REG - Evraz Plc - Q2 2014 production results <Origin Href="QuoteRef">EVRE.L</Origin>
06/09/2014 16:39
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RNS Number : 4437M
Evraz Plc
16 July 2014
EVRAZ Q2 2014 PRODUCTION REPORT
16 July 2014 - EVRAZ plc (LSE: EVR) today releases its operational results for
the second quarter of 2014.
Q2 2014 vs Q1 2014 HIGHLIGHTS:
· Consolidated crude steel production increased slightly in Q2 2014 vs. Q1
2014
· Consolidated production of steel products, net of re-rolled volumes
increased by 6% as a result of growth both in production of construction
products and rails in Russia on the back of strong domestic demand
· Share of finished steel products within the consolidated volumes
decreased to 70% in Q2 2014 vs. 74% in Q1 2014, whilst the share of
semi-finished goods increased to 30% from 26%, due to lower intercompany
supplies of slabs for re-rolling into finished goods at EVRAZ non-Russian
assets
· Output of iron ore products in Russia increased by 3% vs. Q1 2014
· Consolidated raw coking coal output and production of coking coal
concentrate increased by 7% and 3% respectively due to strong Raspadskaya's
production
· Average prices for most of EVRAZ's steel products in Russia recovered on
the back of improved demand in the domestic market
· Average prices for flat-rolled and tubular products in North America
improved supported by growing demand from the oil and gas sector
· Average prices for Russian-produced iron ore products and coking coal
concentrate softened in line with global benchmark prices
STEEL SEGMENT
Product, '000 tonnes Q2 2014 Q1 2014 Q2 2014/ Q1 2014, change Q2 2013 Q2 2014/ Q2 2013, change
Coke (saleable) 273 255 7.0% 398 -31.5%
Pig iron 3,131 2,991 4.7% 3,106 0.8%
Pig iron (saleable) 85 77 10.9% 45 91.0%
Crude steel 3,918 3,875 1.1% 4,089 -4.2%
Steel products, gross* 3,810 3,781 0.8% 4,093 -6.9%
Steel products, net of re-rolled volumes 3,556 3,366 5.7% 3,695 -3.8%
Semi-finished products ** 1,056 867 21.9% 843 25.3%
Finished products 2,500 2,499 0.0% 2,853 -12.4%
Construction products 1,335 1,217 9.7% 1,335 0.1%
Railway products 538 508 5.8% 497 8.2%
Flat-rolled products 226 344 -34.5% 588 -61.7%
Tubular products 250 271 -7.6% 200 25.5%
Other steel products 151 159 -5.0% 233 -35.2%
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
Coke (saleable) 87 111 -21.1% 185 -53.0%
Pig iron 2,691 2,591 3.8% 2,694 -0.1%
Pig iron (saleable) 75 74 0.6% 39 89.7%
Crude steel 3,020 2,852 5.9% 3,003 0.5%
Steel products, gross 2,835 2,649 7.0% 2,797 1.4%
Steel products, net of re-rolled volumes 2,728 2,582 5.6% 2,744 -0.6%
Semi-finished products 1,094 1,086 0.8% 1,106 -1.1%
Finished products 1,634 1,497 9.2% 1,638 -0.2%
Construction products 1,109 993 11.7% 1,067 3.9%
Railway products 395 376 5.1% 379 4.3%
Other steel products 129 127 1.6% 192 -32.5%
Other steel products
129
127
1.6%
192
-32.5%
In Q2 2014, pig iron and crude steel output increased by 4% and 6%
respectively compared to Q1 2014 due to lower downtime for maintenance works
at blast furnaces and converters at Russian steel mills. The year-on-year
output of steel was up marginally.
As a result of larger crude steel volumes in Q2 2014, production of steel
products also grew compared to Q1 2014: gross production by 7% and production
net of re-rolled products by 6%.
Production of finished products rose by 9% due to seasonally strong demand for
construction steel products (+12% vs. Q1 2014) and higher production of rails
at the EVRAZ ZSMK rail mill.
In Q3 2014, crude steel production is expected to increase compared to Q2 2014
as no major maintenance works are planned at the steel mills. Q3 is normally a
peak season for construction in Russia, and the demand for construction
products is expected to remain high.
Selling prices for all product groups were higher quarter-on-quarter supported
by stronger markets for EVRAZ goods.
