TIDMEVR
RNS Number : 4437M
Evraz Plc
16 July 2014
EVRAZ Q2 2014 PRODUCTION REPORT
16 July 2014 - EVRAZ plc (LSE: EVR) today releases its
operational results for the second quarter of 2014.
Q2 2014 vs Q1 2014 HIGHLIGHTS:
-- Consolidated crude steel production increased slightly in Q2 2014 vs. Q1 2014
-- Consolidated production of steel products, net of re-rolled
volumes increased by 6% as a result of growth both in production of
construction products and rails in Russia on the back of strong
domestic demand
-- Share of finished steel products within the consolidated
volumes decreased to 70% in Q2 2014 vs. 74% in Q1 2014, whilst the
share of semi-finished goods increased to 30% from 26%, due to
lower intercompany supplies of slabs for re-rolling into finished
goods at EVRAZ non-Russian assets
-- Output of iron ore products in Russia increased by 3% vs. Q1 2014
-- Consolidated raw coking coal output and production of coking
coal concentrate increased by 7% and 3% respectively due to strong
Raspadskaya's production
-- Average prices for most of EVRAZ's steel products in Russia
recovered on the back of improved demand in the domestic market
-- Average prices for flat-rolled and tubular products in North
America improved supported by growing demand from the oil and gas
sector
-- Average prices for Russian-produced iron ore products and
coking coal concentrate softened in line with global benchmark
prices
STEEL SEGMENT
Product, '000 tonnes Q2 2014 Q1 2014 Q2 2014/ Q1 2014, change Q2 2013 Q2 2014/ Q2 2013, change
---------------------------------- -------- -------- ------------------------- -------- -------------------------
Coke (saleable) 273 255 7.0% 398 -31.5%
Pig iron 3,131 2,991 4.7% 3,106 0.8%
Pig iron (saleable) 85 77 10.9% 45 91.0%
Crude steel 3,918 3,875 1.1% 4,089 -4.2%
Steel products, gross* 3,810 3,781 0.8% 4,093 -6.9%
Steel products, net of re-rolled
volumes 3,556 3,366 5.7% 3,695 -3.8%
Semi-finished products ** 1,056 867 21.9% 843 25.3%
Finished products 2,500 2,499 0.0% 2,853 -12.4%
Construction products 1,335 1,217 9.7% 1,335 0.1%
Railway products 538 508 5.8% 497 8.2%
Flat-rolled products 226 344 -34.5% 588 -61.7%
Tubular products 250 271 -7.6% 200 25.5%
Other steel products 151 159 -5.0% 233 -35.2%
---------------------------------- -------- -------- ------------------------- -------- -------------------------
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 Q2 2014 Q1 2014 Q2 2014/ Q1 2014, change Q2 2013 Q2 2014/ Q2 2013, change
---------------------------------- -------- -------- ------------------------- -------- -------------------------
Coke (saleable) 87 111 -21.1% 185 -53.0%
Pig iron 2,691 2,591 3.8% 2,694 -0.1%
Pig iron (saleable) 75 74 0.6% 39 89.7%
Crude steel 3,020 2,852 5.9% 3,003 0.5%
Steel products, gross 2,835 2,649 7.0% 2,797 1.4%
Steel products, net of re-rolled
volumes 2,728 2,582 5.6% 2,744 -0.6%
Semi-finished products 1,094 1,086 0.8% 1,106 -1.1%
Finished products 1,634 1,497 9.2% 1,638 -0.2%
Construction products 1,109 993 11.7% 1,067 3.9%
Railway products 395 376 5.1% 379 4.3%
Other steel products 129 127 1.6% 192 -32.5%
---------------------------------- -------- -------- ------------------------- -------- -------------------------
In Q2 2014, pig iron and crude steel output increased by 4% and
6% respectively compared to Q1 2014 due to lower downtime for
maintenance works at blast furnaces and converters at Russian steel
mills. The year-on-year output of steel was up marginally.
As a result of larger crude steel volumes in Q2 2014, production
of steel products also grew compared to Q1 2014: gross production
by 7% and production net of re-rolled products by 6%.
Production of finished products rose by 9% due to seasonally
strong demand for construction steel products (+12% vs. Q1 2014)
and higher production of rails at the EVRAZ ZSMK rail mill.
