Last checked at 31 Jan 2022 07:00
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 | Q42021 | Q32021 | Q4 2021/ Q3 2021, change | 12m 2021 | 12m2020 | 12m 2021/ 12m 2020, change |
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 concentrateproduction | 4,166 | 3,746 | 11.2% | 15,962 | 15,528 | 2.8% |
Iron ore products production | 3,751 | 3,504 | 7.0% | 14,399 | 14,205 | 1.4% |
Total sales of steel products1 | 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 products2 | 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 coal1 | 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 production2 | 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 segment2 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 | Q32021 | Q4 2021/ Q3 2021, change | 12m2021 | 12m2020 | 12m 2021/ 12m 2020, change |
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 products1 | 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 products2 | 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$/t | Q4 2021 | Q3 2021 | Q4 2021 / Q3 2021, change | 12m 2021 | 12m 2020 | 12m 2021 / 12m 2020, change | |
Slab cash cost (vertically integrated) | 358 | 309 | 15.9% | 308 | 213 | 44.6% | |
Iron ore products (Fe 62%) | 47 | 40 | 17.5% | 42 | 36 | 16.7% | |
Average selling prices
US$/tonne (ex-works) | Q4 2021 | Q3 2021 | 12m 2021 | 12m 2020 |
Coke | 488 | 380 | 357 | 155 |
Steel products | 726 | 761 | 696 | 442 |
Semi-finished products1 | 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 grade Western Europe2 | 32.32 | 38.22 | 34.35 | 25.02 |
Ryan's Notes N.A. FeV 80% min, US ex-warehouse, duty paid2 | 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 2021 | Q3 2021 | Q4 2021/ Q3 2021, change | 12m 2021 | 12m 2020 | 12m 2021/ 12m 2020, change |
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 mills1 | 260 | 268 | -3.2% | 1,048 | 742 | 41.2% |
Total steel products production, net of re-rolled volume1 | 440 | 430 | 2.3% | 1,655 | 1,669 | -0.8% |
EVRAZ US mills1 | 301 | 278 | 8.4% | 1,128 | 1,104 | 2.2% |
EVRAZ Canadian mills1 | 139 | 153 | -8.8% | 527 | 565 | -6.7% |
Sales of steel products1 | 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 products1 | 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 2021 | Q3 2021 | 12m 2021 | 12m 2020 |
Construction products1 | 1,146 | 1,015 | 961 | 665 |
Flat-rolled products1 | 1,782 | 1,470 | 1,319 | 755 |
Tubular products2 | 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 2021 | Q3 2021 | Q4 2021/ Q3 2021, change | 12m 2021 | 12m2020 | 12m 2021/ 12m 2020, change |
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 2021 | Q3 2021 | Q4 2021/ Q3 2021, change | 12m 2021 | 12m 2020 | 12m 2021/ 12m 2020, change |
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$/t | Q4 2021 | Q3 2021 | Q4 2021 / Q3 2021, change | 12m 2021 | 12m 2020 | 12m 2021 / 12m 2020, change |
Coking coal concentrate | 42 | 48 | -12.5% | 41 | 31 | 32.3% |
Note: Starting from 2021, the methodology has been changed.
Average selling prices
US$/tonne (ex-works)
| Q4 2021 | Q3 2021 | 12m 2021 | 12m 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:
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