013.
The increase in production of most steel product groups in Q1
2014 compared to Q4 2013 is mainly due to the low base effect as
operations at the end of 2013 were hampered by numerous
incident-related as a result of accidents, while work in Q1 2014
was largely stable. The stronger demand for flat products, in
particular coil, mainly driven by export markets, was also
supportive of production.
Prices of semi-finished goods increased in Q1 2014 in line with
global steel prices.
Average selling prices
$/tonne (ex works) Q1 2014 Q4 2013 Q1 2013
-------------------------- -------- -------- --------
Steel products
Semi-finished products 440 156* 539
Construction products 642 632 789
Flat-rolled products 606 609 721
Other steel products 574 497 643
-------------------------- -------- -------- --------
*The calculation includes a year-end adjustment to the selling
expenses. The price excluding the adjustment would be $357/t
MINING SEGMENT
IRON ORE
Product, '000 tonnes Q1 2014 Q4 2013 Q1 2014/ Q1 2013 Q1 2014/
Q4 2013, Q1 2013,
change change
-------------------------- -------- -------- ---------- -------- ----------
Sinter (Russia)* 2,788 2,886 -3.4% 3,147 -11.4%
Pellets (Russia) 1,572 1,575 -0.2% 1,544 1.9%
Lumpy ore (Ukraine) 736 796 -7.5% 691 6.5%
Fines ore (South Africa) 139 145 -3.7% 164 -15.1%
Lumpy ore (South Africa) 293 298 -1.7% 376 -22.0%
-------------------------- -------- -------- ---------- -------- ----------
*Figures for Q1 2013 and Q4 2013 differ from those presented in
the previous quarterly production reports and include sinter
produced at EVRAZ ZSMK both from own and 3(rd) party primary
concentrate.
In Q1 2014 production of iron ore products in Russia decreased
by 2% vs. Q4 2013 primarily as a result of the disposal of Teya and
Abakan mines of Evrazruda in December 2013. The year-on-year
changes are also explained by the shutdown of Evrazruda's Irba mine
in July 2013 and the disposal of EVRAZ VGOK in October 2013. The
share of own iron ore concentrate used in production of sinter and
pellets in Russia decreased to 68% in Q1 2014 compared with 80% in
Q4 2013.
Production of lumpy iron ore at EVRAZ Sukha Balka in Ukraine
fell by 8% compared to Q4 2013, mainly as a result of fewer working
days in Q1 2014, while year-on-year production of lumpy ore
increased by 7% due to improved productivity at the Yubileynaya
mine.
Production of iron ore at the Mapochs mine in South Africa in Q1
2014 was negatively affected by repairs at the crushing facilities
of the mine in January-February 2014.
The prices for iron ore products marginally softened.
Average selling prices
$/tonne (ex works) Q1 2014 Q4 2013 Q1 2013
---------------------------- -------- -------- --------
Lumpy ore (Ukraine) 66 68 63
Sinter (Russia) 74 76 70
Pellets (Russia) 88 88 79
Fines ore (South Africa) 13 14 35
---------------------------- -------- -------- --------
COAL
Product, '000 tonnes Q1 2014 Q4 2013 Q1 2014/ Q1 2013 Q1 2014/
Q4 2013, Q1 2013,
change change
------------------------------------- -------- -------- ---------- -------- ----------
Raw coking coal (mined) 4,724 5,048 -6.4% 4,751 -0.6%
Yuzhkuzbassugol 2,867 3,193 -10.2% 2,490 15.1%
Raspadskaya 1,857 1,855 0.1% 2,261 -17.9%
Coking coal concentrate
(production) 3,285 3,348 -1.9% 3,382 -2.9%
Produced at Yuzhkuzbassugol
coal washing plants 1,580 1,579 0.1% 1,280 23.4%
Produced at EVRAZ ZSMK coal
washing plant 588 657 -10.5% 644 -8.7%
Produced at Raspadskaya
coal washing plant 1,117 1,112 0.4% 1,457 -23.4%
Raw steam coal (mined) 467 456 2.4% 19 2379.9%
Steam coal concentrate (production) 13 16 -19.5% 10 24.8%
------------------------------------- -------- -------- ---------- -------- ----------
Coking coal
In Q1 2014 Yuzhkuzbassugol decreased production of raw coking
coal by 10% compared to Q4 2013 due to repositioning of longwalls
at several mines - Yesaulskaya (inoperative in March-April),
Alardinskaya (in February-March), and the discontinuation of
tunneling works at the Abashevskaya mine as part of preparatory
works for its shutdown.
Production of coking coal concentrate at Yuzhkuzbassugol was
flat quarter-on-quarter and increased by 23% year-on-year due to
increased availability of raw coking coal following the launch and
ramp-up of Yerunakovskaya VIII mine. The additional volumes of raw
coking coal were processed at Yuzhkuzbassugol's Kuznetskaya coal
washing plant and at third party facilities.
Production of raw coking coal and coking coal concentrate at
Raspadskaya Coal Company was flat compared to Q4 2013 and decreased
compared to Q1 2013 due to the scheduled repositioning of the
longwall at the MUK-96 mine. This decline was partly offset by
increased output at the Raspadskaya underground mine following the
launch of a longwall in December 2013. The mining volumes at the
Raspadskaya underground mine are expected to increase further in Q2
2014 with the launch of the second longwall in March 2014.