In Q3 2014, crude steel production is expected to increase
compared to Q2 2014 as no major maintenance works are planned at
the steel mills. Q3 is normally a peak season for construction in
Russia, and the demand for construction products is expected to
remain high.
Selling prices for all product groups were higher
quarter-on-quarter supported by stronger markets for EVRAZ
goods.
Average selling prices
USD/tonne (ex works) Q2 2014 Q1 2014 Q2 2013
-------------------------- -------- -------- --------
Coke 133 128 172
Pig iron 307 305 290
Steel products
Semi-finished products 427 406 410
Construction products 616 569 652
Railway products 807 775 839
Other steel products 612 594 637
-------------------------- -------- -------- --------
NORTH AMERICA
Product, '000 tonnes Q2 2014 Q1 2014 Q2 2014/ Q1 2014, change Q2 2013 Q2 2014/ Q2 2013, change
---------------------------------- -------- -------- ------------------------- -------- -------------------------
Crude steel 481 491 -1.9% 561 -14.3%
Steel products, net of re-rolled
volumes 619 639 -3.0% 688 -10.0%
Construction products 79 85 -6.9% 104 -23.7%
Railway products 142 132 7.9% 118 20.6%
Flat-rolled products 147 151 -2.1% 267 -44.7%
Tubular products 250 271 -7.6% 200 25.5%
---------------------------------- -------- -------- ------------------------- -------- -------------------------
In Q2 2014, output of crude steel and total steel products
decreased by 2% and 3% respectively compared to Q1 2014 due to the
scheduled biannual Regina steel shop maintenance.
The year-on-year decreases in quarterly steel production, total
output of steel products and in particular of flat-rolled products
were driven mainly by the suspension of the EVRAZ Claymont
operations from Q4 2013.
In Q2 2014, production of construction products (rods &
bars) at EVRAZ Pueblo declined by 7% vs. Q1 2014 and by 24% vs. Q2
2013 as available crude steel volumes were primarily used in
production of rails.
Production of rails increased by 8% vs. Q1 2014 and by 21% vs.
Q2 2013 due to improved productivity at the Pueblo rail mill
following the completion of the rail mill expansion project in Q4
2013.
Production of tubular goods decreased by 8% vs. Q1 2014 due to
planned outages at tubular mills as well as certain changes in
produced pipe size mix.
With the exception of rails, prices in North America increased
as a result of improving market sentiment as well as a larger share
of higher value-added flat-rolled marginal products (specialty and
heat-treated plates). Rail prices declined following scrap price
declining and a slightly lower share of premium rails.
In Q3 2014 crude steel output is expected to outperform the Q2
2014 results as market demand remains strong, and no major outages
are planned for the second half of the year. Increased steel supply
and a strong order book is expected to provide growth to tubular
production in Q3 2014. A slight decrease in rail volumes is
expected in Q3 2014 due to annual maintenance works.
Average selling prices
USD/tonne (ex works) Q2 2014 Q1 2014 Q2 2013
------------------------- -------- -------- --------
Construction products 812 795 772
Railway products 956 983 949
Flat-rolled products 980 919 873
Tubular products 1,329 1,290 1,308
------------------------- -------- -------- --------
UKRAINE
Product, '000 tonnes Q2 2014 Q1 2014 Q2 2014/ Q1 2014, change Q2 2013 Q2 2014/ Q2 2013, change
----------------------------- -------- -------- ------------------------- -------- -------------------------
Coke (saleable) 186 145 28.4% 213 -12.8%
Pig iron 249 248 0.5% 254 -1.7%
Pig iron (saleable) 11 3 287.2% 5 100.2%
Crude steel 247 253 -2.3% 265 -6.9%
Steel products 219 214 2.1% 214 2.4%
Semi-finished products 103 121 -14.6% 78 31.4%
Finished products 116 94 23.5% 135 -14.0%
Construction products 97 74 32.2% 109 -10.9%
Other steel products 18 20 -8.3% 26 -29.4%
----------------------------- -------- -------- ------------------------- -------- -------------------------
In Q2 2014, output of crude steel by EVRAZ Ukrainian steel mill,
DMZ, decreased by 2% compared to Q1 2014 and by 7% compared to Q2
2013 as a result of maintenance works as well as increased pig iron
to steel conversion ratio.
