TIDMEVR

RNS Number : 8292G

Evraz Plc

29 July 2021

EVRAZ Q2 2021 TRADING UPDATE

29 July 2021 - EVRAZ plc (LSE: EVR; "EVRAZ" or the "Group") today released its trading update for the second quarter of 2021.

Q2 2021 vs Q1 2021 HIGHLIGHTS

   --      In Q2 2021, EVRAZ' consolidated crude steel output remained almost flat QoQ. 

-- Total sales of steel products climbed by 6.1% QoQ, driven primarily by higher sales of finished products in Russia amid favourable market conditions and an increase in slab sales following the completion of repairs of basic oxygen furnaces at EVRAZ NTMK in Q1 2021.

-- Total raw coking coal production dropped by 21.5% QoQ. The reduction was caused primarily by scheduled longwall movements at the Raspadskaya and Alardinskaya mines, as well as completion on the current longwall at the Osinnikovskaya mine ahead of the upcoming movement in Q3 2021.

-- External sales volumes of coking coal concentrate fell by 8.3% QoQ because of logistical restrictions on shipments to the Russian Far East amid rising exports and the start of the repair season at Russian Railways.

-- External sales of iron ore products increased by 8.4% QoQ, driven by higher production in Q2 2021.

-- Sales of vanadium products fell by 3.6% QoQ, mainly due to changing the regional sales and product mix to support the increased FeV demand, resulting in longer lead times.

 
 Product, '000 tonnes            Q2       Q1     Q2 2021/ Q1 2021, change     H1       H1     H1 2021/ H1 2020, change 
                                 2021     2021                                2021     2020 
----------------------------  -------  -------  -------------------------  -------  -------  ------------------------- 
 Total crude steel 
  production                    3,368    3,414                      -1.3%    6,782    6,936                      -2.2% 
   Russia                       2,953    2,921                       1.1%    5 874    6,113                      -3.9% 
   North America                  415      493                     -15.8%      908      823                      10.3% 
 Total raw coking coal mined    5,098    6,492                     -21.5%   11,590    9,857                      17.6% 
 Total coking coal 
  concentrate 
  production                    3,814    4,236                     -10.0%    8,050    7,567                       6.4% 
 Iron ore products 
  production                    3,750    3,394                      10.5%    7,144    7,055                       1.3% 
 Total sales of steel 
  products(1)                   3,244    3,057                       6.1%    6,301    6,606                      -4.6% 
   Semi-finished products       1,439    1,406                       2.3%    2,845    3,167                     -10.2% 
   Finished products            1,805    1,651                       9.3%    3,456    3,439                       0.5% 
 Total sales of third-party 
  steel products                  217      134                      61.9%      351      372                      -5.6% 
 Sales of coking coal 
  products                      2,761    2,824                      -2.2%    5,585    6,079                      -8.1% 
 Sales of iron ore products       337      311                       8.4%      648      801                     -19.1% 
 Sales of vanadium in slag      1,624    1,135                      43.1%    2,759    2,760                       0.0% 
 Sales of vanadium final 
  products(2)                   3,247    3,368                      -3.6%    6,615    5,610                      17.9% 
----------------------------  -------  -------  -------------------------  -------  -------  ------------------------- 
 

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

FORWARD-LOOKING STATEMENTS

This document contains "forward-looking statements", which include all statements other than statements of historical facts, including, without limitation, any statements preceded by, followed by or that include the words "targets", "believes", "expects", "aims", "intends", "will", "may", "anticipates", "would", "could" or similar expressions or the negative thereof. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors beyond the Group's control that could cause the actual results, performance or achievements of the Group to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements, including, among others, the achievement of anticipated levels of profitability, growth, cost and synergy of recent acquisitions, the impact of competitive pricing, the ability to obtain necessary regulatory approvals and licenses, the impact of developments in the Russian economic, political and legal environment, volatility in stock markets or in the price of the Group's shares or GDRs, financial risk management and the impact of general business and global economic conditions. Such forward-looking statements are based on numerous assumptions regarding the Group's present and future business strategies and the environment in which the Group will operate in the future. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. These forward-looking statements speak only as at the date as of which they are made, and each of EVRAZ and the Group expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements contained herein to reflect any change in EVRAZ' or the Group's expectations with regard thereto or any change in events, conditions or circumstances on which any such statements are based. Neither the Group, nor any of its agents, employees or advisors intends or has any duty or obligation to supplement, amend, update or revise any of the forward-looking statements contained in this document.

