TIDMEVR
RNS Number : 4586C
Evraz Plc
16 October 2015
EVRAZ Q3 2015 PRODUCTION REPORT
16 October 2015 - EVRAZ plc (LSE: EVR) today releases its
operational results for the third quarter of 2015.
Q3 2015 vs Q2 2015 HIGHLIGHTS:
* Consolidated crude steel output reached 3.5 million
tonnes, improving 3% QoQ on the back of completed
repair works at Russian steel mills.
* Production of steel products, net of re-rolled
volumes, was largely unchanged.
* The share of finished steel products within
consolidated volumes grew to 69% in Q3 2015 from 65%
in Q2 2015 due to seasonal pickup in demand for
construction products in Russia and improved demand
for linepipe in North America.
* Production volumes of railway products were 22% down
due to maintenance at the Russian EVRAZ ZSMK rail
mill and at EVRAZ North America rail mill in Pueblo
coupled with seasonality in North America rail
demand.
* Consolidated raw coking coal output and production of
coking coal concentrate increased by 36% and 17%
respectively due to resumption of full-scale mining
at Yuzhkuzbassugol and Raspadskaya on the back of
improving domestic demand in Russia.
STEEL
Product, '000 tonnes Q3 2015 Q2 2015 Q3 2015/ Q2 2015, 9m 2015** 9m 2014** 9m 2015/ 9m 2014,
change change
----------------------- -------- -------- ---------------------- ---------- ---------- -----------------------
Coke (saleable) 207 286 -27.5% 778 833 -6.6%
Pig iron 2,982 2,811 6.1% 8,924 9,230 -3.3%
Pig iron (saleable) 189 165 14.7% 425 229 85.2%
Crude steel 3,494 3,382 3.3% 10,790 11,651 -7.4%
Steel products, gross* 3,388 3,317 2.1% 10,507 11,248 -6.6%
Steel products, net of
re-rolled volumes 3,154 3,119 1.1% 9,835 10,335 -4.8%
Semi-finished
products *** 993 1,089 -8.8% 3,436 2,987 15.1%
Finished products 2,161 2,030 6.5% 6,398 7,349 -12.9%
Construction
products 1,291 1,128 14.5% 3,602 3,854 -6.5%
Railway products 329 423 -22.1% 1,152 1,453 -20.7%
Flat-rolled
products 188 167 12.7% 562 794 -29.2%
Tubular products 213 165 29.4% 633 786 -19.4%
Other steel
products 140 148 -5.6% 450 462 -2.6%
----------------------- -------- -------- ---------------------- ---------- ---------- -----------------------
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.
** Includes production volumes of EVRAZ Vitkovice Steel disposed
of in April 2014 and of EVRAZ Highveld Steel and Vanadium (EHSV)
which are not consolidated starting from April 2015 due to business
rescue proceedings
*** Consolidated production volumes of semi-finished products
are preliminary as Q3 2015 intra-group re-rolling volumes are yet
to be finalised.
RUSSIA and KAZAKHSTAN
Q3 2015/ Q2 2015, 9m 2015/ 9m 2014,
Product, '000 tonnes Q3 2015 Q2 2015 change 9m 2015 9m 2014 change
------------------------ -------- -------- ------------------------ -------- -------- ------------------------
Coke (saleable) 74 96 -23.4% 247 292 -15.4%
Pig iron 2,733 2,553 7.0% 8,030 7,977 0.7%
Pig iron (saleable) 166 142 16.8% 356 210 69.3%
Crude steel 2,820 2,697 4.6% 8,573 8,820 -2.8%
Steel products, gross 2,632 2,562 2.7% 8,062 8,161 -1.2%
Steel products, net of
re-rolled volumes 2,552 2,500 2.1% 7,848 7,980 -1.7%
Semi-finished
products 1,084 1,092 -0.7% 3,591 3,381 6.2%
Finished products 1,468 1,408 4.3% 4,257 4,599 -7.4%
Construction
products 1,103 991 11.3% 3,076 3,155 -2.5%
Railway products 234 281 -16.9% 773 1,055 -26.8%
Other steel
products 131 135 -3.3% 408 390 4.8%
------------------------ -------- -------- ------------------------ -------- -------- ------------------------
In Q3 2015, production of pig iron and crude steel grew by 7%
and 5% respectively, as in Q2 2015 production was affected by
capital repair works at EVRAZ ZSMK's blast furnace 3 and EVRAZ
NTMK's blast furnace 6.
Quarterly production of steel products increased mostly due to
higher volumes of construction products (+11%) reflecting stronger
demand during peak domestic construction season. Output of
construction products in the nine months of 2015 vs. the same
period of 2014 declined only by 2.5%.
Production of semi-finished steel products was largely unchanged
in Q3 2015 over Q2 2015. When comparing the first nine months of
this year to the same period last year, semi-finished goods
demonstrated growth due to reallocation of part of the production
volumes to export markets.
Production of railway products in Q3 2015, in particular rails,
was down by 17% over Q2 2015 as a result of the scheduled capital
repair of the EVRAZ ZSMK electric arc furnace and rail mill in Q3
2015. The 9M 2015 to 9M 2014 decrease in railway product output is
attributable to lower consumption in the CIS countries caused by a
decrease in new construction and overhaul of railway
infrastructure.