Production of steel products increased by 2% as lower crude
steel production was offset by the use of semi-finished steel from
stock. Production of finished steel products was 24% higher than in
the previous quarter, mostly driven by EVRAZ's higher shipments of
construction steel products to Russia and other destinations, as
conversion costs improved due to the weaker Ukrainian hryvnia.
Selling prices for finished construction products declined in Q2
2014 due to lower share of domestic sales. Billet prices were
stable compared to Q1 2014. Coke prices followed the weakening in
coking coals prices during the period.
Average selling prices
USD/tonne (ex works) Q2 2014 Q1 2014 Q2 2013
-------------------------- -------- -------- --------
Coke (saleable) 159 179 226
Pig iron 327 351 383
Steel products
Semi-finished products 452 449 476
Construction products 573 583 600
Other steel products 819 894 937
-------------------------- -------- -------- --------
EUROPE
Product, '000 tonnes Q2 2014 Q1 2014 Q2 2014/ Q1 2014, change Q2 2013 Q2 2014/ Q2 2013, change
---------------------------------- -------- -------- ------------------------- -------- -------------------------
Crude steel 0 131 n/a 100 n/a
Steel products, gross 0 129 n/a 259 n/a
Steel products, net of re-rolled
volumes 0 129 n/a 257 n/a
Construction products 0 22 n/a 17 n/a
Flat-rolled products 0 103 n/a 234 n/a
Other steel products 0 5 n/a 6 n/a
---------------------------------- -------- -------- ------------------------- -------- -------------------------
On 3 April 2014, EVRAZ sold EVRAZ Vitkovice Steel for a total
consideration of $287 million.
Operations at EVRAZ Palini e Bertoli in Italy have remained
suspended since August 2013.
SOUTH AFRICA
Product, '000 tonnes Q2 2014 Q1 2014 Q2 2014/ Q1 2014, change Q2 2013 Q2 2014/ Q2 2013, change
----------------------------- -------- -------- ------------------------- -------- -------------------------
Pig iron 191 152 25.7% 158 20.8%
Crude steel 170 150 13.3% 159 6.5%
Steel products 137 149 -8.3% 135 1.6%
Semi-finished products 6 9 -34.3% 0 n/a
Finished products 131 141 -6.7% 135 -2.5%
Construction products 50 43 14.8% 38 31.7%
Flat-rolled products 78 90 -13.5% 87 -10.6%
Other steel products 3 7 -53.2% 9 -65.1%
----------------------------- -------- -------- ------------------------- -------- -------------------------
In Q2 2014, the output of pig iron and crude steel increased
considerably compared to both Q1 2014 and Q2 2013 following
improved stability throughout the iron making process, which
resulted from operational improvements and following major repair
of a furnace.
Production of steel products, in particular of flat-rolled
products, decreased 8% vs. Q1 2014, as a result of operational
challenges.
Production of steel products in Q3 2014 may be negatively
affected by an industrial action by South African metalworkers
which has been going on since 1 July.
Prices of semi-finished goods in Q2 2014 were in line with
global steel prices. Prices for most finished products improved as
a result of the weak Rand.
Average selling prices
USD/tonne (ex works) Q2 2014 Q1 2014 Q2 2013
-------------------------- -------- -------- --------
Semi-finished products 431 440 590
Construction products 680 642 767
Flat-rolled products 653 606 721
Other steel products 513 574 733
-------------------------- -------- -------- --------
MINING SEGMENT
IRON ORE
Product, '000 tonnes Q2 2014 Q1 2014 Q2 2014/ Q1 2014, change Q2 2013* Q2 2014/ Q2 2013, change
---------------------------- -------- -------- ------------------------- --------- -------------------------
Sinter (Russia) 2,929 2,788 5.1% 2,970 -1.4%
Pellets (Russia) 1,575 1,572 0.2% 1,575 0.0%
Lumpy ore (Ukraine) 714 736 -3.0% 770 -7.2%
Fines ore (South Africa) 195 139 40.2% 188 3.7%
Lumpy ore (South Africa) 407 293 38.7% 379 7.3%
---------------------------- -------- -------- ------------------------- --------- -------------------------
*Figures for Q2 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 Q2 2014 production of iron ore products - sinter and pellets
- in Russia grew by 3% vs. Q1 2014 primarily as a result of
increased production at EVRAZ KGOK and more sinter produced at
EVRAZ ZSMK beneficiation plant from third party ores. The share of
own iron ore concentrate used in production of sinter and pellets
in Russia decreased to 64% in Q2 2014 compared to 68% in Q1 2014
due to scheduled stoppage for upgrade of Evrazruda's Sheregesh iron
ore mine in March-June 2014. The Sheregesh mine is expected to
resume mining operations in the second half of July. The major
expansion project carried out at Sheregesh is aimed at increasing
the mine's capacity by 1.5 million tonnes of iron ore concentrate
by 2017.
