Last checked at 19 Jul 2017 07:00
EVRAZ Q2 2017 PRODUCTION REPORT
19 July 2017 - EVRAZ plc (LSE: EVR; "EVRAZ" or the "Group") today released its operational results for the second quarter of 2017.
Q2 2017 vs Q1 2017 OPERATIONAL HIGHLIGHTS:
· Consolidated crude steel output fell by 9.5% quarter-on-quarter to 3.3 million tonnes in Q2 2017, primarily due to planned capital repairs at EVRAZ ZSMK's oxygen steelmaking converter no. 5 and blast furnace no. 2, as well as planned capital repairs at EVRAZ DMZ' oxygen-converter plant.
· Production of steel products, net of re-rolled volumes, decreased by 8.0% quarter-on-quarter to 3.0 million tonnes as a result of reduced output of semi-finished products amid planned capital repairs at EVRAZ ZSMK.
· The share of finished steel products in consolidated volumes rose to 63.8% in Q2 2017, up from 55.6% in Q1 2017, due to lower output of semi-finished products in Russia and Ukraine.
· Production of construction products increased by 10.5% quarter-on-quarter, as demand for construction products improved with the beginning of construction season.
· Production of railway products was down 1.9% due to changed product mix on Russian facilities, which was partially offset by higher output in North America (up 10.1% quarter-on-quarter) due to marginally increased demand for rails driven by Class I railroads finalised destocking.
· Output of flat products rose by 8.4% quarter-on-quarter, mostly following planned maintenance outage at EVRAZ Palini e Bertoli in Q1 2017 as well as due to strengthening demand in North America.
· Consolidated raw coking coal output increased by 7.9% following a planned longwall repositioning at the Raspadskaya mine in Q1 2017. In addition, open-pit mining operations were started at the site of the Raspadskaya-Koksovaya mine to produce deficit OS (semi-hard) coking coal grade.
STEEL
Product, '000 tonnes | Q22017 | Q1 2017 | Q2 2017/ Q1 2017, change | H1 2017 | H1 2016 | H1 2017/ H1 2016, change |
Coke (saleable) | 171 | 118 | 44.9% | 289 | 457 | -36.8% |
Pig iron | 2,793 | 2,894 | -3.5% | 5,687 | 5,557 | 2.3% |
Pig iron (saleable) | 195 | 44 | 343.2% | 239 | 188 | 27.1% |
Crude steel | 3,328 | 3,679 | -9.5% | 7,007 | 6,739 | 4.0% |
Steel products, gross* | 3,211 | 3,522 | -8.8% | 6,733 | 6,461 | 4.2% |
Steel products, net of re-rolled volumes | 2,994 | 3,255 | -8.0% | 6,249 | 6,134 | 1.9% |
Semi-finished products** | 1,084 | 1,446 | -25.0% | 2,530 | 2,439 | 3.7% |
Finished products | 1,910 | 1,809 | 5.6% | 3,719 | 3,695 | 0.6% |
Construction products | 970 | 878 | 10.5% | 1,848 | 2,075 | -10.9% |
Railway products | 410 | 418 | -1.9% | 828 | 751 | 10.3% |
Flat-rolled products*** | 206 | 190 | 8.4% | 396 | 279 | 41.9% |
Tubular products | 167 | 166 | 0.6% | 333 | 308 | 8.1% |
Other steel products | 157 | 157 | 0.0% | 314 | 282 | 11.3% |
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 (65 thousand tonnes in Q2 2017 and 116 thousand tonnes in H1 2017), which resumed operations in 2016 after suspending them in August 2013.
