REG - Evraz Plc - Q3 2017 production report <Origin Href="QuoteRef">EVRE.L</Origin>
RNS Number : 7457TEvraz Plc17 October 2017EVRAZ Q3 2017 PRODUCTION REPORT
17 October 2017 - EVRAZ plc (LSE: EVR; "EVRAZ" or the "Group") today released its operational results for the third quarter of 2017.
Q32017 vs Q22017 OPERATIONAL HIGHLIGHTS:
Consolidated crude steel output increased by 5.9% quarter-on-quarter to 3.5 million tonnes in Q32017, primarily following the completion of capital repairs at EVRAZ DMZ' oxygen-converter plant and the ramp-up of EVRAZ Reginaafterthe planned outage in Q2 2017.
Production of steel products, net of re-rolled volumes, increased by 4.4% quarter-on-quarter to 3.1million tonnes as a result of increased output of semi-finished products due to the completion of planned capital repairs at EVRAZ ZSMK and EVRAZ DMZ.
Production of construction products increased by 6.0% quarter-on-quarter following a seasonal upturn in demand.
Production of railway products was down 9.8% due toplanned capital repairs at Russian facilities and planned downtime for maintenance in North America.
Output of flat products decreased by 9.3% quarter-on-quarter, mostly following a planned maintenance outage in North America.
In North America, output of tubular products, including large-diameter pipes (LDP), oil country tubular goods (OCTG) and small-diameter line pipes, increased as a result of higher steel availability after a planned outage at EVRAZ Regina and strong demand recovery in OCTG.
Consolidated raw coking coal output in Q3 2017 was in line with Q2 2017.
STEEL
Product, '000 tonnes
Q3
2017Q2 2017
Q32017/ Q22017, change
9m
2017
9m
2016
9m2017/ 9m2016, change
Coke (saleable)
232
171
35.6%
521
737
-29.3%
Pig iron
2,827
2,793
1.2%
8,515
8,455
0.7%
Pig iron (saleable)
76
195
-61.1%
315
315
0.2%
Crude steel
3,506
3,312
5.9%
10,497
10,130
3.6%
Steel products, gross*
3,348
3,206
4.4%
10,077
9,739
3.5%
Steel products, net of re-rolled volumes
3,121
2,988
4.4%
9,364
9,160
2.2%
Semi-finished products**
1,196
1,084
10.3%
3,726
3,741
-0.4%
Finished products
1,925
1,904
1.1%
5,638
5,419
4.0%
Construction products
1,027
969
6.0%
2,873
3,071
-6.4%
Railway products
370
411
-9.8%
1,199
1,095
9.5%
Flat-rolled products***
189
208
-9.3%
587
418
40.4%
Tubular products
189
159
18.5%
514
406
26.6%
Other steel products
150
157
-4.8%
464
428
8.4%
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 mills. However, such volumes are eliminated as inter-company sales for the purposes of EVRAZ' 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 (60 thousand tonnes in Q3 2017 and 175 thousand tonnes in 9m 2017).
RUSSIA and KAZAKHSTAN
Product, '000 tonnes
Q3 2017
Q2 2017
Q32017/ Q2 2017, change
9m
20179m
20169m2017/ 9m2016, change
Coke (saleable)
113
75
50.8%
257
281
-8.5%
Pig iron
2,547
2,537
0.4%
7,746
7,638
1.4%
Pig iron (saleable)
34
90
-61.5%
161
265
-39.3%
Crude steel
2,783
2,762
0.7%
8,525
8,234
3.5%
Steel products, gross
2,605
2,558
1.8%
7,970
7,781
2.4%
Steel products, net of re-rolled volumes
2,551
2,493
2.3%
7,812
7,608
2.7%
Semi-finished products
1,234
1,178
4.8%
3,949
3,716
6.3%
Finished products
1,316
1,315
0.1%
3,864
3,891
-0.7%
Construction products
897
858
4.5%
2,514
2,650
-5.2%
Railway products
285
311
-8.5%
925
845
9.5%
Other steel products
135
145
-7.3%
425
396
7.2%
Saleable coke volumes increased by 50.8% quarter-on-quarter due to better market conditions.
In Q3 2017, production of crude steel and steel products (net of re-rolled volumes) increased slightly quarter-on-quarter (up 0.7% and 2.3%, respectively) as output in Q2 2017 was impacted by capital repairs at EVRAZ ZSMK's oxygen steelmaking converter no. 5.
The increase in steel product volumes was primarily caused by higher output of semi-finished products (up 4.8% quarter-on-quarter) and the growth of construction products output (up 4.5% quarter-on-quarter), reflecting improved market conditions.
Production of railway products was down by 8.5% quarter-on-quarter amid capital repairs of the rail mill at EVRAZ ZSMK in August.
