REG - Evraz Plc - 3rd Quarter Production Results and IMS <Origin Href="QuoteRef">EVRE.L</Origin>

EvrazAnnouncement

29/10/2014 12:24

RNS Number : 4267U
Evraz Plc
16 October 2014
EVRAZ Q32014 PRODUCTION REPORT and INTERIM MANAGEMENT STATEMENT
16October 2014-EVRAZ plc (LSE: EVR) today releases its operational results for the third quarter of 2014 and its Interim Management Statement.
Q32014 vs Q22014 HIGHLIGHTS and RECENT DEVELOPMENTS:
 Consolidated crude steel production decreased slightly in Q32014 vs. Q22014 mostly due to maintenance works at the EVRAZ ZSMK mill in Russia
 Share of finished steel products within consolidated volumes was 69% in Q32014 vs. 70% in Q22014 
 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. Q22014 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 Q32014, preliminary capital expenditure1 totalled US$175million, including US$57million on development projects. The company is on track to meet its commitment to achieve capital expenditure of less than US$900million per annum for 2014 and beyond 
 In Q32014, the Group drew down a US$425million 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 RUB20billion bonds in October 2014
1 Estimate as EVRAZ IFRS books are not yet closed
STEEL SEGMENT
Product, '000 tonnes 
Q32014
Q22014
Q32014/ Q22014, change
Q32013
Q32014/ Q32013, 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 
Q32014
Q22014
Q32014/ Q22014, change
Q32013
Q32014/ Q32013, 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 Q32014, crude steel output decreased slightly by 2% compared to Q22014 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 Q22014 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 Q22014 and to Q32013 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 Mill450 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 Q42014 compared to Q32014, 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)
Q32014
Q22014
Q32013
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
Q32014
Q22014
Q32014/ Q22014, change
Q32013
Q32014/ Q32013, 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 Q32014, output of crude steel improved by 4% vs. Q22014 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 Q42013as 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 Q42014 crude steel output is expected to be generally in line with Q32014 supported by the order book for tubular and long products. A slight increase in rail volumes is expected compared to Q32014 following completion of the annual maintenance of the EVRAZ Pueblo rail mill in September.
Average selling prices
USD/tonne (ex works)
Q32014
Q22014
Q32013
Construction products
795
808
747
Flat-rolled products
998
980
840
Tubular products
1,352
1,335
1,429
UKRAINE
Product, '000 tonnes
Q32014
Q22014
Q32014/ Q22014, change
Q32013
Q32014/ Q32013, 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 Q32014, output of crude steel by EVRAZ steel mill in Ukraine, DMZ, increased by 9% compared to Q22014 and to Q32013 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 Q22014 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)
Q32014
Q22014
Q32013
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
Q32014
Q22014
Q32014/ Q22014, change
Q32013
Q32014/ Q32013, 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
Q32014
Q22014
Q32014/ Q22014, change
Q32013
Q32014/ Q32013, 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 Q32014, the output of pig iron and crude steel decreased by 20% and 17% respectively compared to Q22014 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. Q22014.
The decrease in production of steel products year-on-year is attributable mostly to the slab caster outages in Q32014.
Average selling prices
USD/tonne (ex works)
Q32014
Q22014
Q32013
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
Q32014
Q22014
Q32014/ Q22014, change
Q32013
Q32014/ Q32013, 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 Q32014 production of iron ore products (sinter and pellets) in Russia decreased by 3% compared to Q22014 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 Q32014 compared to Q32013 would have been flat (See Attachment 2).
Production of sinter in Russia decreased by 6% vs. Q22014 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 Q22014 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 Q22014 and by 2% compared to Q32014 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 Q32014 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)
Q32014
Q22014
Q32013
Sinter (Russia)
52
69
71
Pellets (Russia)
64
82
82
Lumpy ore (Ukraine)
46
56
66
COAL
Product, '000 tonnes 
Q32014
Q22014
Q32014/ Q22014, change
Q32013
Q32014/ Q32013, 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 Q32014, production of raw coking coal by EVRAZ increased by 6% vs. Q22014 due to a 16% increase in volumes of raw coal mined by Yuzhkuzbassugol compared to low Q22014 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 Q22014 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)
Q32014
Q22014
Q32013
Raw coking coal
44
46
53
Raw steam coal
28
28
32
Coking coal concentrate 
70
73
78
VANADIUM SEGMENT
Product, tonnes of V* 
Q32014
Q22014
Q32014/ Q22014, change
Q32013
Q32014/ Q32013, 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
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 Q22014 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 Q32014 decreased by 9% compared to Q22014 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 Q22014 and Q32013 respectively as a result of reduced slag supply from EVRAZ Highveld.
In Q32014, 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 Q32014 vs. Q22014 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)
Q32014
Q22014
Q32013
Ferrovanadium
24,933
25,824
25,185
Nitrovan
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: +442078328998  Moscow: +74959376871
media@evraz.com
Investor Relations:
London: +442078328990  Moscow: +74952321370
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 16.1million 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 31December 2013 were US$14,411million, and consolidated EBITDA amounted to US$1,821million. 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 
Q32014
Q32013
Q32014/ Q32013, 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 
Q32014
Q32013
Q32014/ Q32013, 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
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