TIDMEVR
RNS Number : 4267U
Evraz Plc
16 October 2014
EVRAZ Q3 2014 PRODUCTION REPORT and INTERIM MANAGEMENT
STATEMENT
16 October 2014 - EVRAZ plc (LSE: EVR) today releases its
operational results for the third quarter of 2014 and its Interim
Management Statement.
Q3 2014 vs Q2 2014 HIGHLIGHTS and RECENT DEVELOPMENTS:
-- Consolidated crude steel production decreased slightly in Q3
2014 vs. Q2 2014 mostly due to maintenance works at the EVRAZ ZSMK
mill in Russia
-- Share of finished steel products within consolidated volumes
was 69% in Q3 2014 vs. 70% in Q2 2014
-- Consolidated production of steel products decreased by 4%
mostly due to a decrease in production of railway products driven
by lower orders for railway products from customers in Russia and
the CIS and annual maintenance works at the EVRAZ Pueblo rail mill
in North America
-- Output of iron ore products in Russia decreased by 3% vs. Q2
2014 due to maintenance works at the sintering facilities
-- Consolidated raw coking coal output and production of coking
coal concentrate increased by 6% and 4% respectively due to stable
performance by Yuzhkuzbassugol
-- Average prices for EVRAZ's construction products in Russia remained seasonally strong
-- Average prices for flat-rolled and tubular products in North
America were supported by growing demand from the oil and gas
sector
-- Average prices for Russian-produced iron ore products and
coking coal concentrate were in line with the global benchmarks
-- In Q3 2014, preliminary capital expenditure(1) totalled
US$175 million, including US$57 million on development projects.
The company is on track to meet its commitment to achieve capital
expenditure of less than US$900 million per annum for 2014 and
beyond
-- In Q3 2014, the Group drew down a US$425 million pre-export
credit facility signed with a syndicate of international banks in
August, with the proceeds being put towards the redemption of the
Company's RUB 20 billion bonds in October 2014
(1) Estimate as EVRAZ IFRS books are not yet closed
STEEL SEGMENT
Product, '000 tonnes Q3 2014 Q2 2014 Q3 2014/ Q2 2014, change Q3 2013 Q3 2014/ Q3 2013, change
---------------------------------- -------- -------- ------------------------- -------- -------------------------
Coke (saleable) 305 273 11.6% 342 -10.9%
Pig iron 3,107 3,131 -0.8% 3,137 -0.9%
Pig iron (saleable) 67 85 -21.9% 131 -49.1%
Crude steel 3,859 3,917 -1.5% 3,962 -2.6%
Steel products, gross * 3,647 3,812 -4.3% 3,933 -7.3%
Steel products, net of re-rolled
volumes 3,406 3,556 -4.2% 3,649 -6.7%
Semi-finished products ** 1,066 1,054 1.1% 918 16.1%
Finished products 2,340 2,502 -6.5% 2,731 -14.3%
Construction products 1,301 1,336 -2.6% 1,363 -4.6%
Railway products 411 535 -23.1% 515 -20.2%
Flat-rolled products 215 228 -5.9% 456 -52.9%
Tubular products 261 252 3.6% 229 13.9%
Other steel products 152 151 0.6% 167 -9.2%
---------------------------------- -------- -------- ------------------------- -------- -------------------------
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 Q3 2014 Q2 2014 Q3 2014/ Q2 2014, change Q3 2013 Q3 2014/ Q3 2013, change
---------------------------------- -------- -------- ------------------------- -------- -------------------------
Coke (saleable) 94 87 7.8% 141 -33.5%
Pig iron 2,695 2,691 0.2% 2,735 -1.5%
Pig iron (saleable) 61 75 -17.9% 110 -44.0%
Crude steel 2,948 3,020 -2.4% 2,967 -0.6%
Steel products, gross 2,676 2,835 -5.6% 2,753 -2.8%
Steel products, net of re-rolled
volumes 2,669 2,728 -2.2% 2,661 0.3%
Semi-finished products 1,201 1,094 9.7% 1,024 17.3%
Finished products 1,469 1,634 -10.1% 1,637 -10.3%
Construction products 1,052 1,109 -5.1% 1,109 -5.2%
Railway products 283 395 -28.3% 389 -27.2%
Other steel products 133 129 2.7% 138 -4.0%
---------------------------------- -------- -------- ------------------------- -------- -------------------------
In Q3 2014, crude steel output decreased slightly by 2% compared
to Q2 2014 as a result of lower pig iron output due to unscheduled
maintenance works (change of the worn-out charging device) at one
of the EVRAZ ZSMK blast furnaces.