RUSSIA and KAZAKHSTAN
Product, '000 tonnes | Q2 2017 | Q1 2017 | Q2 2017/ Q1 2017, change | H12017 | H12016 | H1 2017/ H1 2016, change |
Coke (saleable) | 75 | 69 | 8.7% | 144 | 191 | -24.6% |
Pig iron | 2,537 | 2,663 | -4.7% | 5,200 | 5,020 | 3.6% |
Pig iron (saleable) | 90 | 37 | 143.2% | 127 | 175 | -27.4% |
Crude steel | 2,762 | 2,980 | -7.3% | 5,742 | 5,444 | 5.5% |
Steel products, gross | 2,558 | 2,806 | -8.8% | 5,364 | 5,104 | 5.1% |
Steel products, net of re-rolled volumes | 2,493 | 2,769 | -10.0% | 5,262 | 5,009 | 5.1% |
Semi-finished products | 1,178 | 1,536 | -23.3% | 2,714 | 2,408 | 12.7% |
Finished products | 1,315 | 1,232 | 6.7% | 2,547 | 2,600 | -2.0% |
Construction products | 859 | 759 | 13.2% | 1,617 | 1,768 | -8.5% |
Railway products | 311 | 328 | -5.2% | 639 | 570 | 12.1% |
Other steel products | 145 | 145 | 0.0% | 290 | 262 | 10.7% |
In Q2 2017, production of crude steel and steel products (net of re-rolled volumes) decreased quarter-on-quarter by 7.3% and 10.0%, respectively, due to planned capital repairs at EVRAZ ZSMK's oxygen steelmaking converter no. 5 in April-June and blast furnace no. 2 in June.
The decrease in steel product volumes was primarily caused by reduced output of semi-finished products (down 23.3% quarter-on-quarter), which was partly offset by higher output of construction products (up 13.2% quarter-on-quarter), driven by stronger demand for rebars and channels.
Output of railway products, including rails, was down slightly quarter-on-quarter due to lower volumes at EVRAZ ZSMK in the view of changed product mix. However, volumes increased half-on-half, mainly due to higher volumes at EVRAZ ZSMK amid more favourable demand for rails and wheels in 2017.
Average selling prices
US$/tonne (ex works) | Q22017 | Q12017 | H12017 | H12016 |
Coke | 172 | 212 | 189 | 83 |
Pig iron | 251 | 262 | 255 | 141 |
Steel products |
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|
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Semi-finished products | 352 | 344 | 347 | 210 |
Construction products | 499 | 530 | 514 | 348 |
Railway products | 646 | 621 | 633 | 442 |
Other steel products | 501 | 503 | 502 | 357 |
Overall, steel selling prices in Q2 2017 followed divergent trends according to global benchmarks.
In Q3 2017, crude steel output is expected to increase by roughly 3% due to the completion of capital repairs at EVRAZ ZSMK's blast furnace no. 2 in Q2 2017. Production of finished products is expected to fall as a result of a gas pause at EVRAZ ZSMK in August, as well as capital repairs of the rail mills at EVRAZ NTMK in August-September and at EVRAZ ZSMK in August.
NORTH AMERICA
Product, '000 tonnes | Q2 2017* | Q1 2017 | Q2 2017/ Q1 2017, change | H1 2017 | H1 2016 | H1 2017/ H1 2016, change |
Crude steel | 419 | 457 | -8.3% | 876 | 734 | 19.3% |
Steel products, net of re-rolled volumes | 467 | 462 | -1.1% | 929 | 895 | 3.8% |
Construction products | 61 | 68 | -10.3% | 129 | 135 | -4.4% |
Railway products | 98 | 89 | 10.1% | 187 | 181 | 3.3% |
Flat-rolled products | 141 | 139 | 1.4% | 280 | 271 | 3.3% |
Tubular products | 167 | 166 | 0.6% | 333 | 308 | 8.1% |
* Q2 2017 production volumes are preliminary
Crude steel production decreased by 8.3% quarter-on-quarter as a result of a planned outage at the Regina mill in order to install upgrades to the rolling mill, which were part of the previously announced investment projects.
Construction products output declined by 10.3% quarter-on-quarter due to strong import pressure.
Railway products production increased by 10.1% quarter-on-quarter, driven by marginally better demand as Class I railroads finalised destocking.
Production of flat-rolled products increased by 1.4% quarter-on-quarter as a result of strengthening demand.
Production of tubular products remained almost unchanged quarter-on-quarter. Line pipe demand continued to be impacted by uncertainty, while oil country tubular goods (OCTG) experienced a healthy demand recovery combined with gaining share in Western Canada.