Average selling prices
Coke 133 128 172
Pig iron 307 305 290
Steel products
Semi-finished products 427 406 410
Construction products 616 569 652
Railway products 807 775 839
Other steel products 612 594 637
Other steel products
612
594
637
NORTH AMERICA
Crude steel 481 491 -1.9% 561 -14.3%
Steel products, net of re-rolled volumes 619 639 -3.0% 688 -10.0%
Construction products 79 85 -6.9% 104 -23.7%
Railway products 142 132 7.9% 118 20.6%
Flat-rolled products 147 151 -2.1% 267 -44.7%
Tubular products 250 271 -7.6% 200 25.5%
Tubular products
250
271
-7.6%
200
25.5%
In Q2 2014, output of crude steel and total steel products decreased by 2% and
3% respectively compared to Q1 2014 due to the scheduled biannual Regina steel
shop maintenance.
The year-on-year decreases in quarterly steel production, total output of
steel products and in particular of flat-rolled products were driven mainly by
the suspension of the EVRAZ Claymont operations from Q4 2013.
In Q2 2014, production of construction products (rods & bars) at EVRAZ Pueblo
declined by 7% vs. Q1 2014 and by 24% vs. Q2 2013 as available crude steel
volumes were primarily used in production of rails.
Production of rails increased by 8% vs. Q1 2014 and by 21% vs. Q2 2013 due to
improved productivity at the Pueblo rail mill following the completion of the
rail mill expansion project in Q4 2013.
Production of tubular goods decreased by 8% vs. Q1 2014 due to planned outages
at tubular mills as well as certain changes in produced pipe size mix.
With the exception of rails, prices in North America increased as a result of
improving market sentiment as well as a larger share of higher value-added
flat-rolled marginal products (specialty and heat-treated plates). Rail prices
declined following scrap price declining and a slightly lower share of premium
rails.
In Q3 2014 crude steel output is expected to outperform the Q2 2014 results as
market demand remains strong, and no major outages are planned for the second
half of the year. Increased steel supply and a strong order book is expected
to provide growth to tubular production in Q3 2014. A slight decrease in rail
volumes is expected in Q3 2014 due to annual maintenance works.
Average selling prices
Construction products 812 795 772
Railway products 956 983 949
Flat-rolled products 980 919 873
Tubular products 1,329 1,290 1,308
Tubular products
1,329
1,290
1,308
UKRAINE
Coke (saleable) 186 145 28.4% 213 -12.8%
Pig iron 249 248 0.5% 254 -1.7%
Pig iron (saleable) 11 3 287.2% 5 100.2%
Crude steel 247 253 -2.3% 265 -6.9%
Steel products 219 214 2.1% 214 2.4%
Semi-finished products 103 121 -14.6% 78 31.4%
Finished products 116 94 23.5% 135 -14.0%
Construction products 97 74 32.2% 109 -10.9%
Other steel products 18 20 -8.3% 26 -29.4%
Other steel products
18
20
-8.3%
26
-29.4%
In Q2 2014, output of crude steel by EVRAZ Ukrainian steel mill, DMZ,
decreased by 2% compared to Q1 2014 and by 7% compared to Q2 2013 as a result
of maintenance works as well as increased pig iron to steel conversion ratio.
Production of steel products increased by 2% as lower crude steel production
was offset by the use of semi-finished steel from stock. Production of
finished steel products was 24% higher than in the previous quarter, mostly
driven by EVRAZ's higher shipments of construction steel products to Russia
and other destinations, as conversion costs improved due to the weaker
Ukrainian hryvnia.
Selling prices for finished construction products declined in Q2 2014 due to
lower share of domestic sales. Billet prices were stable compared to Q1 2014.
Coke prices followed the weakening in coking coals prices during the period.
Average selling prices
Coke (saleable) 159 179 226
Pig iron 327 351 383
Steel products
Semi-finished products 452 449 476
Construction products 573 583 600
Other steel products 819 894 937
Other steel products
819
894
937
EUROPE
Crude steel 0 131 n/a 100 n/a
Steel products, gross 0 129 n/a 259 n/a
Steel products, net of re-rolled volumes 0 129 n/a 257 n/a
Construction products 0 22 n/a 17 n/a
Flat-rolled products 0 103 n/a 234 n/a
Other steel products 0 5 n/a 6 n/a
Other steel products
0
5
n/a
6
n/a
On 3 April 2014, EVRAZ sold EVRAZ Vitkovice Steel for a total consideration of
$287 million.
Operations at EVRAZ Palini e Bertoli in Italy have remained suspended since
August 2013.
SOUTH AFRICA
Pig iron 191 152 25.7% 158 20.8%
Crude steel 170 150 13.3% 159 6.5%
Steel products 137 149 -8.3% 135 1.6%
Semi-finished products 6 9 -34.3% 0 n/a
Finished products 131 141 -6.7% 135 -2.5%
Construction products 50 43 14.8% 38 31.7%
Flat-rolled products 78 90 -13.5% 87 -10.6%
Other steel products 3 7 -53.2% 9 -65.1%
Other steel products
3
7
-53.2%
9
-65.1%
In Q2 2014, the output of pig iron and crude steel increased considerably
compared to both Q1 2014 and Q2 2013 following improved stability throughout
the iron making process, which resulted from operational improvements and
following major repair of a furnace.