Production of steel products, net of re-rolled volumes,
decreased by 2% compared to the previous quarter and was unchanged
compared to the same period last year.
Production of semi-finished goods increased by 10% compared to
Q2 2014 when their production was limited by steel availability due
to maintenance of one of EVRAZ NTMK's blast furnaces in May.
Production of railway products was affected, experiencing a 28%
decrease quarter-on-quarter and a 27% decrease year-on-year, by
lower orders of railway products by customers in Russia and the
CIS, including Russian Railways.
While the demand for rebars and, consequently, their production
remained strong in Q3 2014, the overall production of construction
products decreased by 5% compared to Q2 2014 and to Q3 2013 due to
lower production volumes of other construction products. In
particular, the production of beams decreased, mostly as a result
of a softer demand, but also due to the scheduled 22-day
maintenance of one of the reheating furnaces at EVRAZ NTMK's broad
flange beam shop in July to August. Production volumes of
construction products were also affected by the shutdown of
unprofitable Mill 450 at the EVRAZ ZSMK.
Prices for semi-finished goods slightly decreased in line with
global prices. Higher prices for construction products reflected
the seasonal peak in demand. Prices for railway products in US
dollar terms decreased mostly as a result of the Russian rouble
devaluation.
Production of steel and total steel products is expected to
increase in Q4 2014 compared to Q3 2014, albeit at the expense of a
further shift in favour of production of semi-finished products due
to seasonal change in demand. Prices for construction products are
expected to be negatively affected by decreasing demand in Russia
and the CIS and, in dollar terms, by the continuing weakening of
the rouble.
Average selling prices
USD/tonne (ex works) Q3 2014 Q2 2014 Q3 2013
-------------------------- -------- -------- --------
Coke 118 133 150
Pig iron 309 307 292
Steel products
Semi-finished products 417 427 374
Construction products 623 616 639
Railway products 747 807 829
Other steel products 606 612 627
-------------------------- -------- -------- --------
NORTH AMERICA
Product, '000 tonnes Q3 2014 Q2 2014 Q3 2014/ Q2 2014, change Q3 2013 Q3 2014/ Q3 2013, change
---------------------------------- -------- -------- ------------------------- -------- -------------------------
Crude steel 500 480 4.2% 558 -10.4%
Steel products, net of re-rolled
volumes 641 621 3.2% 673 -4.7%
Construction products 89 80 11.4% 81 9.3%
Railway products 128 139 -8.5% 126 1.4%
Flat-rolled products 164 150 9.3% 237 -30.8%
Tubular products 261 252 3.6% 229 13.9%
---------------------------------- -------- -------- ------------------------- -------- -------------------------
In Q3 2014, output of crude steel improved by 4% vs. Q2 2014 as
there were no major outages of production facilities. EVRAZ North
American's plants produced 3% more steel products due to healthy
demand for most of EVRAZ North America's products supported by
improved economic indicators.
Production of rails decreased compared to the previous quarter
as a result of the annual maintenance works at the EVRAZ Pueblo
rail mill.
The year-on-year decrease in quarterly steel production, total
output of steel products and in particular of flat-rolled products
was driven mainly by the suspension of the EVRAZ Claymont
operations from Q4 2013 as part of EVRAZ's asset optimisation plan.
Excluding EVRAZ Claymont, the production would have increased (See
Attachment 1).
Prices for flat-rolled and tubular products increased as a
result of improving market sentiment. Construction prices declined
following a decrease in scrap price.
In Q4 2014 crude steel output is expected to be generally in
line with Q3 2014 supported by the order book for tubular and long
products. A slight increase in rail volumes is expected compared to
Q3 2014 following completion of the annual maintenance of the EVRAZ
Pueblo rail mill in September.