STEEL SEGMENT

Total production volumes

 
 Product, '000 tonnes            Q2       Q1     Q2 2021/ Q1 2021, change     H1       H1     H1 2021/ H1 2020, change 
                                 2021     2021                                2021     2020 
----------------------------  -------  -------  -------------------------  -------  -------  ------------------------- 
 Pig iron production            2,719    2,683                       1.3%    5,402    5,620                      -3.9% 
  EVRAZ ZSMK                    1,435    1,424                       0.8%    2,859    3,088                      -7.4% 
  EVRAZ NTMK                    1,284    1,259                       2.0%    2,543    2,532                       0.4% 
 Crude steel production         2,953    2,921                       1.1%    5,874    6,113                      -3.9% 
   EVRAZ ZSMK                   1,821    1,810                       0.6%    3,631    3,858                      -5.9% 
   EVRAZ NTMK                   1,132    1,111                       1.9%    2,243    2,255                      -0.5% 
 Total steel products 
  production, net of 
  re-rolled volume              2 693    2,656                       1.4%    5,349    5,606                      -4.6% 
   EVRAZ ZSMK                   1,548    1,559                      -0.7%    3,107    3,400                      -8.6% 
   EVRAZ NTMK                   1,040    1,014                       2.6%    2,054    2,026                       1.4% 
   EVRAZ Caspian Steel            105       83                      26.5%      188      180                       4.4% 
 Iron ore products 
  production                    3,750    3,394                      10.5%    7,144    7,055                       1.3% 
   Pellets (EVRAZ KGOK)         1,643    1,574                       4.4%    3,217    3,281                      -2.0% 
   Sinter (EVRAZ KGOK)            922      921                       0.1%    1,843    1,821                       1.2% 
   Concentrate saleable 
    (EVRAZ KGOK, EVRAZ ZSMK)    1,185      899                      31.8%    2,084    1,953                       6.7% 
 Coking coal concentrate 
  production                      434      367                      18.3%      801      982                     -18.4% 
   From own raw coal(1)           370      313                      18.2%      683      830                     -17.7% 
   From third-party raw coal       64       54                      18.5%      118      152                     -22.4% 
 Gross vanadium slag 
  production(2)                 5,206    4,798                       8.5%   10,004   10,077                      -0.7% 
----------------------------  -------  -------  -------------------------  -------  -------  ------------------------- 
 

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 Q2 2021, pig iron and crude steel production remained mostly flat QoQ at the Russian mills.

The total output of steel products rose by 1.4% QoQ, mainly because of an increase of production at EVRAZ NTMK and EVRAZ Caspian Steel amid higher market demand.

Output of iron ore products climbed by 10.5% QoQ, mainly driven by the resumption of third-party raw material supplies and additional loading of the Abagurskaya processing plant's capacity at EVRAZ ZSMK.

Total sales volumes

 
    Product, '000 tonnes         Q2       Q1     Q2 2021/ Q1 2021, change     H1       H1     H1 2021/ H1 2020, change 
                                 2021     2021                                2021     2020 
----------------------------  -------  -------  -------------------------  -------  -------  ------------------------- 
 Coke                              73       74                      -2.2%      147      186                     -21.0% 
 Steel products, external 
  sales                         2,862    2,642                       8.3%    5,504    5,628                      -2.2% 
 Semi-finished products         1,439    1,406                       2.3%    2,845    3,023                      -5.9% 
   Slabs                          870      666                      30.6%    1,536    1,307                      17.5% 
   Billets                        468      624                     -25.0%    1,092    1,476                     -26.0% 
   Other steel products(1)        101      116                     -12.9%      217      240                      -9.6% 
 Finished products              1,423    1,236                      15.1%    2,659    2,605                       2.1% 
   Construction products          943      794                      18.8%    1,737    1,622                       7.1% 
   Railway products               285      279                       2.2%      564      669                     -15.7% 
   Other steel products           195      163                      19.6%      358      314                      14.0% 
 Steel products, 
  intersegment sales               11        4                        n/a       15       43                     -65.1% 
 Third-party steel products, 
  external sales                  217      134                      61.9%      351      372                      -5.6% 
 Iron ore products, external 
  sales                           337      311                       8.4%      648      801                     -19.1% 
 Pellets                          337      311                       8.4%      648      801                     -19.1% 
 Sales of vanadium in slag      1,624    1,135                      43.1%    2,759    2,760                       0.0% 
 Sales of vanadium final 
  products(2)                   3,247    3,368                      -3.6%    6,615    5,610                      17.9% 
----------------------------  -------  -------  -------------------------  -------  -------  ------------------------- 
 

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

In Q2 2021, external sales of steel products rose by 8.3% QoQ, driven by an increase in sales volumes of semi-finished and finished products.

Sales of semi-finished products climbed by 2.3% QoQ amid a 30.6% QoQ surge in slab sales volumes. This was mainly driven by the completion of repairs of basic oxygen furnace no. 1 in February and basic oxygen furnace no. 2 in March at EVRAZ NTMK. Sales of billets dropped by 25.0% QoQ, driven by changes in the product mix in favour of slabs and finished products to account for market conditions.

Sales of finished products rose by 15.1% QoQ amid favourable market conditions. Sales of construction and other products increased by 18.8% and 19.6% QoQ, respectively, because of higher domestic and CIS market demand.

Sales of iron ore products climbed by 8.4% QoQ, driven by higher production in Q2 2021.

Sales of vanadium products fell by 3.6% QoQ, mainly due to changing the regional sales and product mix to support the increased FeV demand, resulting in longer lead times.