Average selling prices
US$/tonne (ex works) | Q22017 | Q12017 | H12017 | H12016 |
Construction products | 635 | 594 | 614 | 512 |
Flat-rolled products | 814 | 742 | 776 | 624 |
Tubular products | 1,015 | 980 | 998 | 982 |
Prices for most steel products increased in Q2 2017, reflecting prevailing scrap and other inputs increases, reduced pressure from imports and positive demand fundamentals.
In Q3 2017, crude steel output is expected to increase by 5-10% quarter-on-quarter, as EVRAZ Regina's availability returns to normal levels after the prolonged planned outage in Q2 2017. Tubular product volumes are expected to experience a modest quarter-on-quarter increase in volume; flat rolled products and construction products are expected to remain essentially unchanged from Q2 2017 levels; and railway product volumes are expected to decrease slightly as a result of an annual maintenance outage in the rail mill during September and of a customary seasonal slowdown in orders expected in the third quarter.
UKRAINE
Product, '000 tonnes | Q2 2017 | Q1 2017 | Q2 2017/ Q1 2017, change | H1 2017 | H1 2016 | H1 2017/ H1 2016, change |
Coke (saleable) | 96 | 50 | 92.0% | 146 | 266 | -45.1% |
Pig iron | 257 | 232 | 10.8% | 489 | 537 | -8.9% |
Pig iron (saleable) | 106 | 7 | n/a | 113 | 14 | n/a |
Crude steel | 147 | 241 | -39.0% | 388 | 560 | -30.7% |
Steel products | 120 | 203 | -40.9% | 323 | 455 | -29.0% |
Semi-finished products | 58 | 139 | -58.3% | 197 | 263 | -25.1% |
Finished products | 62 | 63 | -1.6% | 125 | 192 | -34.9% |
Construction products | 50 | 52 | -3.8% | 102 | 172 | -40.7% |
Other steel products | 12 | 12 | 0% | 24 | 20 | 20.0% |
In Q2 2017, saleable coke volumes increased by 92.0% quarter-on-quarter in response to higher domestic demand and increased pig iron output.
Pig iron production went up 10.8% amid increased blast furnace productivity, with saleable pig iron increase due to reduced billet production (which had a lower margin in the product mix).
Production of crude steel and steel products decreased by 39.0% and 40.9% quarter-on-quarter, respectively, (they were also down half-on-half) after cutting production of low-margin semi-finished products in February-May and capital repairs at EVRAZ DMZ' oxygen-converter plant and rolling mill no. 1.
Average selling prices
US$/tonne (ex works) | Q22017 | Q12017 | H12017 | H12016 |
Coke (saleable) | 230 | 274 | 245 | 125 |
Pig iron | 322 | 314 | 321 | 196 |
Steel products |
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Semi-finished products | 353 | 335 | 340 | 254 |
Construction products | 474 | 456 | 465 | 357 |
Other steel products | 667 | 604 | 636 | 484 |
Overall, prices moved in line with global benchmarks. In Q2 2017, changes in saleable coke prices primarily reflected lower coal prices.
In Q3 2017, pig iron production is expected to increase following repairs at EVRAZ DMZ' rolling mill no. 1 and oxygen-converter plant in Q2 2017, accompanied by expected higher blast furnace productivity in Q3 2017. Consequently, output of crude steel and steel products (billets) is expected to increase quarter-on-quarter.
IRON ORE
Product, '000 tonnes | Q22017 | Q12017 | Q2 2017/ Q1 2017, change | H12017 | H12016 | H1 2017/ H1 2016, change |
Iron ore products* | 4,536 | 4,984 | -9.2% | 9,520 | 9,844 | -3.3% |
* Includes production of sinter, pellets and other iron ore products
In Q2 2017, production of iron ore decreased by 9.2% quarter-on-quarter, mainly due to lower volumes of sinter amid capital repairs at EVRAZ ZSMK's sintering machines no. 1 and no. 2. The reduced output of pellets was also partly caused by the accidental outage of EVRAZ KGOK's indurating machine no. 2 in June.
Average selling prices
US$/tonne (ex works) | Q2 2017 | Q1 2017 | H1 2017 | H1 2016 |
Pellets (Russia) | 66 | 84 | 74 | 36 |
Prices for pellet moved in line with global benchmarks.