Production of steel products, in particular of flat-rolled products, decreased
8% vs. Q1 2014, as a result of operational challenges.
Production of steel products in Q3 2014 may be negatively affected by an
industrial action by South African metalworkers which has been going on since
1 July.
Prices of semi-finished goods in Q2 2014 were in line with global steel
prices. Prices for most finished products improved as a result of the weak
Rand.
Average selling prices
Semi-finished products 431 440 590
Construction products 680 642 767
Flat-rolled products 653 606 721
Other steel products 513 574 733
721
Other steel products
513
574
733
MINING SEGMENT
IRON ORE
Product, '000 tonnes Q2 2014 Q1 2014 Q2 2014/ Q1 2014, change Q2 2013* Q2 2014/ Q2 2013, change
Sinter (Russia) 2,929 2,788 5.1% 2,970 -1.4%
Pellets (Russia) 1,575 1,572 0.2% 1,575 0.0%
Lumpy ore (Ukraine) 714 736 -3.0% 770 -7.2%
Fines ore (South Africa) 195 139 40.2% 188 3.7%
Lumpy ore (South Africa) 407 293 38.7% 379 7.3%
*Figures for Q2 2013 differ from those presented in the previous quarterly
production reports and include sinter produced at EVRAZ ZSMK both from own and
3rd party primary concentrate.
In Q2 2014 production of iron ore products - sinter and pellets - in Russia
grew by 3% vs. Q1 2014 primarily as a result of increased production at EVRAZ
KGOK and more sinter produced at EVRAZ ZSMK beneficiation plant from third
party ores. The share of own iron ore concentrate used in production of sinter
and pellets in Russia decreased to 64% in Q2 2014 compared to 68% in Q1 2014
due to scheduled stoppage for upgrade of Evrazruda's Sheregesh iron ore mine
in March-June 2014. The Sheregesh mine is expected to resume mining operations
in the second half of July. The major expansion project carried out at
Sheregesh is aimed at increasing the mine's capacity by 1.5 million tonnes of
iron ore concentrate by 2017.
Despite the disposals of EVRAZ VGOK and three mines of Evrazruda in H2 2013,
production of iron ore products in Q2 2014 vs. Q2 2013 was flat as the loss of
own concentrate volumes for production of sinter and pellets was compensated
with concentrate purchased in the market.
Production of lumpy iron ore at EVRAZ Sukha Balka in Ukraine declined by 3%
compared to Q1 2014, mainly as a result of fewer working days and lower Fe
content of the run-of-mine ore in the Yubileynaya mine. The ore quality and
the bypassing to lower level of mining are two main factors for a 7%
year-on-year decrease in production.
Production of iron ore at the Mapochs mine in South Africa in Q2 2014 improved
compared to Q1 2014 following completion of repairs at the crushing facilities
of the mine in January-February 2014.
Average selling prices
Lumpy ore (Ukraine) 56 66 68
Sinter (Russia) 69 74 87
Pellets (Russia) 82 88 95
Fines ore (South Africa) 15 13 25
Fines ore (South Africa)
15
13
25
COAL
Product, '000 tonnes Q2 2014 Q1 2014 Q2 2014/ Q1 2014, change Q2 2013 Q2 2014/ Q2 2013, change
Raw coking coal (mined) 5,036 4,724 6.6% 4,332 16.2%
Yuzhkuzbassugol 2,467 2,867 -14.0 % 2,632 -6.3%
Raspadskaya 2,569 1,857 38.4% 1,700 51.1%
Coking coal concentrate (production) 3,384 3,285 3.0% 3,470 -2.5%
Produced at Yuzhkuzbassugol coal washing plants 1,374 1,580 -13.1% 1,460 -5.9%
Produced at EVRAZ ZSMK coal washing plant 500 588 -14.9% 658 -24.0%
Produced at Raspadskaya coal washing plant 1,510 1,117 35.2% 1,352 11.7%
Raw steam coal (mined) 290 467 -37.8% 476 -39.0%
Steam coal concentrate (production) 15 13 16.1% 53 -72.2%
Coking coal
In Q2 2014, production of coking coal by EVRAZ increased by 7% vs. Q1 2014 and
by 16% vs. Q2 2013 driven by growth in the Raspadskaya's production. Share of
own raw coal used in concentrate production increased to 96% in Q2 2014
compared to 94% in Q1 2014 and 92% in Q2 2013.
