REG - Evraz Plc - EVRAZ Q2 2016 PRODUCTION REPORT <Origin Href="QuoteRef">EVRE.L</Origin>

EvrazAnnouncement

19/07/2016 07:05

RNS Number : 5286E
Evraz Plc
19 July 2016
EVRAZ Q22016 PRODUCTION REPORT
19July 2016 - EVRAZ plc (LSE: EVR; "EVRAZ" or the "Company") has today released its operational results for the second quarter of 2016.
Q22016 vs Q12016 operational highlights
 Consolidated crude steel output amounted to 3.2 million tonnes in Q2 2016, down 9.9% QoQ, primarily due to planned capital repairs at blast furnace 1 at EVRAZ ZSMK in Q2 2016. 
 Production of steel products, net of re-rolled volumes, decreased QoQ to 2.9 million tonnes, due to planned capital repairs at blast furnace 1 at EVRAZ ZSMK and a higher share of intragroup re-rolled volumes at EVRAZ North America. 
 The share of finished steel products in consolidated volumes rose to 65.3% in Q2 2016, up from 56.4% in Q1 2016, due to lower production of semi-finished products in Russia and Ukraine amid improved demand for construction products in both markets.
 Production of railway products in Russia, including rails, was mostly flat. Production in North America declined in response to lower demand from Class I railways amid inventory re-balancing. 
 Production of tubular products (large diameter pipes, oil country tubular goods and small diameter line pipes) in North America continued to be affected by pipeline project delays, low oil prices and the seasonal impact of the spring break in Western Canada.
 Production of coking coal concentrate increased by 3.3% in response to improved demand on the domestic and export markets.
STEEL
Product, '000 tonnes 
Q2 2016
Q1 2016
Q22016/ Q12016, change
H1 
2016
H1 
2015*
H12016/ H12015, change
Coke (saleable)
290
164
77.3%
454
571
-20.5%
Pig iron
2,606
2,951
-11.7%
5,557
5,942
-6.5%
Pig iron (saleable)
44
144
-69.2%
188
236
-20.0%
Crude steel
3,196
3,548
-9.9%
6,744
7,296
-7.6%
Steel products, gross**
3,083
3,424
-9.9%
6,507
7,119
-8.6%
Steel products, net of re-rolled volumes
2,871
3,308
-13.2%
6,179
6,716
-8.0%
Semi-finished products ***
997
1,442
-30.9%
2,439
2,479
-1.6%
Finished products
1,874
1,866
0.4%
3,740
4,237
-11.7%
Construction products
1,110
964
15.1%
2,075
2,311
-10.2%
Railway products
343
406
-15.7%
749
822
-8.9%
Flat-rolled products****
169
152
11.0%
321
374
-14.1%
Tubular products
120
193
-37.8%
314
420
-25.3%
Other steel products
132
150
-12.1%
282
310
-9.2%
Note: numbers in this table and the tables below may not add to the totals due to rounding.
* Includes production volumes of EVRAZ Highveld Steel and Vanadium (EHSV), which are not consolidated starting from April 2015 due to business rescue proceedings.
** Gross volume of steel products in the tables includes those re-rolled at other EVRAZ mills. However, such volumes are eliminated as intercompany sales for the purpose 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.
**** Includes production volumes of EVRAZ Palini e Bertoli (8 thousand tonnes in H1 2016), which started to operate in 2016 after operations were suspended in August 2013.
Russia and Kazakhstan
Product, '000 tonnes 
Q2 2016
Q1 2016
Q22016/ Q12016, change
H1 2016
H1 
2015
H12016/ H12015, change
Coke (saleable)
121
70
72.3%
191
173
10.4%
Pig iron
2,331
2,688
-13.3%
5,020
5,297
-5.2%
Pig iron (saleable)
40
134
-69.9%
175
190
-8.3%
Crude steel
2,579
2,865
-10.0%
5,444
5,752
-5.4%
Steel products, gross
2,435
2,669
-8.7%
5,104
5,430
-6.0%
Steel products, net of re-rolled volumes
2,371
2,638
-10.1%
5,009
5,276
-5.1%
Semi-finished products
1,015
1,393
-27.2%
2,408
2,487
-3.2%
Finished products
1,356
1,245
8.9%
2,600
2,789
-6.8%
 Construction products
947
821
15.4%
1,768
1,973
-10.4%
 Railway products
286
285
0.3%
570
539
5.8%
 Other steel products
123
139
-11.6%
262
277
-5.6%
In Q2 2016, production of crude steel and steel products decreased by 10.0% and 8.7% respectively, due to planned capital repairs of blast furnace 1 at EVRAZ ZSMK.