Average selling prices
US$/tonne (ex works)
Q3
2017Q2
20179m
20179m
2016Coke
173
172
182
85
Pig iron
282
251
260
160
Steel products
Semi-finished products
364
352
353
240
Construction products
543
499
524
373
Railway products
648
646
637
467
Other steel products
506
501
503
368
Overall, steel selling prices in Q3 2017 followed positive trends according to global benchmarks.
In Q4 2017, we expect output of pig iron and crude steel to increase slightly quarter-on-quarter as no significant repairs are planned.
NORTH AMERICA
Product, '000 tonnes
Q3 2017*
Q2 2017
Q32017/ Q22017, change
9m 2017
9m
2016
9m2017/ 9m2016, change
Crude steel
451
402
12.1%
1,311
1,072
22.3%
Steel products, net of re-rolled volumes
460
462
-0.5%
1,385
1,240
11.6%
Construction products
57
60
-5.7%
184
194
-5.1%
Railway products
85
99
-14.0%
274
250
9.5%
Flat-rolled products
129
143
-9.9%
412
390
5.6%
Tubular products
189
159
18.5%
514
406
26.6%
* Q32017 production volumes are preliminary.
Crude steel output increased by 12.1% quarter-on-quarter as EVRAZ Regina ramped up production following the planned outage during Q2 2017.
Construction products output declined by 5.7% quarter-on-quarter as crude steel was allocated to seamless pipe.
Railway products output fell by 14.0% quarter-on-quarter due to planned maintenance downtime at Pueblo rail mill.
Production of flat-rolled products decreased 9.9% quarter-on-quarter due to planned maintenance downtime at Portland rolling mill during Q3 2017.
Production of tubular products rose by 18.5% quarter-on-quarter, thanks to higher steel availability at EVRAZ Regina, as well as to stronger demand for oil country tubular goods (OCTG), which have staged a strong recovery during 2017. Meanwhile, political uncertainty continued to impact line pipe demand.
Average selling prices
US$/tonne (ex works)
Q3
2017Q2
20179m
20179m
2016Construction products
649
634
624
513
Flat-rolled products
817
829
794
644
Tubular products
1,204
1,018
1,074
971
Prices for most steel products increased during Q3 2017, reflecting prevailing trends in scrap and other inputs, reduced pressure from imports, and improving demand fundamentals. Meanwhile, prices for flat products were down as a result of a less favourable customer mix.
During the fourth quarter, we expect crude steel volumes to pick up slightly, tubular and railway products volumes to grow by 5-10%, construction products to remain essentially unchanged, and flat rolled products to fall by 5-10%.
UKRAINE
Product, '000 tonnes
Q3 2017
Q2 2017
Q32017/ Q22017, change
9m 2017
9m 2016
9m2017/ 9m2016, change
Coke (saleable)
119
96
23.8%
264
456
-42.1%
Pig iron
280
257
9.1%
768
817
-6.0%
Pig iron (saleable)
42
106
-60.8%
154
49
212.7%
Crude steel
273
147
85.6%
661
824
-19.8%
Steel products
223
121
85.0%
547
689
-20.6%
Semi-finished products
135
58
131.3%
332
430
-22.8%
Finished products
89
62
42.2%
215
259
-17.0%
Construction products
73
50
46.5%
175
226
-22.6%
Other steel products
15
12
24.8%
39
32
22.9%
In Q3 2017, saleable coke volumes surged by 23.8% quarter-on-quarter due to increased orders from export and domestic customers.
Pig iron production went up 9.1% amid higher blast furnace productivity. Meanwhile, saleable pig iron volumes decreased reflecting the switch to billets production after completing capital repairs at EVRAZ DMZ, as well as upward price dynamics on semi-finished products.
Production of crude steel and steel products jumped by 85.6% and 85.0% quarter-on-quarter, respectively, after the completion of repairs at EVRAZ DMZ' rolling mill no. 1 and oxygen-converter plant and amid an increase in pig iron production in Q3 2017.
Average selling prices
US$/tonne (ex works)
Q3
2017Q2
20179m
20179m
2016Coke (saleable)
217
230
232
136
Pig iron
315
322
320
202
Steel products
Semi-finished products
396
353
362
266
Construction products
555
474
505
364
Other steel products
611
667
626
499
Overall, prices for steel products were higher than in Q2 2017, in line with the upward market trend.
In Q4 2017, we expect output of both crude steel and steel products to increase quarter-on-quarter, mainly due to lower sales volumes of pig iron.
IRON ORE
Product, '000 tonnes
Q3
2017Q2
2017Q32017/ Q22017, change
9m
20179m
20169m2017/ 9m2016, change
Iron ore products*
4,195
4,535
-7.5%
13,714
14,921
-8.1%
* Includes production of sinter, pellets and other iron ore products.
Note. 9m 2016-H1 2017 adjusted for volumes of saleable concentrate to third parties.