Lower prices are in line with global benchmarks.
In Q4 2015, steel production is expected to remain at the level
of Q3 2015 and production of semi-finished products for exports may
increase due to low season in Russia.
Average selling prices
USD/tonne (ex works) Q3 2015 Q2 2015 9m 2015 9m 2014
-------------------------- -------- -------- -------- --------
Coke 108 136 112 126
Pig iron 189 205 198 307
Steel products
Semi-finished products 241 278 276 417
Construction products 365 419 400 604
Railway products 527 611 553 779
Other steel products 381 462 421 604
-------------------------- -------- -------- -------- --------
NORTH AMERICA
Q3 2015/ Q2 2015, 9m 2015/ 9m 2014,
Product, '000 tonnes Q3 2015 Q2 2015 change 9m 2015 9m 2014 change
------------------------ -------- -------- ------------------------ -------- -------- ------------------------
Crude steel 432 431 0.3% 1,340 1,471 -8.9%
Steel products, net of
re-rolled volumes 567 530 6.9% 1,712 1,909 -10.3%
Construction products 71 58 22.7% 204 254 -19.9%
Railway products 95 141 -32.4% 379 398 -4.8%
Flat-rolled products 188 167 12.7% 497 471 5.4%
Tubular products 213 165 29.4% 633 786 -19.4%
------------------------ -------- -------- ------------------------ -------- -------- ------------------------
* Q3 2015 and 9m 2015 production volumes are preliminary
In Q3 2015, crude steel production remained unchanged compared
to Q2 2015 as an increase in steel production for construction
products was partially offset by a decline in rail production.
Railway products declined 32% in Q3 2015 when compared to the
previous quarter due to the combined effect of approximately three
weeks of maintenance outages at the EVRAZ Pueblo rail mill and a
seasonal slowdown in rail purchases.
(MORE TO FOLLOW) Dow Jones Newswires
October 16, 2015 02:00 ET (06:00 GMT)
Production of flat-rolled products increased 13% over Q2 2015 as
plate demand returned to more normal levels. Additionally, Q3
production benefited from no maintenance outages in comparison with
a 17-day maintenance outage in Portland and eight days of planned
outages mostly related to maintenance activities at EVRAZ Regina
during Q2 2015.
Production of tubular products increased 30% QoQ on the back of
higher linepipe volumes to fulfill increased demand from oil and
natural gas transmission companies. Additionally, EVRAZ OCTG mills
in Red Deer and Calgary and the seamless pipe facility in Pueblo
which resumed production at the end of Q2 2015 continued operating
at low levels throughout the quarter.
When comparing the first nine months of 2015 with the same
period in the previous year, crude steel and steel products
declined by 9% and 10% respectively. Key drivers for these declines
were the idling of seamless and OCTG facilities, subdued flat
products demand, and selective reduction in rod & bar volumes
to eliminate low margin products. During the first nine months of
2015 we also carried out significant maintenance projects as
described in the preceeding paragraphs in this report and in the
first quarter and second quarter operating reports.
Third party sales of flat-rolled products increased as volumes
previously consumed by EVRAZ North America's OCTG and hollow
structural shapes mills were directed to third party sales.
Tubular goods output in the first nine months of 2015 declined
as low oil and natural gas prices resulted in reduced exploration
and production activity which in turn dampened OCTG consumption.
This decline was partially offset by increased output of large
diameter linepipe, a segment where we expect to continue seeing
volume growth.
Prices for most steel products continued to decline during Q3
2015 reflecting prevailing scrap and other inputs declines.
During Q4 2015 we expect a return of rail production to
normalised levels. During Q4 2015 we are also planning to reduce
utilisation of the large diameter mill in Regina to approximately
70% of its capacity during October and November to accommodate work
related to the new large diameter mill project announced
previously.
Average selling prices
USD/tonne (ex works) Q3 2015 Q2 2015 9m 2015 9m 2014
----------------------- -------- -------- -------- --------
Construction products 589 738 672 798
Flat-rolled products 652 727 751 962
Tubular products 1,055 1,096 1,147 1,331
----------------------- -------- -------- -------- --------
UKRAINE
Q3 2015/ Q2 2015, 9m 2015/ 9m 2014,
Product, '000 tonnes Q3 2015 Q2 2015 change 9m 2015 9m 2014 change
------------------------ -------- -------- ------------------------ -------- -------- ------------------------
Coke (saleable) 133 190 -29.6% 531 542 -1.9%
Pig iron 249 258 -3.3% 744 755 -1.5%
Pig iron (saleable) 24 23 1.9% 69 19 262.6%
Crude steel 242 254 -4.9% 729 769 -5.2%
Steel products 189 225 -16.2% 610 651 -6.4%
Semi-finished
products 63 133 -53.0% 237 318 -25.4%
Finished products 126 92 37.3% 310 333 -7.0%
Construction
products 117 79 48.1% 275 281 -2.2%
Other steel
products 9 13 -30.0% 35 52 -33.0%
------------------------ -------- -------- ------------------------ -------- -------- ------------------------
The 30% reduction in saleable coke volumes in Q2 2015 vs. Q3
2014 and in the nine months of 2015 vs. the nine months of 2014 was
caused by decreased orders from other Ukrainian steel
producers.