Production of raw coking coal by Yuzhkuzbassugol decreased by 14% compared to
Q1 2014 due to repositioning of a longwall at the Uskovskaya mine and
temporary suspension of mining at the Yesaulskaya mine because of the high
water level in the mine. Lower production of raw coal resulted in a decline of
production of coking coal concentrate at Yuzhuzbassugol's coal washing plants
and EVRAZ ZSMK coal washing plant.
The 6% year-on-year decrease in production of raw coal and of coking coal
concentrate by Yuzhkuzbassugol is attributable to a shutdown of the
Abashevskaya mine in Q1 2014, as well as lower concentrate yield as a result
of replacement of low ash coal from the Uskovskaya mine, which was closed for
repositioning of a longwall in Q2 2014 with higher ash coal from the other
mines.
Production of raw coking coal and coking coal concentrate at the Raspadskaya
Coal Company increased by 38% and 35% respectively compared to Q1 2014,
primarily driven by increased production at the Raspadskaya mine, the launch
of a longwall at the MUK-96 mine and a shift to planned production volumes at
the Razrez Raspadsky open-pit.
Production of raw coal and coking coal concentrate was 51% and 12% higher than
in Q2 2013, mainly due to a continuing successful ramp-up of the Raspadskaya
mine production.
The blended average selling price of coking coal concentrate decreased mostly
due to lower export prices.
Average selling prices
Raw coking coal 46 51 60
Raw steam coal 28 30 29
Coking coal concentrate 73 81 90
Steam coal concentrate 23 49
49
VANADIUM SEGMENT
Product, tonnes of V* Q2 2014 Q1 2014 Q2 2014/ Q1 2014, change Q2 2013 Q2 2014/ Q2 2013, change
Vanadium in slag (gross production) 5,415 4,989 8.5% 5,473 -1.1%
Russia 3,519 3,554 -1.0% 3,562 -1.2%
South Africa 1,896 1,436 32.1% 1,911 -0.8%
Vanadium in final products (saleable) n/a n/a
Ferrovanadium 3,590 3,866 -7.1% 3,479 3.2%
Produced at own facilities 1,956 2,070 -5.5% 1,900 3.0%
Processed at 3rd parties' facilities 1,634 1,797 -9.0% 1,579 3.5%
Nitrovan 734 611 20.1% 708 3.6%
Oxides, vanadium aluminium and chemicals 587 564 4.2% 433 35.5%
* Calculated in pure vanadium equivalent.
Vanadium slag production increased by 9% compared to Q1 2014 due to higher
output of pig iron and improved Vanadium recovery at EVRAZ Highveld in South
Africa following completion of furnace's repair. Vanadium slag production in
Russia was slightly down affected by maintenance works at EVRAZ NTMK's
converter in May 2014.
Production of Ferrovanadium in Q2 2014 decreased by 7% compared to Q1 2014.
Production at own facilities was about 6% less due to scheduled maintenance
and certain production challenges at EVRAZ Vanady Tula. Ferrovanadium
processed at third party facilities was 9% less than in Q1 2014 as a result of
reduced slag supply from EVRAZ Highveld.
Production of Ferrovanadium in Q2 2014 vs. Q2 2013 grew by 3% due to output
growth both at own and third party facilities driven by increase of FeV
production at EVRAZ Vanady Tula to support stronger offtake in the Russian
market and the re-start of oxides conversion at BMC (US) (there was no
conversion agreement with BMC in place for Q2 2013).
In Q2 2014, production of Nitrovan by Vametco in South Africa increased by 20%
compared to the previous quarter as in Q1 2014 the plant's performance was
impacted by several equipment failures and a 5-day suspension of operations
initiated by the South African Department of Mineral Resources (DMR).
Production of oxides, vanadium aluminum and chemicals at EVRAZ Stratcor
facility at Arkansas (US) was up 4% compared to Q1 2014 due to improved oxide
extraction yields. The 36% increase vs. Q2 2013 is attributable to fully
resolved issues with feedstock availability in 2014.
Average prices for Vanadium products kept on growing 2014 fuelled by pipeline
projects in the CIS, Europe, and healthy steel demand in North America.
Average selling prices
Ferrovanadium 25,824 24,951 28,094
Nitrovan 28,171 27,464 29,781
Oxides, vanadium aluminium and chemicals 33,602 32,161 35,646
Oxides, vanadium aluminium and chemicals
33,602
32,161
35,646
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, for Europe - slabs and
cut shapes; for South Africa - rails.
###
For further information:
Media Relations:
Vsevolod Sementsov
VP, Corporate Communications
London: +44 207 832 8998 Moscow: +7 495 937 6871
media@evraz.com
Investor Relations:
London: +44 207 832 8990 Moscow: +7 495 232 1370
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 16.1 million 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 31 December 2013 were US$14,411 million, and
consolidated EBITDA amounted to US$1,821 million.
This information is provided by RNS
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