REG - Evraz Plc - EVRAZ Q4 2019 TRADING UPDATE - CORRECTION
RNS Number : 4236BEvraz Plc30 January 2020This announcement replaces the RNS announcement number 3562B released at 07:00 UK time today,
30 January 2020.The figures in the table "Average selling prices" in the "Steel segment" section on page 6 of the pdf version should read as follows:
Average selling prices
US$/t (ex works)
Q4 2019
Q3 2019
12m
2019
12m
2018
Coke
187
214
217
217
Steel products2
454
490
483
537
Semi-finished products1,2
317
361
361
453
Construction products
488
557
534
583
Railway products
940
842
823
685
Other steel products
530
579
576
636
Pellets
53
76
70
65
Metal Bulletin Ferro-Vanadium basis 78% min, free DDP,
consumer plant, 1st grade Western Europe323.05
30.72
41.62
81.28
Ryan's Notes N.A. FeV 80% min, US ex-warehouse, duty paid3
26.05
34.93
49.18
86.29
1 Includes prices for pig iron
2 The Q3 2019 data have been adjusted.
3 US$/kgV
EVRAZ Q4 2019 TRADING UPDATE
30 January 2020 - EVRAZ plc (LSE: EVR; "EVRAZ" or the "Group") today released its trading update for the fourth quarter and full year of 2019.
Q4 2019 vs Q3 2019 HIGHLIGHTS
· In Q4 2019, EVRAZ' consolidated crude steel output rose by 2.1% QoQ, mainly due to higher production volumes at EVRAZ ZSMK after the scheduled capital repairs during July-August ended.
· Steel product sales climbed by 6.6% QoQ, driven primarily by semi-finished products, which grew by 17.7%. This, in turn, was mainly a result of higher steel production at EVRAZ ZSMK and seasonally weaker market demand for finished construction products in Russia. In addition, sales of railway products in Russia grew by 17.8% following completion of capital repairs at EVRAZ ZSMK's rail and beam shop in Q3 2019.
· Total raw coking coal production decreased by 5.3% QoQ due to lower production volumes amid a scheduled longwall move at the Raspadskaya mine in Q4 2019. Coking coal concentrate production dropped by 16.7% QoQ due to softer market demand.
· External sales volumes of coking coal products fell by 14.9% QoQ due to lower market demand.
· External sales of iron ore products surged by 68.5% QoQ following the completion of capital repairs of EVRAZ KGOK's roasting machines that took place during August and September.
· Sales of vanadium final products were down by 2.0% QoQ due to lower FeV demand mainly from North American steel producers amid reduced utilisation rates.
FY2019 vs FY2018 HIGHLIGHTS
· In 2019, EVRAZ' consolidated crude steel production climbed by 6.1% YoY, mainly due to higher production volumes of pig iron at EVRAZ ZSMK as the blast furnace no.3 underwent a lengthier and more complex process of capital repair in 2018 (category II) vs the blast furnace no.1 in 2019 (category III).
· Sales volumes of semi-finished products jumped by 22.8% YoY, primarily due to higher semi-finished product sales from Russia to the export markets amid greater production volumes and a sharp increase of slab sales in North America amid greater demand from customers.
· Production of raw coking coal grew by 8.1% YoY due to higher production volumes at the Osinnikovskaya, Erunakovskaya and Uskovskaya mines, driven by improvements in capital repairs and equipment maintenance.
· External iron ore product sales fell by 42.5% YoY, primarily as a result of higher consumption of pellets in 2019 by EVRAZ NTMK after the launch of blast furnace no. 7 in Q2 2018 and by EVRAZ ZSMK amid higher pig iron production.
Product, kt
Q4 2019
Q3 2019
Q4 2019/ Q3 2019, change
12m 2019
12m 2018
12m 2019/ 12m 2018, change
Total crude steel production1
3,449
3,379
2.1%
13,814
13,019
6.1%
Russia
3,008
2,953
1.9%
11,953
10,967
9.0%
Ukraine
0
0
n/a
0
154
n/a
North America
441
426
3.5%
1,861
1,898
-1.9%
Total raw coking coal mined
5,981
6,319
-5.3%
26,140
24,188
8.1%
Total coking coal concentrate
production3,537
4,244
-16.7%
15,923
16,188
-1.6%
Iron ore products production
3,277
3,319
-1.3%
13,765
13,515
1.8%
Total sales of steel products1
3,609
3,386
6.6%
13,502
12,235
10.4%
Semi-finished products
1,699
1,443
17.7%
5,844
4,760
22.8%
Finished products
1,910
1,943
-1.7%
7,658
7,475
2.4%
Total sales of third-party steel
products200
225
-11.1%
801
900
-11.0%
Sales of coking coal products
2,514
2,953
-14.9%
11,053
11,048
0.0%
Sales of iron ore products
273
162
68.5%
1,134
1,972
-42.5%
Sales of vanadium in slag2
1,923
1,693
13.6%
6,451
6,701
-3.7%
Sales of vanadium final products3
3,514
3,585
-2.0%
12,883
12,352
4.3%
Note. Numbers in this table and the tables below may not add up to totals due to rounding.