The decrease in steel product volumes primarily reflected a fall in output of semi-finished and other steel products. Output of construction products increased by 15.4% QoQ, driven by stronger demand during the domestic construction season. 
Output of railway products, including rails, was mostly flat QoQ, HoHincrease was due to operational improvements at EVRAZ ZSMK rolling mill and more favorable demand in 2016.
Overall, prices in Q2 2016 were higher than in Q1 2016, reflecting the upward trend on global markets.
Average selling prices
US$/tonne (ex works)
Q2 
2016
Q1 
2016
H1 
2016
H1 
2015
Coke
89
74
83
114
Pig iron
206
119
141
205
Steel products
Semi-finished products
256
176
210
292
Construction products
413
271
348
418
Railway products
470
414
442
564
Other steel products
411
307
357
440
North America
Product, '000 tonnes 
Q2 2016*
Q1 2016
Q22016/ Q12016, change
H1 2016
H1 
2015
H12016/ H12015, change
Crude steel
326
414
-21.2%
740
908
-18.5%
Steel products, net of re-rolled volumes
412
528
-22.1%
940
1,145
-17.9%
Construction products
69
65
5.8%
134
133
1.0%
Railway products
57
122
-52.9%
179
283
-36.9%
Flat-rolled products
165
148
11.6%
313
309
1.3%
Tubular products
120
193
-37.8%
314
420
-25.3%
* Q22016 production volumes are preliminary
In Q2 2016, crude steel production decreased by 21.2% as reduced tubular products and rail products demand resulted in lower utilisation at the Regina steelmaking and the Pueblo steelmaking facilities.
Output of construction products rose by 5.8% QoQ, driven by improved productivity.
Rail production declined by 52.9% QoQ in response to lower demand from Class I railway companies, which are re-balancing their rail inventories due to lower CAPEX after the record levels of last year.
Output of flat-rolled products increased by 11.6% QoQ, the 20-day planned outage at the Portland rolling mill during January accounts for most of the difference in production volumes.
Output of tubular products decreased by 37.8% QoQ. Large diameter (LD) pipe declined as a result of pipeline project delays that required idling the Portland and Camrose LD pipe mills. Additionaly, oil country tubular goods and small diameter line pipe markets remained under pressure due to low oil prices and the seasonal impact of the spring break in Western Canada. Despite the challenging current market conditions for both of these products, the near-term outlook is cautiously optimistic, as oil prices are above US$40 per barrel and rig counts are stabilising, while distributor inventories appear to be sufficiently depleted for certain products, underpinning a more favourable outlook.
Prices for most steel products increased during Q2 2016, reflecting prevailing higher scrap and other input prices and reduced pressure from imports.
Average selling prices
US$/tonne (ex works)
Q2 
2016
Q1 
2016
H1 
2016
H1 
2015
Construction products
531
491
512
720
Flat-rolled products
642
600
624
812
Tubular products
999
968
981
1,188
Ukraine
Product, '000 tonnes 
Q2 2016
Q1 2016
Q22016/ Q12016, change
H1 2016
H1 
2015
H12016/ H12015, change
Coke (saleable)
169
93
81.0%
263
398
-34.0%
Pig iron
274
263
4.4%
537
494
8.8%
Pig iron (saleable)
4
10
-59.5%
14
45
-69.4%
Crude steel
291
269
8.4%
560
487
15.0%
Steel products
232
222
4.6%
455
421
7.9%
Semi-finished products
130
133
-2.8%
263
237
10.9%
Finished products
103
89
15.7%
192
184
4.2%
Construction products
94
78
20.3%
172
158
9.0%
Other steel products
9
11
-17.6%
20
26
-24.7%
Saleable coke volumes increased QoQ in Q2 2016 in response to higher domestic demand.
Production of crude steel increased by 8.4% QoQ due to an increase in pig iron output of 4.4%.
Output of steel products increased by 4.6% QoQ, driven mainly by greater volumes of crude steel. Production of construction products increased by 20.3% QoQ due to improved demand.
Prices were higher than in comparable periods, in line with the market trend.
