REG - Evraz Plc - EVRAZ Q4 2021 TRADING UPDATE
31/01/2022 07:00
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RNS Number : 0575A Evraz Plc 31 January 2022
EVRAZ Q4 2021 TRADING UPDATE
31 January 2022 - EVRAZ plc (LSE: EVR; "EVRAZ" or the "Group") today released
its trading update for the fourth quarter and full year of 2021.
Q4 2021 vs Q3 2021 HIGHLIGHTS
· In Q4 2021, EVRAZ' consolidated crude steel output fell by 0.6%
QoQ, mainly because of maintenance outages in November in North America.
· Total sales of steel products increased by 7.0% QoQ. Sales of
construction products were buoyed by market demand in the period, while sales
of railway products were higher following the completion of capital repairs at
EVRAZ ZSMK's rail and beam shop and EVRAZ NTMK's wheel shop.
· Total raw coking coal production surged by 34.4% QoQ, mainly
because of the completion of longwall moves at the Raspadskaya, Osinnikovskaya
and Yerunakovskaya-VIII mines.
· Coking coal concentrate production grew by 11.2% QoQ amid greater
coal mining volumes.
· External sales volumes of coking coal products rose by 4.0% QoQ,
as an increase in coal mining volumes allowed for greater coking coal
concentrate sales volumes amid favourable market conditions.
· Output of iron ore products climbed by 7.0% QoQ, driven by higher
production volumes of pellets at EVRAZ KGOK and higher production of saleable
concentrate at EVRAZ ZSMK following the completion of capital repairs.
· External sales of iron ore products jumped by 58.1% QoQ following
the start of sales to China through the port of Ust-Luga.
· Sales of vanadium products surged by 33.0% QoQ, primarily due to
higher demand in Europe and North America.
FY2021 vs FY2020 HIGHLIGHTS
· The Group's consolidated crude steel production edged down by
0.4% YoY, as crude steel production volumes fell after Russia introduced an
export duty (effective until the end of 2021), which led to lower margins from
pig iron production at EVRAZ ZSMK.
· Total sales of steel products dropped by 4.5% YoY. This was
partly because of the impact that the export duty introduced in Russia in 2021
had on the output of semi-finished products for export, and partly because of
a high-base effect following the fulfilment of a contract with the key
customer in 2020 in North America.
· Production of raw coking coal grew by 12.7% YoY. The main driver
of the increase was the resumption of work at Razrez Raspadsky, which had
halted operations from May to September 2020 amid poor market conditions.
Another contributor was the transfer of operations at Esaulskaya to the new
longwall no. 29.
· Coking coal concentrate production grew by 2.8% YoY following the
increase in coal mining volumes.
· External sales volumes of coking coal products fell by 14.0% YoY amid
lower raw coking coal sales following the change in the product mix in favour
of coking coal concentrate to meet customer needs.
· Output of iron ore products rose by 1.4% YoY, partly driven by higher
production volumes of sinter in connection with the implementation of new
initiatives in the efficiency improvement programme for 2021, and partly by a
low-base effect following capital repairs performed in 2020 at EVRAZ KGOK's
sinter machine no. 1.
· External iron ore product sales fell by 17.4% YoY as a result of
concentrate shortage in Q1 2021, an increase in EVRAZ NTMK's demand for pig
iron in 2021.
· Sales of vanadium products rose by 5.7% YoY due to overall
stronger demand in 2021, caused by the recovery of key steel consuming sectors
globally.