Despite the disposals of EVRAZ VGOK and three mines of Evrazruda
in H2 2013, production of iron ore products in Q2 2014 vs. Q2 2013
was flat as the loss of own concentrate volumes for production of
sinter and pellets was compensated with concentrate purchased in
the market.
Production of lumpy iron ore at EVRAZ Sukha Balka in Ukraine
declined by 3% compared to Q1 2014, mainly as a result of fewer
working days and lower Fe content of the run-of-mine ore in the
Yubileynaya mine. The ore quality and the bypassing to lower level
of mining are two main factors for a 7% year-on-year decrease in
production.
Production of iron ore at the Mapochs mine in South Africa in Q2
2014 improved compared to Q1 2014 following completion of repairs
at the crushing facilities of the mine in January-February
2014.
Average selling prices
USD/tonne (ex works) Q2 2014 Q1 2014 Q2 2013
---------------------------- -------- -------- --------
Lumpy ore (Ukraine) 56 66 68
Sinter (Russia) 69 74 87
Pellets (Russia) 82 88 95
Fines ore (South Africa) 15 13 25
---------------------------- -------- -------- --------
COAL
Product, '000 tonnes Q2 2014 Q1 2014 Q2 2014/ Q1 2014, change Q2 2013 Q2 2014/ Q2 2013, change
---------------------------------- -------- -------- ------------------------- -------- -------------------------
Raw coking coal (mined) 5,036 4,724 6.6% 4,332 16.2%
Yuzhkuzbassugol 2,467 2,867 -14.0 % 2,632 -6.3%
Raspadskaya 2,569 1,857 38.4% 1,700 51.1%
Coking coal concentrate
(production) 3,384 3,285 3.0% 3,470 -2.5%
Produced at Yuzhkuzbassugol
coal washing plants 1,374 1,580 -13.1% 1,460 -5.9%
Produced at EVRAZ ZSMK coal
washing plant 500 588 -14.9% 658 -24.0%
Produced at Raspadskaya coal
washing plant 1,510 1,117 35.2% 1,352 11.7%
Raw steam coal (mined) 290 467 -37.8% 476 -39.0%
Steam coal concentrate
(production) 15 13 16.1% 53 -72.2%
---------------------------------- -------- -------- ------------------------- -------- -------------------------
Coking coal
In Q2 2014, production of coking coal by EVRAZ increased by 7%
vs. Q1 2014 and by 16% vs. Q2 2013 driven by growth in the
Raspadskaya's production. Share of own raw coal used in concentrate
production increased to 96% in Q2 2014 compared to 94% in Q1 2014
and 92% in Q2 2013.
Production of raw coking coal by Yuzhkuzbassugol decreased by
14% compared to Q1 2014 due to repositioning of a longwall at the
Uskovskaya mine and temporary suspension of mining at the
Yesaulskaya mine because of the high water level in the mine. Lower
production of raw coal resulted in a decline of production of
coking coal concentrate at Yuzhuzbassugol's coal washing plants and
EVRAZ ZSMK coal washing plant.
The 6% year-on-year decrease in production of raw coal and of
coking coal concentrate by Yuzhkuzbassugol is attributable to a
shutdown of the Abashevskaya mine in Q1 2014, as well as lower
concentrate yield as a result of replacement of low ash coal from
the Uskovskaya mine, which was closed for repositioning of a
longwall in Q2 2014 with higher ash coal from the other mines.