Average selling prices
US$/tonne (ex works)
Q2 
2016
Q1 
2016
H1 
2016
H1 
2015
Coke (saleable)
129
117
125
183
Pig iron
263
168
196
259
Steel products
Semi-finished products
298
211
254
337
Construction products
398
312
357
438
Other steel products
587
393
484
618
IRON ORE
Product, '000 tonnes 
Q2 2016
Q1 2016
Q22016/ Q12016, change
H1 2016
H1 
2015
H12016/ H12015, change
Sinter (Russia)
2,463
2,774
-11.2%
5,236
5,432
-3.6%
Pellets (Russia)
1,652
1,649
0.1%
3,301
3,259
1.3%
Lumpy ore (Ukraine)
782
525
49.1%
1,307
1,393
-6.2%
Production of sinter decreased by 11.2% QoQ, mainly due to lower consumption resulting from the capital repairs at blast furnace 1 at EVRAZ ZSMK. 
Production of lumpy ore at EVRAZ Sukha Balka recovered in Q2 (rising by 49.1%), after the temporary suspension of mining operations in response to lower demand in Q1.
Pellet and lumpy ore prices increased in Q2 2016, following global benchmarks.
Average selling prices
US$/tonne (ex works)
Q2 
2016
Q1 
2016
H1 
2016
H1 
2015
Pellets (Russia)
40
30
36
44
Lumpy ore (Ukraine)
22
18
20
25
COAL
Product, '000 tonnes 
Q2 2016
Q1 2016
Q22016/ Q12016, change
H1 
2016
H1 
2015
H12016/ H12015, change
Raw coking coal (mined)
5,503
5,514
-0.2%
11,016
9,348
17.9%
Yuzhkuzbassugol
2,735
3,193
-14.3%
5,928
4,178
41.9%
Raspadskaya
2,627
2,256
16.5%
4,883
5,072
-3.7%
Mezhegeyugol
141
65
117.0%
206
98
109.5%
Coking coal concentrate (production)
3,707
3,590
3.3%
7,297
6,503
12.2%
In general, production of raw coking coal was flat in Q2 2016 QoQ. This reflected the increased output of raw coking coal at the Raspadskaya mine after the longwall repositioning in Q1 2016; higher production at Mezhegeyugol; and lower output of raw coking coal at the Alardinskaya, Esaulskaya and Uskovskaya mines due to planned longwall moves in Q2 2016.
Production of coking coal concentrate increased by 3.3% QoQ, due to greater demand on the domestic and export markets (coking coal from inventories was used in production).
Coal prices rose in Q2 2016, following global benchmarks.
Average selling prices
US$/tonne (ex works) 
Q2 
2016
Q1 
2016
H1 
2016
H1 
2015
Raw coking coal
34
29
32
37
Coking coal concentrate 
60
52
56
61
VANADIUM
Production, tonnes* 
Q2 2016
Q1 2016
Q22016/ Q12016, change
H1 
2016
H1 2015**
H12016/ H12015, change
Vanadium slag, gross production
4,169
4,097
1.8%
8,267
9,751
-15.2%
 Russia
4,169
4,097
1.8%
8,267
7,962
3.8%
 South Africa
0
0
n/a
0
1,788
-100.0%
Vanadium in final products (saleable)
3,263
3,344
-2.4%
6,606
8,475
-22.0%
*Calculated in pure vanadium equivalent
** Includes production volumes of EVRAZ Highveld Steel and Vanadium (EHSV) and Hochvanadium, which are not consolidated from April 2015 due to business rescue proceedings.
Vanadium slag production increased by 1.8% QoQ in Q2 2016, predominantly due to higher output of pig iron (duplex process).
Output of final vanadium products decreased by 2.4% amid lower production of oxides, vanadium aluminium and chemicals due to idled oxide production at Stratcor (US) and lower output of nitrovan at Vametco (SA), affected by an eight-day maintenance shutdown in April 2016. This decrease was partly offset by an increase in production of ferrovanadium, due to higher oxide availability and greater demand for ferrovanadium in Ukraine.
In Q2 2016, the average Metal Bulletin FeV80 index stood at US$18.44/kgV, 26% higher than US$14.60/kgV in Q1. Meanwhile, the Ryan's Notes index used in North America averaged US$22.2/kgV in Q2 2016, 52% higher than US$14.57/kgV in the previous quarter. Sale prices for vanadium products followed the market dynamics.
Average FeV indices
US$/tonne of V
Q2 
2016
Q1 
2016
H1 
2016
H1 
2015
Metal Bulletin Ferro-Vanadium basis 78% min, free DDP, consumer plant, 1st grade Western Europe
18.44
14.60
16.52
21.53
Ryan's Notes N.A. FeV 80% min, US ex-warehouse, duty paid
22.20
14.57
18.38
23.23
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 and for South Africa - rails.
###
For further information:
Media Relations: 
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 14.3 million tonnes in 2015. 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 2015 were US$8,767 million, and consolidated EBITDA amounted to US$1,438 million. 

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