Product, '000 tonnes Q4 Q3 Q4 2021/ Q3 2021, change 12m 12m 12m 2021/ 12m 2020, change
2021
2021
2021
2020
Total crude steel production 3,384 3,403 -0.6% 13,569 13,630 -0.4%
Russia 2,904 2,912 -0.3% 11,690 12,050 -3.0%
North America 480 491 -2.2% 1,879 1,580 18.9%
Total raw coking coal mined 6,699 4,983 34.4% 23,272 20,653 12.7%
Total coking coal concentrate 4,166 3,746 11.2% 15,962 15,528 2.8%
production
Iron ore products production 3,751 3,504 7.0% 14,399 14,205 1.4%
Total sales of steel products(1) 3,188 2,979 7.0% 12,469 13,062 -4.5%
Semi-finished products 1,357 1,338 1.4% 5,541 6,183 -10.4%
Finished products 1.831 1,641 11.6% 6,928 6,879 0.7%
Total sales of third-party steel products 210 213 -1.4% 774 848 -8.7%
Sales of coking coal products 2,561 2,462 4.0% 10,608 12,336 -14.0%
Sales of iron ore products 479 303 58.1% 1,430 1,732 -17.4%
Sales of vanadium in slag 2,460 1,834 34.1% 7,053 6,129 15.1%
Sales of vanadium final products(2) 3,809 2,864 33.0% 13,288 12,567* 5.7%
Note. Numbers in this table and the tables below may not add up to totals due
to rounding.
(1) Includes tonnes of pig iron
(2 )In tonnes of pure vanadium
* The 2020 data has been adjusted
STEEL SEGMENT
Total production volumes
Product, '000 tonnes Q4 2021 Q3 2021 Q4 2021/ Q3 2021, change 12m 2021 12m 2020 12m 2021/ 12m 2020, change
Pig iron production 2,701 2,716 -0.6% 10,819 11,157 -3.0%
EVRAZ ZSMK 1,429 1,445 -1.1% 5,733 6,208 -7.7%
EVRAZ NTMK 1,272 1,271 0.1% 5,086 4,949 2.8%
Crude steel production 2,904 2,912 -0.3% 11,690 12,050 -3.0%
EVRAZ ZSMK 1,817 1,824 -0.4% 7,272 7,671 -5.2%
EVRAZ NTMK 1,087 1,088 -0.1% 4,418 4,379 0.9%
Total steel products production, net of re‑rolled volume 2,693 2,721 -1.0% 10,763 11,082 -2.9%
EVRAZ ZSMK 1,571 1,643 -4.4% 6,321 6,766 -6.6%
EVRAZ NTMK 1,010 985 2.5% 4,049 3,999 1.3%
EVRAZ Caspian Steel 112 93 20.4% 393 317 24.0%
Iron ore products production 3,751 3,504 7.0% 14,399 14,205 1.4%
Pellets (EVRAZ KGOK) 1,704 1,563 9.0% 6,484 6,548 -1.0%
Sinter (EVRAZ KGOK) 943 946 -0.3% 3,732 3,582 4.2%
Concentrate saleable (EVRAZ KGOK, EVRAZ ZSMK) 1,104 995 11.0% 4,183 4,075 2.7%
Coking coal concentrate production 347 366 -5.2% 1,514 1,930 -21.6%
From own raw coal(1) 287 305 -5.9% 1,275 1,518 -16.0%
From third-party raw coal 60 61 -1.6% 239 412 -42.0%
Gross vanadium slag production(2) 4,856 5,198 -6.6% 20,058 19,533 2.7%
Note. Numbers in this table and the tables below may not add up to totals due
to rounding.
(1) From Coal segment
(2)( )In tonnes of pure vanadium
In Q4 2021, pig iron production at the Group's Russian mills remained mostly
flat QoQ. In FY2021, pig iron production dropped by 3.0% YoY because of a
shortage of sinter and coke, as well as because of the export duty
introduction (effective until the end of 2021) which led to lower margins from
production at EVRAZ ZSMK.
Crude steel production volumes remained mostly flat QoQ and fell by 3.0% YoY
amid lower pig iron production at EVRAZ ZSMK.
Total output of steel products decreased by 1.0% QoQ. While semi-finished
product volumes were lower at EVRAZ ZSMK, construction product volumes were
higher at EVRAZ NTMK and EVRAZ Caspian Steel amid increased market demand. In
FY2021, total output of steel products fell by 2.9% YoY, mainly because of
unfavourable prices for semi-finished products and reduced railway product
volumes at EVRAZ ZSMK amid lower demand from Russian Railways.