1 The Q4 2019 production and sales volumes of EVRAZ North America are preliminary.
2 The 12m 2018 data have been adjusted.
3 In tonnes of pure vanadium
STEEL SEGMENT
Total production volumes
Product, kt
Q4 2019
Q3 2019
Q4 2019/ Q3 2019, change
12m 2019
12m 2018
12m 2019/ 12m 2018, change
Pig iron production
2,764
2,795
-1.1%
11,016
9,993
10.2%
EVRAZ ZSMK
1,555
1,516
2.6%
6,072
5,195
16.9%
EVRAZ NTMK
1,209
1,279
-5.5%
4,944
4,644
6.5%
EVRAZ DMZ
0
0
n/a
0
153
-100.0%
Crude steel production
3,008
2,953
1.9%
11,953
11,121
7.5%
EVRAZ ZSMK
1,956
1,866
4.8%
7,659
6,851
11.8%
EVRAZ NTMK
1,052
1,087
-3.2%
4,294
4,116
4.3%
EVRAZ DMZ
0
0
n/a
0
154
-100.0%
Total steel products production, net of
re-rolled volume12,871
2,766
3.8%
11,018
9,934
10.9%
EVRAZ ZSMK
1,770
1,624
9.0%
6,817
6,216
9.7%
EVRAZ NTMK
983
969
1.4%
3,590
3,058
17.4%
EVRAZ DMZ
0
0
n/a
0
132
-100.0%
EVRAZ Caspian Steel
76
86
-11.6%
283
180
57.2%
Iron ore products production
3,277
3,319
-1.3%
13,765
13,515
1.8%
Pellets (EVRAZ KGOK)
1,531
1,456
5.2%
6,203
6,509
-4.7%
Sinter (EVRAZ KGOK)
802
883
-9.2%
3,511
3,541
-0.8%
Concentrate (EVRAZ KGOK, Evrazruda)
944
980
-3.7%
4,051
3,465
16.9%
Coking coal concentrate production
493
511
-3.5%
1,947
2,057
-5.3%
From own raw coal2
331
407
-18.7%
1,335
1,216
9.8%
From third-party raw coal
162
104
55.8%
612
841
-27.2%
Gross vanadium slag production3
4,667
4,734
-1.4%
18,380
17,052
7.8%
Note. Numbers in this table and the tables below may not add up to totals due to rounding.
1 Including EVRAZ Palini e Bertoli
2 From Coal segment
3 In tonnes of pure vanadium
In Q4 2019, EVRAZ` pig iron production remained almost flat QoQ, with a 5.5% QoQ decrease in production volumes at EVRAZ NTMK mainly due to capital repairs at blast furnace no. 5 in October. This was partly offset by production at EVRAZ ZSMK going up by 2.6% after the scheduled capital repairs during July-August ended. In FY2019, production of pig iron climbed by 10.2% YoY, primarily because blast furnace no. 3 underwent a lengthier and more complex capital repair (category II) in FY2018 than blast furnace no. 1 underwent in FY2019 (category III).
Crude steel production volumes edged up by 1.9% QoQ, mainly due to increased pig iron production volumes at EVRAZ ZSMK. In FY2019, production of crude steel rose by 7.5% YoY, which was in line with pig iron production volumes.
Total output of steel products grew by 3.8% QoQ, driven by a 9.0% QoQ uptick in production volumes at EVRAZ ZSMK due to higher semi-finished production volumes following greater production of steel at EVRAZ ZSMK and seasonally weaker market demand for finished construction products in Russia. In FY2019, total output of steel products rose by 10.9% YoY due to higher production of semi-finished products at EVRAZ ZSMK and of construction products at EVRAZ NTMK.
Output of iron ore products fell by 1.3% QoQ, mainly due to capital repairs of roasting machine no. 1 at EVRAZ KGOK in October 2019. In FY2019, output of iron ore products rose by 1.8% YoY following a shortage of concentrates in FY2018 amid repairs of the primary equipment at EVRAZ ZSMK's mining operations (former Evrazruda).