Production of crude steel and steel products, in particular
semi-finished goods, fell as a result of scheduled maintenance
works at blast furnace 3 and rolling mills in Q3 2015.
Production of construction products, meanwhile, grew by 48% in
Q3 2015 vs. Q2 2015 and declined by 2% only in the nine months this
year vs. 2014 due to better seasonal demand and larger shipments to
the Ukrainian, Russian and European markets in 2015.
In Q4 2015, production of crude steel and steel products is
expected to increase compared to Q3 2015 as no maintenance works
are planned.
Average selling prices
USD/tonne (ex works) Q3 2015 Q2 2015 9m 2015 9m 2014
-------------------------- -------- -------- -------- --------
Coke (saleable) 152 175 176 167
Pig iron 223 248 247 331
Steel products
Semi-finished products 289 325 327 454
Construction products 396 436 420 574
Other steel products 609 704 616 870
-------------------------- -------- -------- -------- --------
SOUTH AFRICA
Results of EVRAZ Highveld Steel and Vanadium have been
deconsolidated following introduction of business rescue
proceedings at EVRAZ Highveld and Vanadium in April 2015.
IRON ORE
Product, '000 tonnes Q3 2015 Q2 2015 Q3 2015/ Q2 2015, change 9m 2015 9m 2014 9m 2015/ 9m 2014, change
---------------------- -------- -------- ------------------------- -------- -------- -------------------------
Sinter (Russia) 2,884 2,595 11.2% 8,316 8,461 -1.7%
Pellets (Russia) 1,615 1,629 -0.8% 4,875 4,784 1.9%
Lumpy ore (Ukraine) 721 726 -0.6% 2,115 2,154 -1.9%
---------------------- -------- -------- ------------------------- -------- -------- -------------------------
On completion of scheduled maintenance works at EVRAZ ZSMK's
sintering machine in Q2 2015, production of iron ore products
(sinter plus pellets) in Russia rose by 7% QoQ and remained flat
when comparing the first nine months of 2015 with the same period
in the previous year.
Production is expected to be stable in Q4 2015.
In Ukraine, production of lumpy ore has been stable, and
maintenance works, replacement of parts of mining equipment
scheduled for Q4 2015 are not expected to significantly impact
production volumes.
In Q3 2015, prices for iron ore products followed global
benchmarks.
Average selling prices
USD/tonne (ex works) Q3 2015 Q2 2015 9m 2015 9m 2014
----------------------- --------- -------- -------- --------
Pellets (Russia) 36 41 41 76
Lumpy ore (Ukraine) 20 21 23 56
------------------------ -------- -------- -------- --------
COAL
Q3 2015/ Q2 2015, 9m 2015/ 9m 2014,
Product, '000 tonnes Q3 2015 Q2 2015 change 9m 2015 9m 2014 change
------------------------ -------- -------- ------------------------ -------- -------- ------------------------
Raw coking coal (mined) 5,232 3,840 36.3% 14,539 15,089 -3.6%
Yuzhkuzbassugol 2,426 1,510 60.6% 6,563 8,204 -20.0%
Raspadskaya 2,727 2,270 20.2% 7,799 6,885 13.3%
Mezhegeyugol 79 60 32.2% 177 0 n/a
Coking coal concentrate
(production) 3,666 3,123 17.4% 10,169 10,165 0.0%
------------------------ -------- -------- ------------------------ -------- -------- ------------------------
Coking coal
In Q3 2015, production of coking coal concentrate was 17% up on
the back of increased raw coking coal production (+36% QoQ).
Following scheduled longwall moves at its Yerunakovskaya VIII,
Osinnikovskaya and Yesaulskaya mines, Yuzhkuzbassugol expanded coal
production by 61% compared with Q2 2015. The Raspadskaya coal
company mined 20% more coal having completed the longwal move at
the Raspadskaya underground mine and resuming full-scale operations
at the Razrez Raspadksy open pit which were curtailed in Q2 2015 in
response to excessive supply of GZh and GZhO grades in the
market.
Pricing in the Russian market is set quarterly. In Q3 2015, the
weighted average price of coking coal concentrate in Russian rouble
terms remained unchanged compared to Q2 2015. However, due to to
unexpected sharp Russian rouble depreciation, when re-calculated in
US dollars, the prices are lower than in the previous quarter.
In Q4 2015, Yuzhkuzbassugol and Raspadskaya mines will continue
to work on existing longwalls.
Average selling prices
USD/tonne (ex works) Q3 2015 Q2 2015 9m 2015 9m 2014
--------------------------- --------- -------- -------- --------
Raw coking coal 29 42 32 47
Coking coal concentrate 54 68 59 74
---------------------------- -------- -------- -------- --------
(MORE TO FOLLOW) Dow Jones Newswires
October 16, 2015 02:00 ET (06:00 GMT)
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