In Q3 2017, production of iron ore decreased by 7.5% quarter-on-quarter, mainly due to the disposal of EVRAZ Sukha Balka in June. This was accompanied by capital repairs of EVRAZ KGOK's sintering machine no. 2 in September. The reduced output of iron products was partially offset by increased production of pellets at EVRAZ KGOK after indurating machine no. 2 resumed work following its accidental outage in Q2 2017.
In Q4 2017, we expect sinter output to grow by roughly 9%, while production of pellets should remain flat quarter-on-quarter.
Average selling prices
US$/tonne (ex works)
Q3
2017
Q2
2017
9m
2017
9m
2016
Pellets (Russia)
52
66
65
36
Prices for pellets moved in line with global benchmarkswith a one-month lag.
COAL
Product, '000 tonnes
Q3 2017
Q2 2017
Q32017/ Q22017, change
9m
20179m
20169m2017/ 9m2016, change
Raw coking coal (mined)
6,062
6,048
0.2%
17,713
16,450
7.7%
Yuzhkuzbassugol
3,236
2,761
17.2%
8,499
8,739
-2.7%
Raspadskaya
2,602
3,071
-15.3%
8,559
7,314
17.0%
Mezhegeyugol
224
216
3.9%
655
398
64.7%
Coking coal concentrate (production)
3,814
3,612
5.6%
11,031
10,863
1.5%
Yuzhkuzbassugol's coal washing plants
1,612
1,491
8.1%
4,594
4,912
-6.5%
Raspadskaya's coal washing plant
1,652
1,615
2.3%
4,900
4,621
6.0%
EVRAZ ZSMK's coal washing plant
550
506
8.8%
1,537
1,330
15.6%
Raw coking coal output was slightly higher quarter-on-quarter after the Uskovskaya mine ramped up production following the longwall repositioning in Q2 2017, as well as due to higher raw coking coal output at the Alardinskaya and Erunakovskaya-8 mines in Q3 2017. This was almost completely offset by the scheduled longwall repositioning at the Raspadskaya mine in Q3 2017.
Output of coking coal concentrate rose by 5.6% quarter-on-quarter after logistical constraints on coal products shipments were mitigated andamid higher production at EVRAZZSMK's coal washing plant, which was mainly the result of an improvement in the coal concentrate yield.
In Q4 2017, we expect raw coal production to drop due to scheduled longwall repositioning at the Alardinskaya and Uskovskaya mines. This should be partially offset by higher output of raw coking coal at the Raspadskaya and Raspadskaya-Koksovaya mines.
Average selling prices
US$/tonne (ex works)
Q3
2017Q2
20179m
20179m
2016Raw coking coal
50
52
63
31
Coking coal concentrate
98
103
118
58
In Q3 2017, coal prices were down in line with global benchmarks.
VANADIUM
Product, tonnes of V*
Q3 2017
Q2 2017
Q32017/ Q22017, change
9m 2017
9m 2016
9m2017/ 9m2016, change
Vanadium slag, gross production (Russia)
4,916
4,795
2.5%
14,264
12,536
13.8%
Vanadium in final products (saleable)
2,745
2,641
4.0%
8,677
9,847
-11.9%
*Calculated in pure vanadium equivalent.
Vanadium slag production increased by 2.5% quarter-on-quarter, mostly due to higher pig iron output.
In Q3 2017, output of final vanadium products grew by 4.0% quarter-on-quarter amid higher ferrovanadium production, mainly on the back of improved availability of oxides.
Average FeV indices
US$/kgV
Q3
2017Q2
20179m
20179m
2016
Metal Bulletin Ferro-Vanadium basis 78% min, free DDP, consumer plant, 1st grade Western Europe
39.06
27.01
30.46
17.20
Ryan's Notes N.A. FeV 80% min, US ex-warehouse, duty paid
38.89
27.11
31.08
19.63
Sale prices for vanadium products followed market trends.
In Q3 2017, the Metall Bulletin FeV80 index averaged US$39.06/kgV, up 45% from US$27.01/kgV in Q2 2017. Meanwhile, the Ryan's Notes index, used in North America, averaged US$38.89/kgV in Q3 2017, up 43% from US$27.11/kgV in the previous quarter.
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:
London: +442078328998 Moscow: +74959376871
media@evraz.com
Investor Relations:
London: +442078328990 Moscow: +74952321370
EVRAZ plc LEI: 5493005B7DAN39RXLK23
EVRAZ is a vertically integrated steel, mining and vanadium business with operations in the Russian Federation, Ukraine, Kazakhstan, USA, Canada, Czech Republicand Italy. EVRAZ is among the top steel producers in the world based on crude steel production of 13.5million tonnes in 2016. 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 2016 were US$7,713 million, and consolidated EBITDA amounted to US$1,542 million.
This information is provided by RNSThe company news service from the London Stock ExchangeENDDRLLLFIDIILRLID
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