Average selling prices
USD/tonne (ex works) Q3 2014 Q2 2014 Q3 2013
----------------------- -------- -------- --------
Construction products 795 808 747
Flat-rolled products 998 980 840
Tubular products 1,352 1,335 1,429
----------------------- -------- -------- --------
UKRAINE
Product, '000 tonnes Q3 2014 Q2 2014 Q3 2014/ Q2 2014, change Q3 2013 Q3 2014/ Q3 2013, change
----------------------------- -------- -------- ------------------------- -------- -------------------------
Coke (saleable) 211 186 13.4% 201 5.0%
Pig iron 258 249 3.5% 257 0.5%
Pig iron (saleable) 5 11 -49.8% 21 -74.9%
Crude steel 269 247 9.0% 246 9.3%
Steel products 218 219 -0.3% 207 5.6%
Semi-finished products 94 103 -8.8% 87 8.3%
Finished products 124 116 7.3% 120 3.6%
Construction products 110 97 13.4% 101 9.0%
Other steel products 14 18 -24.9% 19 -25.9%
----------------------------- -------- -------- ------------------------- -------- -------------------------
In Q3 2014, output of crude steel by EVRAZ steel mill in
Ukraine, DMZ, increased by 9% compared to Q2 2014 and to Q3 2013 as
a result of increased pig iron production.
Output of semi-finished goods for exports was reduced by 9%.
Production of finished products increased by 7% compared to Q2 2014
due to high demand and their deficit in the local market caused by
lower competition from other Ukrainian steel producers. EVRAZ DMZ
steel mill began producing new types of U-channels, which expanded
the product mix.
Prices for construction products sold in the Ukrainian market
were flat quarter-on-quarter and prices for semi-finished products
(billets) rose due to the limited supply and resulting deficit of
Ukrainian steel products in the export markets.
Average selling prices
USD/tonne (ex works) Q3 2014 Q2 2014 Q3 2013
-------------------------- -------- -------- --------
Coke (saleable) 167 159 211
Pig iron 330 327 348
Steel products
Semi-finished products 462 452 462
Construction products 570 573 581
Other steel products 901 819 872
-------------------------- -------- -------- --------
EUROPE
Product, '000 tonnes Q3 2014 Q2 2014 Q3 2014/ Q2 2014, change Q3 2013 Q3 2014/ Q3 2013, change
---------------------------------- -------- -------- ------------------------- -------- -------------------------
Crude steel 0 0 n/a 46 n/a
Steel products, gross 0 0 n/a 174 n/a
Steel products, net of re-rolled
volumes 0 0 n/a 174 n/a
Construction products 0 0 n/a 22 n/a
Flat-rolled products 0 0 n/a 147 n/a
Other steel products 0 0 n/a 5 n/a
---------------------------------- -------- -------- ------------------------- -------- -------------------------
Operations at EVRAZ Palini e Bertoli in Italy have remained
suspended due to market conditions since August 2013.
SOUTH AFRICA
Product, '000 tonnes Q3 2014 Q2 2014 Q3 2014/ Q2 2014, change Q3 2013 Q3 2014/ Q3 2013, change
----------------------------- -------- -------- ------------------------- -------- -------------------------
Pig iron 154 191 -19.5% 145 6.2%
Crude steel 141 170 -16.6% 144 -1.8%
Steel products 111 137 -18.7% 127 -12.3%
Semi-finished products 5 6 -3.6% 0 n/a
Finished products 106 131 -19.3% 127 -16.5%
Construction products 50 50 -0.2% 50 0.0%
Flat-rolled products 51 78 -34.9% 72 -28.9%
Other steel products 5 3 60.2% 6 -4.9%
----------------------------- -------- -------- ------------------------- -------- -------------------------
In Q3 2014, the output of pig iron and crude steel decreased by
20% and 17% respectively compared to Q2 2014 due to operational
constraints caused by electricity load-shedding in winter months
and by slab caster outages.
As a result of lower steel volumes, production of steel
products, in particular of flat-rolled products, decreased 19% vs.
Q2 2014.
The decrease in production of steel products year-on-year is
attributable mostly to the slab caster outages in Q3 2014.
Average selling prices
USD/tonne (ex works) Q3 2014 Q2 2014 Q3 2013
------------------------ -------- -------- --------
Semi-finished products 413 431 595
Construction products 694 680 689
Flat-rolled products 619 653 674
Other steel products 474 513 698
------------------------ -------- -------- --------
MINING SEGMENT
IRON ORE
Product, '000 tonnes Q3 2014 Q2 2014 Q3 2014/ Q2 2014, change Q3 2013 Q3 2014/ Q3 2013, change
---------------------------------- -------- -------- ------------------------- -------- -------------------------
Iron ore products (Russia),
including 4,380 4,504 -2.8% 4,686 -6.5%
Sinter 2,744 2,929 -6.3% 3,079 -10.9%
Pellets 1,636 1,575 3.9% 1,606 1.9%
Lumpy ore (Ukraine) 705 714 -1.3% 717 -1.7%
Fines ore (South Africa) 190 195 -3.0% 154 23.5%
Lumpy ore (South Africa) 474 407 16.5% 377 25.5%
---------------------------------- -------- -------- ------------------------- -------- -------------------------
In Q3 2014 production of iron ore products (sinter and pellets)
in Russia decreased by 3% compared to Q2 2014 and by 7% compared to
the same period last year. The year-on-year lower volumes of iron
ore products produced in Russia, in particular of sinter, resulted
from the disposal of VGOK in October 2013. Excluding EVRAZ VGOK,
production of iron ore products by EVRAZ's Russian assets in Q3
2014 compared to Q3 2013 would have been flat (See Attachment
2).