Production of raw coking coal and coking coal concentrate at the
Raspadskaya Coal Company increased by 38% and 35% respectively
compared to Q1 2014, primarily driven by increased production at
the Raspadskaya mine, the launch of a longwall at the MUK-96 mine
and a shift to planned production volumes at the Razrez Raspadsky
open-pit.
Production of raw coal and coking coal concentrate was 51% and
12% higher than in Q2 2013, mainly due to a continuing successful
ramp-up of the Raspadskaya mine production.
The blended average selling price of coking coal concentrate
decreased mostly due to lower export prices.
Average selling prices
USD/tonne (ex works) Q2 2014 Q1 2014 Q2 2013
------------------------------------- --------- -------- --------
Raw coking coal 46 51 60
Raw steam coal 28 30 29
Coking coal concentrate 73 81 90
Steam coal concentrate 23 49
-------------------------------------- -------- -------- --------
VANADIUM SEGMENT
Product, tonnes of V* Q2 2014 Q1 2014 Q2 2014/ Q2 2013 Q2 2014/
Q1 2014, Q2 2013,
change change
--------------------------------- -------- -------- ---------- -------- ----------
Vanadium in slag (gross
production) 5,415 4,989 8.5% 5,473 -1.1%
Russia 3,519 3,554 -1.0% 3,562 -1.2%
South Africa 1,896 1,436 32.1% 1,911 -0.8%
Vanadium in final products n/a n/a
(saleable)
Ferrovanadium 3,590 3,866 -7.1% 3,479 3.2%
Produced at own facilities 1,956 2,070 -5.5% 1,900 3.0%
Processed at 3rd parties'
facilities 1,634 1,797 -9.0% 1,579 3.5%
Nitrovan(R) 734 611 20.1% 708 3.6%
Oxides, vanadium aluminium
and chemicals 587 564 4.2% 433 35.5%
--------------------------------- -------- -------- ---------- -------- ----------
(*) Calculated in pure vanadium equivalent.
Vanadium slag production increased by 9% compared to Q1 2014 due
to higher output of pig iron and improved Vanadium recovery at
EVRAZ Highveld in South Africa following completion of furnace's
repair. Vanadium slag production in Russia was slightly down
affected by maintenance works at EVRAZ NTMK's converter in May
2014.
Production of Ferrovanadium in Q2 2014 decreased by 7% compared
to Q1 2014. Production at own facilities was about 6% less due to
scheduled maintenance and certain production challenges at EVRAZ
Vanady Tula. Ferrovanadium processed at third party facilities was
9% less than in Q1 2014 as a result of reduced slag supply from
EVRAZ Highveld.
Production of Ferrovanadium in Q2 2014 vs. Q2 2013 grew by 3%
due to output growth both at own and third party facilities driven
by increase of FeV production at EVRAZ Vanady Tula to support
stronger offtake in the Russian market and the re-start of oxides
conversion at BMC (US) (there was no conversion agreement with BMC
in place for Q2 2013).
In Q2 2014, production of Nitrovan by Vametco in South Africa
increased by 20% compared to the previous quarter as in Q1 2014 the
plant's performance was impacted by several equipment failures and
a 5-day suspension of operations initiated by the South African
Department of Mineral Resources (DMR).
Production of oxides, vanadium aluminum and chemicals at EVRAZ
Stratcor facility at Arkansas (US) was up 4% compared to Q1 2014
due to improved oxide extraction yields. The 36% increase vs. Q2
2013 is attributable to fully resolved issues with feedstock
availability in 2014.
Average prices for Vanadium products kept on growing 2014
fuelled by pipeline projects in the CIS, Europe, and healthy steel
demand in North America.
Average selling prices
USD/tonne of V (ex works) Q2 2014 Q1 2014 Q2 2013
------------------------------------------ -------- -------- --------
Ferrovanadium 25,824 24,951 28,094
Nitrovan(R) 28,171 27,464 29,781
Oxides, vanadium aluminium and chemicals 33,602 32,161 35,646
------------------------------------------ -------- -------- --------
Notes:
Semi-finished products include 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 products include commodity plate, specialty plate
and other flat products.
Tubular products include 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:
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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