Consolidated output of vanadium slag fell by 1.4% QoQ due to decreased volumes of pig iron duplex processing, which was partly offset by higher vanadium content in pig iron. In FY2019, output of vanadium slag climbed by 7.8% YoY due to greater volumes of pig iron duplex processing and higher vanadium content in pig iron.
Total sales volumes
Product, kt
Q4
2019Q3 2019
Q4 2019/ Q3 2019, change
12m 2019
12m 2018
12m 2019/ 12m 2018, change
Coke
161
93
73.1%
432
569
-24.1%
Steel products, external sales
3,073
2,847
7.9%
11,273
10,080
11.8%
Semi-finished products
1,665
1,398
19.1%
5,636
4,703
19.8%
Slabs
719
669
7.5%
2,443
1,764
38.5%
Billets
767
562
36.5%
2,519
2,448
2.9%
Other steel products1
179
167
7.2%
674
490
37.6%
Finished products
1,408
1,448
-2.8%
5,638
5,377
4.9%
Construction products
855
883
-3.2%
3,331
3,138
6.2%
Railway products
370
314
17.8%
1,395
1,345
3.7%
Flat products
52
79
-34.2%
321
347
-7.5%
Other steel products
131
172
-23.8%
591
548
7.8%
Steel products, inter-segment sales2
10
7
42.9%
318
573
-44.5%
Third-party steel products, external sales
200
225
-11.1%
801
900
-11.0%
Iron ore products, external sales
273
162
68.5%
1,134
1,972
-42.5%
Pellets
273
162
68.5%
1,134
1,972
-42.5%
Sales of vanadium in slag3
1,923
1,693
13.6%
6,451
6,701
-3.7%
Sales of vanadium final products4
3,514
3,585
-2.0%
12,883
12,352
4.3%
Note. Numbers in this table and the tables below may not add to totals due to rounding.
1 Includes tonnes of pig iron
2 The Q3 2019 data have been adjusted,
3 The 12m 2018 data have been adjusted,
4 In tonnes of pure vanadium
In Q4 2019, external sales of steel products went up by 7.9% QoQ. Sales of semi-finished products surged by 19.1% QoQ, mainly due to seasonally weaker market demand for finished construction products and higher billet sales volumes to export markets. In FY2019, greater crude steel production output drove an increase in steel product sales volumes.
Sales of finished products dropped by 2.8% QoQ, mainly driven by seasonally lower sales of construction, flat and other steel products, albeit partly offset by higher sales volumes of railway products. In FY2019, sales volumes of finished products were up by 4.9% YoY, mainly due to higher sales volumes of construction and railway products.
Sales of construction products fell by 3.2% QoQ, following a seasonal decrease of market demand. In FY2019, sales volumes of construction products were up by 6.2% YoY, mainly due to higher demand for beams at EVRAZ NTMK and small sections at EVRAZ ZSMK.
Sales of railway products rose by 17.8% QoQ following the completion of capital repairs at EVRAZ ZSMK's rail and beam shop that took place in August and September. In FY2019, sales volumes of railway products were up by 3.7% YoY, mainly due to increased demand for wheels and profiles for wagon building.
Sales of flat products fell by 34.2% QoQ amid reduced market demand for flat products in October and November 2019. In FY2019, sales volumes were down by 7.5%, primarily due to lower market demand.
Sales of iron ore products surged by 68.5% QoQ as a result of capital repairs of EVRAZ KGOK's roasting machines in August and September. In FY2019, sales volumes of iron ore dropped by 42.5% YoY, primarily as a result of higher consumption of pellets in 2019 by EVRAZ NTMK after the launch of blast furnace no. 7 in Q2 2018 and by EVRAZ ZSMK amid higher pig iron production.
Sales of final vanadium products edged down by 2.0% QoQ due to lower FeV demand mainly from North American steel producers amid reduced utilisation rates. In FY2019, sales of final vanadium products rose by 4.3% YoY due to higher FeV sales, mainly as a result of increased demand in the EU and the development of new sales markets in Asia.