In Q3 2017, sinter output is expected to decrease by roughly 2.5% quarter-on-quarter, mainly due to capital repairs of sintering machine no. 2 at EVRAZ KGOK in September. Following the accidental outage of EVRAZ KGOK's indurating machine no. 2 in Q2 2017, output of pellets should increase by roughly 5% quarter-on-quarter in Q3 2017.
COAL
Product, '000 tonnes | Q2 2017 | Q1 2017 | Q2 2017/ Q1 2017, change | H12017 | H12016 | H1 2017/ H1 2016, change |
Raw coking coal (mined) | 6,048 | 5,603 | 7.9% | 11,651 | 11,016 | 5.8% |
Yuzhkuzbassugol | 2,761 | 2,502 | 10.4% | 5,263 | 5,928 | -11.2% |
Raspadskaya | 3,071 | 2,886 | 6.4% | 5,957 | 4,883 | 22.0% |
Mezhegeyugol | 216 | 215 | 0.5% | 431 | 206 | 109.6% |
Coking coal concentrate (production) | 3,612 | 3,605 | 0.2% | 7,217 | 7,297 | -1.1% |
Yuzhkuzbassugol's coal washing plants | 1,491 | 1,491 | 0.0% | 2,982 | 3,321 | -10.2% |
Raspadskaya's coal washing plant | 1,615 | 1,634 | -1.2% | 3,249 | 3,120 | 4.1% |
EVRAZ ZSMK's coal washing plant | 506 | 480 | 5.4% | 986 | 857 | 15.1% |
Production of raw coking coal increased by 7.9% following the planned longwall repositioning in Q1 2017 at the Raspadskaya mine, accompanied by stable work at the Raspadskaya mine's three longwalls.
In addition, open-pit mining operations were started at the site of the Raspadskaya-Koksovaya mine to produce deficit OS (semi-hard) coking coal grade.
Output of coking coal concentrate remained almost unchanged quarter-on-quarter due to higher production at EVRAZ ZSMK's coal washing plant.
Average selling prices
US$/tonne (ex works)
| Q22017 | Q12017 | H12017 | H12016 |
Raw coking coal | 52 | 86 | 69 | 32 |
Coking coal concentrate | 103 | 155 | 129 | 56 |
In Q2 2017, coal prices were down in line with global benchmarks.
In Q3 2017, raw coal production is expected to increase slightly following the longwall repositioning at the Erunakovskaya-8 mine in Q2 2017. This will be partially offset by the scheduled longwall repositioning at the Raspadskaya mine in Q3 2017.
VANADIUM
Product, tonnes of V* | Q2 2017 | Q1 2017 | Q2 2017/ Q1 2017, change | H1 2017 | H1 2016 | H1 2017/ H1 2016, change |
Vanadium slag, gross production (Russia) | 4,795 | 4,553 | 5.3% | 9,348 | 8,267 | 13.1% |
Vanadium in final products (saleable) | 2,641 | 3,291 | -19.8% | 5,932 | 6,606 | -10.2% |
* Calculated in pure vanadium equivalent
In Q2 2017, output of saleable vanadium products decreased by 19.8% quarter-on-quarter, primarily due to the discontinuation of Nitrovan production as a result of Vametco's divestment in April.
Average FeV indices
US$/kgV | Q22017 | Q12017 | H12017 | H12016 |
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Metal Bulletin Ferro-Vanadium basis 78% min, free DDP, consumer plant, 1st grade Western Europe | 27.01 | 25.31 | 26.14 | 16.52 |
Ryan's Notes N.A. FeV 80% min, US ex-warehouse, duty paid | 27.10 | 27.24 | 27.18 | 18.38 |
Sale prices for vanadium products followed market trends.
In Q2 2017, the Metall Bulletin FeV80 index averaged US$27.01/kgV, up 7% from US$25.31/kgV in Q1 2017. Meanwhile, the Ryan's Notes index, used in North America, averaged US$27.10/kgV in Q2 2017, down 1% from US$27.24/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.
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For further information:
Media Relations:
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 and Italy. EVRAZ is among the top steel producers in the world based on crude steel production of 13.5 million 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 31 December 2016 were US$7,713 million, and consolidated EBITDA amounted to US$1,542 million.