Production of sinter in Russia decreased by 6% vs. Q2 2014 due
to the scheduled maintenance of the sintering plant at KGOK in
September 2014. Production of pellets by EVRAZ KGOK grew by 4%
quarter-on-quarter.
The share of EVRAZ's own concentrate used in production of
sinter rose to 75% compared to 64% in Q2 2014 on the back of
increasing volumes of iron ore mined at Evrazruda's Sheregesh mine
undergoing reconstruction which is expected to be completed by
2017.
Production of lumpy iron ore at EVRAZ Sukha Balka in Ukraine
slightly decreased by 1% compared to Q2 2014 and by 2% compared to
Q3 2014 due to maintenance works at the Yubileynaya mine as well as
lower quality of ore at the depleting section of the mine.
Production of iron ore at the Mapochs mine in South Africa in Q3
2014 grew compared to both the previous quarter and year-on-year
due to improved productivity of the crushing facilities of the mine
after repairs performed in January-February 2014.
Average selling prices
USD/tonne (ex works) Q3 2014 Q2 2014 Q3 2013
---------------------- -------- -------- --------
Sinter (Russia) 52 69 71
Pellets (Russia) 64 82 82
Lumpy ore (Ukraine) 46 56 66
---------------------- -------- -------- --------
COAL
Product, '000 tonnes Q3 2014 Q2 2014 Q3 2014/ Q3 2013 Q3 2014/
Q2 2014, Q3 2013,
change change
------------------------------------- -------- -------- ---------- -------- ----------
Raw coking coal (mined) 5,329 5,036 5.8% 4,802 11.0%
Yuzhkuzbassugol 2,870 2,467 16.4% 2,794 2.7%
Raspadskaya 2,459 2,569 -4.3% 2,008 22.5%
Coking coal concentrate
(production) 3,510 3,384 3.7% 3,464 1.3%
Produced at Yuzhkuzbassugol
coal washing plants 1,543 1,374 12.4% 1,502 2.8%
Produced at EVRAZ ZSMK coal
washing plant 469 500 -6.1% 632 -25.7%
Produced at Raspadskaya
coal washing plant 1,497 1,510 -0.8% 1,330 12.6%
Raw steam coal (mined) 0 290 n/a 482 n/a
Steam coal concentrate (production) 5 15 -62.5% 21 -73.9%
------------------------------------- -------- -------- ---------- -------- ----------
Coking coal
In Q3 2014, production of raw coking coal by EVRAZ increased by
6% vs. Q2 2014 due to a 16% increase in volumes of raw coal mined
by Yuzhkuzbassugol compared to low Q2 2014 volumes impacted by the
longwall move at the Uskovskaya mine in May-June and temporary
suspension of mining operations at the Yesaulskaya mine due to the
high water level. Subsequently, the Yuzhkuzbassugol coal washing
plants increased production by 12%.
Production of raw coking coal and coking coal concentrate by
Raspadskaya coal company decreased by 4% and 1% respectively
compared to Q2 2014 due to completion of mining at a section of the
Raspadskaya mine's 4-9-23 face and beginning of the longwall
move.
The year-on-year increase of 11% in raw coking coal production
by EVRAZ as a whole and of 13% in coking coal concentrate
production by the Raspadskaya coal company in particular were
attributable to the ongoing gradual ramp-up of production at the
Raspadskaya coal mine.
Share of own raw coal used in total concentrate production by
EVRAZ remained largely unchanged at 95%.
The blended average selling price of coking coal concentrate
remained largely flat, in line with global benchmarks.