Cash cost, US$/t
Q4
2019Q3 2019
Q4 2019/ Q3 2019, change
12m 2019
12m 2018
12m 2019/ 12m 2018, change
Slab cash cost, vertically integrated1
243
241
0.8%
236
225
4.9%
Iron ore products (Fe 62%)2
47
41
14.6%
41
37
10.8%
1 The 12m 2018 data have been adjusted.
2 The Q3 2019 data have been adjusted.
Average selling prices
US$/t (ex works)
Q4 2019
Q3 2019
12m
2019
12m
2018
Coke
187
214
217
217
Steel products2
454
490
483
537
Semi-finished products1,2
317
361
361
453
Construction products
488
557
534
583
Railway products
940
842
823
685
Other steel products
530
579
576
636
Pellets
53
76
70
65
Metal Bulletin Ferro-Vanadium basis 78% min, free DDP,
consumer plant, 1st grade Western Europe323.05
30.72
41.62
81.28
Ryan's Notes N.A. FeV 80% min, US ex-warehouse, duty paid3
26.05
34.93
49.18
86.29
1 Includes prices for pig iron
2 The Q3 2019 data have been adjusted.
3 US$/kgV
In Q1 2020, pig iron production volumes are expected to slightly increase following the completion of capital repairs of blast furnace no. 5, which took place in October 2019 at EVRAZ NTMK. Pellet production volumes at EVRAZ KGOK should rise after a period of reduced market demand in November and December. The Group expects sinter production volumes to increase as a result of the completion of capital repairs of the sintering machine in October 2019.
STEEL, NORTH AMERICA SEGMENT
Production and sales volumes
Product, kt
Q4
2019Q3 2019
Q4 2019/ Q3 2019, change
12m 2019
12m 2018
12m 2019/ 12m 2018, change
Crude steel
441
426
3.5%
1,861
1,898
-1.9%
EVRAZ US mills
213
226
-5.8%
925
911
1.5%
EVRAZ Canadian mills
228
200
14.0%
936
986
-5.1%
Total steel products production, net of re-rolled volume
510
539
-5.4%
2,212
2,220
-0.4%
EVRAZ US mills
324
358
-9.5%
1,418
1,376
3.1%
EVRAZ Canadian mills
186
181
2.8%
794
844
-5.9%
Sales of steel products
536
540
-0.7%
2,230
2,156
3.4%
Semi-finished products
34
45
-24.4%
209
57
266.7%
Construction products
55
65
-15.4%
256
287
-10.8%
Railway products
123
115
7.0%
461
421
9.5%
Flat-rolled products
115
126
-8.7%
522
568
-8.1%
Tubular products
209
189
10.6%
782
823
-5.0%
* The Q4 2019 production and sales volumes data are preliminary.
In Q4 2019, crude steel production was up 3.5% QoQ. Volumes at EVRAZ Regina's steelmaking operations were up, mainly driven by higher production of large-diameter pipe (LDP) for current orders. Steel production at EVRAZ Pueblo was down due to a planned maintenance outage in October. In FY2019, EVRAZ Pueblo's steel production was up 1.5% YoY, mainly due to higher rail demand. During the same period, EVRAZ Regina's steel production fell by 5.1%, driven by a slowdown on the oil country tubular goods (OCTG) and small line pipe markets due to high distributors' inventory, aggressive local competition and construction delays on key transmission pipelines.
In Q4 2019, sales of semi-finished products dropped by 24.4% due to timing of customer orders for slabs.
Sales of construction products went down by 15.4% QoQ in Q4 2019, with continued sluggish demand caused by substantial customer inventories, as well as foreign imports of wire rod and concrete reinforcing bar, causing EVRAZ Pueblo's rod bar mill to be idled for parts of November and December. In FY2019, construction product sales were 10.8% lower than in FY2018, primarily due to reduced demand for concrete reinforcing bar caused by inclement weather in the beginning of 2019 and softer market demand as customers managed inventory levels.
Sales of railway products in Q4 2019 increased by 7.0% QoQ with the return to normal production levels after a separate maintenance outage in September. In FY2019, sales of railway products climbed by 9.5% YoY due to improved demand and market share growth, along with greater sales volumes of the super-premium APEX G2 rails.
Flat-rolled product sales dropped by 8.7% QoQ in Q4 2019 and 8.1% YoY in FY2019 as a result of weakening market demand.
Tubular products sales volumes rose by 10.6% QoQ in Q4 2019 due to a slight pickup in Canadian OCTG volumes and a higher LDP recognition accumulated from production in Q3 and Q4 2019. Sales in FY2019 were 5.0% lower than in FY2018 due to a significant reduction in OCTG and line pipe demand, which was partly offset by increased LDP sales carried over from 2018 and new orders.
Average selling prices
US$/t (ex works)
Q4
2019
Q3
2019
12m
2019
12m
2018
Construction products
644
699
745
820
Flat-rolled products
747
865
912
992
Tubular products
1,362
1,363
1,361
1,241
In Q4 2019, prices for construction products decreased driven primarily by sluggish market demand. Prices for flat-rolled products dropped further during the period as service centres continued to curtail purchases amid falling scrap prices and market uncertainty driven by soft demand. Prices for tubular products were flat compared with Q3 2019 due to higher-priced LDP orders offset by continued softening of the OCTG markets and lower line pipe prices. The fluctuation in prices for other steel products in the quarterly and full-year comparatives is primarily driven by shifts in product mix.