Output of iron ore products climbed by 7.0% QoQ. This was driven by higher
production volumes of pellets at EVRAZ KGOK following capital repairs at
roasting furnace no. 4 in September and greater production volumes of saleable
concentrate at EVRAZ ZSMK following capital repairs at the Abagurskaya
processing plant in Q3 2021. In FY2021, output of iron ore products rose by
1.4% YoY. This was partly because of higher production volumes of sinter in
connection with the implementation of new initiatives in the efficiency
improvement programme for 2021, and partly because of a low-base effect
following capital repairs performed in 2020 at EVRAZ KGOK's sinter machine no.
1. Another factor was an increase in production volumes of concentrate
saleable at EVRAZ ZSMK amid higher incoming stocks of primary concentrate in
2021.
Output of vanadium slag fell by 6.6% QoQ, mostly driven by lower vanadium
content in pig iron and reduced pig iron duplex processing volumes. In FY2021,
output of vanadium slag rose by 2.7% YoY, mainly because of higher pig iron
duplex processing volumes during the year.
Total sales volumes
Product, '000 tonnes Q4 2021 Q3 Q4 2021/ Q3 2021, change 12m 12m 12m 2021/ 12m 2020, change
2021
2021
2020
Coke 60 78 -23.3% 284 390 -27.2%
Steel products, external sales 2,758 2,559 7.8% 10,823 11,377 -4.9%
Semi-finished products 1,357 1,338 1.4% 5,541 6,039 -8.2%
Slabs 790 709 11.4% 3,036 2,592 17.1%
Billets 425 533 -20.3% 2,050 2,933 -30.1%
Other steel products(1) 142 96 47.9% 455 514 -11.5%
Finished products 1,401 1,221 14.7% 5,282 5,338 -1.0%
Construction products 922 799 15.4% 3,458 3,392 1.9%
Railway products 378 250 51.2% 1,193 1,299 -8.2%
Other steel products 101 172 -41.3% 631 647 -2.5%
Steel products, inter-segment sales 7 7 0.0% 29 67 -56.7%
Third-party steel products, external sales 210 213 -1.4% 774 848 -8.7%
Iron ore products, external sales 479 303 58.1% 1,430 1,732 -17.4%
Pellets 479 303 58.1% 1,430 1,732 -17.4%
Sales of vanadium in slag 2,460 1,834 34.1% 7,053 6,129 15.1%
Sales of vanadium final products(2) 3,809 2,864 33.0% 13,288 12,567* 5.7%
Note. Numbers in this table and the tables below may not add to totals due to
rounding.
(1) Includes tonnes of pig iron
(2) In tonnes of pure vanadium
* The 2020 data has been adjusted
In Q4 2021, external sales of steel products rose by 7.8% QoQ. In FY2021, they
dropped by 4.9% YoY. Sales of semi-finished products increased by 1.4% QoQ
amid the push to utilise stockpiled material before the year-end. In FY2021,
semi-finished product sales volumes fell by 8.2% YoY because of a reduction in
the output of semi-finished products following the introduction of the export
duty in 2021.
Sales of finished products rose by 14.7% QoQ. This was driven by higher
construction product sales amid healthy market demand in Q4 2021, as well as
by greater railway product sales following the completion of capital repairs
at EVRAZ ZSMK's rail and beam shop and EVRAZ NTMK's wheel shop in Q3 2021. In
FY2021, sales volumes of finished products edged down by 1.0% YoY because of
reduced demand from Russian Railways for EVRAZ ZSMK's rails.
External sales of iron ore products jumped by 58.1% QoQ following the start of
sales to China through the port of Ust-Luga. In FY2021, iron ore sales volumes
dropped by 17.4% YoY amid a shortage of concentrate in Q1 2021, an increase
in EVRAZ NTMK's demand for pig iron in 2021.
Sales of vanadium products surged by 33.0% QoQ, primarily due to higher demand
in Europe and North America after a traditionally low market activity in Q3
during the summer months. In FY2021, sales of final vanadium products
increased by 5.7% YoY due to overall stronger demand in 2021, caused by the
recovery of key steel consuming sectors globally.