Average selling prices
USD/tonne (ex works) Q3 2014 Q2 2014 Q3 2013
------------------------------------- --------- -------- --------
Raw coking coal 44 46 53
Raw steam coal 28 28 32
Coking coal concentrate 70 73 78
-------------------------------------- -------- -------- --------
VANADIUM SEGMENT
Product, tonnes of V* Q3 2014 Q2 2014 Q3 2014/ Q2 2014, change Q3 2013 Q3 2014/ Q3 2013, change
---------------------------------- -------- -------- ------------------------- -------- -------------------------
Vanadium in slag (gross
production) 5,799 5,415 7.1% 4,808 20.6%
Russia 4,034 3,519 14.6% 3,335 21.0%
South Africa 1,765 1,896 -6.9% 1,473 19.8%
Vanadium in final products
(saleable)
Ferrovanadium 3,277 3,590 -8.7% 3,466 -5.4%
Produced at own facilities 1,768 1,956 -9.6% 1,875 -5.7%
Processed at 3rd parties'
facilities 1,509 1,634 -7.6% 1,591 -5.1%
Nitrovan(R) 515 734 -29.8% 436 18.2%
Oxides, vanadium aluminium and
chemicals 467 394 18.5% 358 30.4%
---------------------------------- -------- -------- ------------------------- -------- -------------------------
(*) Calculated in pure vanadium equivalent.
Vanadium slag production increased by 7% compared to Q2 2014 as
a result of higher slag volumes at Russian EVRAZ NTMK following
completion of maintenance works at the mill's converter in May
2014.
Production of Ferrovanadium in Q3 2014 decreased by 9% compared
to Q2 2014 and by 5% year-on-year. Production of ferrovanadium at
EVRAZ's own facilities was 10% and 6% lower respectively affected
by the undersupply of vanadium pentoxide (V2O5) by EVRAZ Vanady
Tula due to operational issues and repair works at its V2O5
producing facilities in September 2014. Ferrovanadium processed at
third party facilities was 8% and 5% less than in Q2 2014 and Q3
2013 respectively as a result of reduced slag supply from EVRAZ
Highveld.
In Q3 2014, production of Nitrovan by Vametco in South Africa
was negatively affected by the scheduled annual shutdown of the
plant in September 2014. Production in Q3 last year was affected by
the industrial action, hence there is an 18% increase
year-on-year.
Production of oxides, vanadium aluminum and chemicals at EVRAZ
Stratcor facility at Arkansas (US) improved by 19% compared to the
previous quarter and by 30% vs. the same quarter of last year due
to higher oxide extraction yields and stable feedstock
availability.
Ferrovanadium and Nitrovan prices declined by 4% in Q3 2014 vs.
Q2 2014 driven by Metal Bulletin Ferrovanadium index which was
negatively affected by a significant increase of Chinese FeV
exports to Europe. Prices of Oxides, VAL and Chemicals decreased
quarter-on-quarter as a result of both a weaker Metal Bulletin
Oxide index and a different sales mix.
Average selling prices
USD/tonne of V (ex works) Q3 2014 Q2 2014 Q3 2013
------------------------------------------ -------- -------- --------
Ferrovanadium 24,933 25,824 25,185
Nitrovan(R) 27,182 28,171 27,856
Oxides, vanadium aluminium and chemicals 30,505 33,602 32,854
------------------------------------------ -------- -------- --------
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:
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. The company's consolidated revenues for the six months
ended 30 June 2014 were US$6,805 million, and consolidated EBITDA
amounted to US$1,080 million.
Attachment 1
Production of steel by EVRAZ North America, excluding EVRAZ
Claymont
Product, '000 tonnes Q3 2014 Q3 2013 Q3 2014/ Q3 2013, change
------------------------------------------ -------- -------- -------------------------
Crude steel 500 484 3.3%
Steel products, net of re-rolled volumes 641 599 7.0%
Construction products 89 81 9.3%
Railway products 128 126 1.4%
Flat-rolled products 164 163 0.6%
Tubular products 261 229 13.9%
------------------------------------------ -------- -------- -------------------------
Attachment 2
Production of iron ore products in Russia, excluding EVRAZ
VGOK
(sold in October 2013)
Product, '000 tonnes Q3 2014 Q3 2013 Q3 2014/ Q3 2013, change
--------------------------- -------- -------- -------------------------
Sinter 2,744 2,793 -1.8%
Pellets 1,636 1,606 1.9%
Total iron ore products 4,380 4,399 -0.4%
--------------------------- -------- -------- -------------------------
This information is provided by RNS
The company news service from the London Stock Exchange
END
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