Production of coking coal concentrate at EVRAZ ZSMK coal washing
plant in Q1 2014 was adjusted in line with the decreased
consumption of coke in steelmaking process due to maintenance works
at a blast furnace.
The blended average selling price of coking coal concentrate was
flat in Q1 2014 compared to Q4 2013.
Average selling prices
$/tonne (ex works) Q1 2014 Q4 2013 Q1 2013
-------- -------- --------
Raw coking coal 51 55 61
Raw steam coal 30 31 12
Coking coal concentrate 81 82 100
Steam coal concentrate 23 0 0
--------------------------- -------- -------- --------
VANADIUM SEGMENT
Product, tonnes of V* Q1 2014 Q4 2013 Q1 2014/ Q4 2013, change Q1 2013 Q1 2014/ Q1 2013, change
---------------------------------- -------- -------- ------------------------- -------- -------------------------
Vanadium in slag (gross
production) 4,989 5,433 -8.2% 5,363 -7.0%
Russia 3,554 3,770 -5.7% 3,735 -4.8%
South Africa 1,436 1,663 -13.7% 1,628 -11.8%
Vanadium in final products n/a n/a
(saleable)
Ferrovanadium 3,866 3,566 8.4% 3,464 11.6%
Produced at own facilities 2,070 1,815 14.0% 1,875 10.4%
Processed at 3rd parties'
facilities 1,797 1,751 2.6% 1,589 13.1%
Nitrovan(R) 611 435 40.4% 715 -14.5%
Oxides, vanadium aluminium and
chemicals 414 369 12.1% 491 -15.6%
---------------------------------- -------- -------- ------------------------- -------- -------------------------
(*) Calculated in pure vanadium equivalent.
Vanadium slag production decreased by 8% compared to Q4 2013 due
to lower output of pig iron both at EVRAZ NTMK in Russia and EVRAZ
Highveld in South Africa due to reasons described above.
Despite the decrease in production of slag, Ferrovanadium output
in Q1 2014 increased by 8% compared to Q4 2013 driven by the
increased production at own facilities - by 14% which resulted from
higher volumes of conversion of third party oxides.
Production of Ferrovanadium in Q1 2014 vs. Q1 2013 grew by 12%
due to a 10% increase in production at own facilities as a result
of consumption of pentoxide stocks at EVRAZ Vanady Tula and a 13%
increase in production at 3(rd) parties' facilities due to higher
production at Hochvanadium.
In Q1 2014, production of Nitrovan by Vametco in South Africa
grew by 40% compared to Q4 2013, as Nitrovan output was impacted by
a labour strike at Vametco in South Africa lasting from September
until mid-October 2013 and a temporary suspension of operations in
the plant initiated by the South African Department of Mineral
Resources (DMR), which lasted for two weeks in November-December
2013. The 15% decrease in Nitrovan production year-on-year is
attributable to a temporary Vametco suspension by DMR and
operational issues at EVRAZ Highveld's vanadium plant that resulted
in lower slag dispatches to Vametco.
Production of oxides, vanadium aluminum and chemicals increased
by 12% compared to Q4 2013 due to improved oxide extraction yields
in Q1 2014.
Average prices for Ferrovanadium and Nitrovan remained broadly
unchanged in Q1 2014 compared to Q4 2013. Prices for oxides,
vanadium aluminium and chemicals decreased due to change in the
sales mix.
Average selling prices
$/tonne of V (ex works) Q1 2014 Q4 2013 Q1 2013
------------------------------------------ -------- -------- --------
Ferrovanadium 24,951 24,525 28,814
Nitrovan(R) 27,464 26,507 30,690
Oxides, vanadium aluminium and chemicals 32,161 35,444 33,266
------------------------------------------ -------- -------- --------
Notes:
Semi-finished productsinclude slabs, billets, pipe blanks and
other semi-finished products.
Construction products include beams, channels, angles, rebars,
wire rods, wire, and other construction products.
Railway products include rails, wheels, tyres and other railway
products.
Flat-rolled productsinclude commodity plate, specialty plate and
other flat products.
Tubular productsinclude large diameter line pipes, ERW pipes and
casings, seamless pipes and other tubular products.
Other steel products include rounds, grinding balls, mine
uprights, strips etc. For Ukraine they also include railway
products, for Europe - slabs and cut shapes; for South Africa -
rails.
###
For further information:
Media Relations:
Vsevolod Sementsov
VP, Corporate Communications
London: +44 207 832 8998
Moscow: +7 495 937 6871
media@evraz.com
Investor Relations:
Sergey Belyakov
Director, Investor Relations
London: +44 207 832 8990
Moscow: +7 495 232 1370
ir@evraz.com
EVRAZ is a vertically integrated steel, mining and vanadium
business with operations in the Russian Federation, Ukraine,
Kazakhstan, USA, Canada, Czech Republic, Italy and South Africa.
EVRAZ is among the top steel producers in the world based on crude
steel production of 16.1 million tonnes in 2013. A significant
portion of the company's internal consumption of iron ore and
coking coal is covered by its mining operations. The company's
consolidated revenues for the year ended 31 December 2013 were
US$14,411 million, and consolidated EBITDA amounted to US$1,821
million.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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