Slab and iron ore products cash cost
Cash cost, US$/t Q4 Q3 Q4 2021 / Q3 2021, change 12m 12m 12m 2021 / 12m 2020, change
2021 2021 2021 2020
Slab cash cost (vertically integrated) 358 309 15.9% 308 213 44.6%
Iron ore products (Fe 62%) 47 40 17.5% 42 36 16.7%
Average selling prices
US$/tonne (ex-works) Q4 Q3 12m 12m
2021 2021 2021 2020
Coke 488 380 357 155
Steel products 726 761 696 442
Semi-finished products(1) 605 691 598 333
Construction products 834 827 782 479
Railway products 917 900 877 818
Other steel products 760 862 756 498
Pellets 81 154 129 60
Metal Bulletin Ferro-Vanadium basis 78% min, free DDP, consumer plant, 1st 32.32 38.22 34.35 25.02
grade Western Europe(2)
Ryan's Notes N.A. FeV 80% min, US ex-warehouse, duty paid(2) 33.39 37.66 34.77 23.85
(1) Includes prices for pig iron
(2) US$/kgV
In Q1 2022, pig iron production volumes are expected to increase QoQ because
of a low-base effect as EVRAZ ZSMK's pig iron output recovers.
Iron ore product output is expected to decrease slightly QoQ in Q1 2022,
because there are fewer working days in February.
STEEL, NORTH AMERICA SEGMENT
Production and sales volumes
Product, '000 tonnes Q4 Q3 2021 Q4 2021/ 12m 2021 12m 12m 2021/ 12m 2020, change
2021 Q3 2021, change 2020
Crude steel 480 491 -2.2% 1,879 1,580 18.9%
EVRAZ US mills 221 223 -1.1% 831 838 -0.8%
EVRAZ Canadian mills(1) 260 268 -3.2% 1,048 742 41.2%
Total steel products production, net of re-rolled volume(1) 440 430 2.3% 1,655 1,669 -0.8%
EVRAZ US mills(1) 301 278 8.4% 1,128 1,104 2.2%
EVRAZ Canadian mills(1) 139 153 -8.8% 527 565 -6.7%
Sales of steel products(1) 430 420 2.3% 1,646 1,686 -2.4%
Semi-finished products 0 0 n/a 0 144 -100.0%
Construction products 57 63 -9.5% 268 262 2.3%
Railway products 103 90 14.4% 383 404 -5.2%
Flat-rolled products 142 172 -17.2% 625 382 63.6%
Tubular products(1) 128 96 33.7% 370 493 -24.9%
(1) Forecast 2020 updated in accordance with the actual data
In Q4 2021, crude steel production was 2.2% lower QoQ, mainly because of a
maintenance outages in November. In FY2021, crude steel production climbed by
18.9% YoY, primarily because of high market demand for flat-rolled products.
Semi-finished product sales fell by 100.0% YoY following the fulfilment of a
contract with the key customer in 2020.
Sales of construction products dropped by 9.5% QoQ as a result of logistical
challenges at the end of the year amid the new wave of the pandemic in the US.
In FY2021, construction product sales rose by 2.3% YoY amid strong market
demand and because product price growth outpaced that of raw materials.
Sales of railway products increased by 14.4% QoQ, mostly as a result of a
low-base effect following a non-repeat outage in Q3. In FY2021, sales of
railway products decreased by 5.2% YoY, primarily due to the unplanned
steelmaking downtime earlier in the year and softer customer demand H1 2021.
In Q4 2021, flat-rolled product sales fell by 17.2% QoQ. This was mainly due
to seasonal decline as the customers focused on managing their inventory at
the end of the year. In FY2021, sales of flat-rolled products were up by 63.6%
YoY due to a spike in demand in 2021 following quick market recovery from the
COVID-19 pandemic and limited available supply.