For Q1 2020, Canada's steel capacity is expected to be close to full utilisation with crude steel output increasing by 10-15% QoQ to address LDP production needs. Canadian tubular sales volumes are expected to decrease by around 5-10% versus Q4 2019 driven by extended recognition of current LDP orders and some volumes that were pulled in December 2019 from January 2020. Sales of flat-rolled products are forecast to improve in quarterly terms, driven by the normal seasonal increase in Q1 2020 and significant market softness in the prior quarter.
COAL SEGMENT
Production volumes
Product, kt
Q4
2019Q3
2019
Q4 2019/ Q3 2019, change
12m 2019
12m 2018
12m 2019/ 12m 2018, change
Raw coking coal (mined)
5,981
6,319
-5.3%
26,140
24,188
8.1%
Yuzhkuzbassugol
3,065
3,043
0.7%
12,180
10,360
17.6%
Raspadskaya
2,712
2,965
-8.5%
12,824
12,740
0.7%
Mezhegeyugol
204
311
-34.4%
1,136
1,088
4.4%
Coking coal concentrate (production)
3,044
3,733
-18.5%
13,975
14,130
-1.1%
Produced at Yuzhkuzbassugol coal
washing plants1,407
1,570
-10.4%
6,247
6,419
-2.7%
Produced at the Raspadskaya coal
washing plant1,637
2,163
-24.3%
7,728
7,711
0.2%
In Q4 2019, overall raw coking coal output fell by 5.3% QoQ due to lower production volumes, which was mainly a result of the scheduled longwall move at the Raspadskaya mine in the period. In FY2019, production of raw coking coal climbed by 8.1% YoY due to the return to normal production levels after a maintenance outage in 2018 at the Osinnikovskaya, Erunakovskaya and Uskovskaya mines, driven by improvements to the repair system and equipment maintenance in FY2019.
Output of coking coal concentrate dropped by 18.5%, primarily due to lower market demand as China has exhausted annual coal import quotas.
Sales volumes
Product, kt
Q4
2019Q3 2019
Q4 2019/ Q3 2019, change
12m 2019
12m 2018
12m 2019/ 12m 2018, change
External sales
2,514
2,953
-14.9%
11,053
11,048
0.0%
Raw coking coal*
527
741
-28.9%
2,212
1,725
28.2%
Coking coal concentrate
1,987
2,212
-10.2%
8,841
9,323
-5.2%
Intersegment sales
1,688
1,712
-1.4%
6,569
6,016
9.2%
Raw coking coal
464
629
-26.2%
2,044
1,863
9.7%
Coking coal concentrate
1,224
1,084
12.9%
4,525
4,153
9.0%
* The data include sales volumes of 1kt of coal recognised as steam-grade coal based on its quality characteristics in FY2019 and 35kt in FY2018.
In Q4 2019, external sales volumes of coking coal products decreased by 14.9%. Raw coking coal sales volumes fell by 28.9% QoQ following change of sales mix in favour of coal concentrate. Coking coal concentrate sales volumes dropped by 10.2% QoQ due to sluggish market demand as China has exhausted annual coal import quotas.
Cash cost, US$/t
Q4
2019Q3 2019
Q4 2019/ Q3 2019, change
12m 2019
12m 2018
12m 2019/ 12m 2018, change
Coking coal concentrate
37
35
5.7%
35
47
-25.5%
Average selling prices
US$/t (ex works)
Q4
2019
Q3
2019
12m
201912m
2018Raw coking coal
35
45
49
65
Coking coal concentrate
84
88
99
120
In Q4 2019, coking coal selling prices moved in line with global benchmarks.
In Q1 2020, raw coal production is expected to slightly decrease due to the completion of current coal seam mining at the Esaulskaya mine before moving to a new seam.
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. They also include railway products for Ukraine.
###
For further information:
Media Relations:
Moscow: +7 495 937 6871
media@evraz.com
Investor Relations:
Moscow: +7 495 232 1370
EVRAZ is a vertically integrated steel, mining and vanadium business with operations in the Russian Federation, Kazakhstan, US, Canada and Czech Republic. EVRAZ is among the top steel producers in the world based on crude steel production of 14mt in 2019. 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 2018 were US$12,836m and consolidated EBITDA amounted to US$3,777m.
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