In Q4 2021, tubular product sales surged by 33.7% QoQ, mainly due to
continuing improvement of the OCTG market demand. In FY2021, tubular products
sales were 24.9% lower YoY mainly due to completion of 2020 customer orders
earlier in the year.
Average selling prices
US$/tonne (ex-works) Q4 Q3 12m 12m
2021 2021 2021 2020
Construction products(1) 1,146 1,015 961 665
Flat-rolled products(1) 1,782 1,470 1,319 755
Tubular products(2) 1,724 1,619 1,610 1,334
(1) Forecast 2020 updated in accordance with the actual data
(2) Forecast 2020 and Q3 2021 updated in accordance with the actual data
In Q1 2022, steel production and sales volumes are forecasted to be relatively
flat QoQ as market sentiments are expected to remain stable in the product
segments served by EVRAZ.
COAL SEGMENT
Production volumes
Product, '000 tonnes Q4 Q3 Q4 2021/ Q3 2021, change 12m 2021 12m 12m 2021/ 12m 2020, change
2020
2021 2021
Raw coking coal (mined) 6,699 4,983 34.4% 23,272 20,653 12.7%
Coking coal concentrate (production) 3,819 3,380 13.0% 14,448 13,598 6.3%
In Q4 2021, overall raw coking coal output surged by 34.4% QoQ, mainly because
of the completion of longwall moves at the Raspadskaya, Osinnikovskaya and
Yerunakovskaya-VIII mines. In FY2021, production of raw coking coal climbed by
12.7% YoY. The main driver of the increase was the resumption of work at
Razrez Raspadsky, which had halted operations from May to September 2020 amid
poor market conditions. Another contributor was the transfer of operations at
Esaulskaya to the new longwall no. 29.
Output of coking coal concentrate rose by 13.0% QoQ and 6.3% YoY following an
increase in coal mining volumes.
Sales volumes
Product, '000 tonnes Q4 Q3 Q4 2021/ Q3 2021, change 12m 12m 12m 2021/ 12m 2020, change
2021 2021 2021 2020
External sales 2,561 2,462 4.0% 10,608 12,336 -14.0%
Raw coking coal 145 104 40.0% 686 2,271 -69.8%
Coking coal concentrate 2,416 2,358 2.5% 9,922 10,065 -1.4%
Intersegment sales 1,443 1,533 -5.9% 6,197 6,990 -11.3%
Raw coking coal 507 522 -3.0% 2,172 2,323 -6.5%
Coking coal concentrate 936 1,010 -7.4% 4,025 4,667 -13.8%
In Q4 2021, external sales volumes of coking coal products climbed by 4.0%
QoQ. In FY2021, they fell by 14.0% YoY. Raw coking coal sales volumes jumped
by 40.0% QoQ in connection with raw coking coal output growth. In
FY2021, external sales volumes of coking coal products decreased by 69.8%
YoY following the change in the product mix in favour of coking coal
concentrate to meet customer needs.
Coking coal concentrate sales volumes rose by 2.5% QoQ amid an increase in
coal mining volumes and favourable market conditions.
Coking coal concentrate cash cost
Cash cost, US$/t Q4 Q3 Q4 2021 / Q3 2021, change 12m 12m 12m 2021 / 12m 2020, change
2021 2021 2021 2020
Coking coal concentrate 42 48 -12.5% 41 31 32.3%
Note: Starting from 2021, the methodology has been changed.
Average selling prices
Q4 Q3 12m 12m
US$/tonne (ex-works) 2021 2021 2021 2020
Raw coking coal 164 97 89 34
Coking coal concentrate 204 131 122 62
In Q1 2022, raw coal production is expected to decrease QoQ amid longwall
movements at the Raspadskaya, Uskovskaya and Alardinskaya mines, as well as
unfavourable mining and geological conditions at the Esaulskaya mine.
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 further information:
Media Relations:
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London: +44 207 290 1096
media@evraz.com (mailto:media@evraz.com)
Investor Relations:
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London: +44 207 290 1095
ir@evraz.com (mailto:ir@evraz.com)
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