 
 Cash cost, US$/t                     Q2       Q1         Q2 2021/          H1       H1     H1 2021/ H1 2020, change 
                                      2021     2021     Q1 2021, change     2021     2020 
---------------------------------  -------  -------  ------------------  -------  -------  ------------------------- 
 Slab cash cost vertically 
  integrated                           290      277                4.7%      283      210                      34.8% 
 Iron ore products (Fe 62%)             41       40                2.5%       40       37                       8.1% 
---------------------------------  -------  -------  ------------------  -------  -------  ------------------------- 
 
 

Average selling prices

 
                                 US$/t (ex-works)                                      Q2       Q1       H1       H1 
                                                                                       2021     2021     2021     2020 
----------------------------------------------------------------------------------  -------  -------  -------  ------- 
 Coke                                                                                   307      258      285      159 
 Steel products                                                                         707      583      646      438 
   Semi-finished products(1)                                                            604      484      543      319 
   Construction products                                                                805      650      734      474 
   Railway products                                                                     838      838      838      873 
   Other steel products                                                                 740      669      704      500 
   Pellets                                                                              166      115      142       49 
 Metal Bulletin Ferro-Vanadium basis 78% min, free DDP, consumer plant, 1st grade 
  Western Europe(2)                                                                   35.94    30.91    33.43    25.02 
 Ryan's Notes N.A. FeV 80% min, US ex-warehouse, duty paid(2)                         35.99    32.03    34.01    23.85 
----------------------------------------------------------------------------------  -------  -------  -------  ------- 
 

(1) Includes prices for pig iron

(2) US$/kgV

In Q3 2021, pig iron production volumes are expected to slightly decrease following the planned repairs at EVRAZ NTMK.

STEEL, NORTH AMERICA SEGMENT

Production and sales volumes

 
    Product, '000 tonnes         Q2       Q1     Q2 2021/ Q1 2021, change     H1       H1     H1 2021/ H1 2020, change 
                                 2021     2021                                2021     2020 
----------------------------  -------  -------  -------------------------  -------  -------  ------------------------- 
 Crude steel                      415      493                     -15.8%      908      823                      10.3% 
   EVRAZ US mills                 161      227                     -29.1%      388      461                     -15.8% 
   EVRAZ Canadian mills           254      266                      -4.7%      520      363                      43.3% 
 Total steel products 
  production, net of 
  re-rolled volume                385      399                      -3.5%      784      914                     -14.2% 
   EVRAZ US mills                 273      276                      -1.2%      549      598                      -8.2% 
   EVRAZ Canadian mills           112      123                      -8.7%      235      316                     -25.6% 
 Sales of steel products          382      415                      -8.1%      797      978                     -18.5% 
   Semi-finished products           -        -                          -        -      144                    -100.0% 
   Construction products           82       66                      24.0%      148      133                      11.3% 
   Railway products                87      104                     -16.6%      191      213                     -10.3% 
   Flat-rolled products           143      168                     -14.5%      311      169                      84.0% 
   Tubular products                69       77                     -10.1%      146      319                     -54.2% 
----------------------------  -------  -------  -------------------------  -------  -------  ------------------------- 
 

In Q2 2021, crude steel production at the Canadian operations fell by 4.7% QoQ as a result of a planned seven-day maintenance outage in May at EVRAZ Regina. Market demand remained high in the quarter amid a rapid economic recovery from the downturn driven by the COVID-19 pandemic, fewer imports and relatively low levels of distributor inventory.

In Q2 2021, crude steel production of US operations decreased 29.1% QoQ due to a steam explosion in the furnace at the end of May at EVRAZ Pueblo, resulting in an unplanned outage.

Sales of construction products in Q2 2021 climbed by 24.0% QoQ amid strong market demand and price growth outpacing those for raw materials.

Sales of railway products decreased by 16.6% QoQ, primarily due to a shortage of steel caused by the unplanned steelmaking outage in June and lower demand from project and distribution customers.

Sales of flat-rolled products dropped by 14.5% QoQ, primarily because of reduced steel availability driven by the planned maintenance outage at EVRAZ Regina in May.

Tubular volumes fell by 10.1% QoQ following the completion of large diameter pipe orders in Q1 2021, there were no large diameter pipe shipments in Q2 2021. This decline in large diameter volumes was partially offset by increase in OCTG and line pipe sales that more than doubled QoQ. The improvement in sales volumes has been driven by rapidly growing market demand, which allowed us to restart all our OCTG facilities that had been idled since Q2 2020.

Average selling prices

 
 US$/t (ex-works)           Q2       Q1       H1       H1 
                            2021     2021     2021     2020 
-----------------------  -------  -------  -------  ------- 
 Construction products       900      826      867      665 
 Flat-rolled products      1,205      869    1,024      792 
 Tubular products          1,513    1,496    1,504    1 267 
-----------------------  -------  -------  -------  ------- 
 

In Q3 2021, steel production is expected to increase QoQ due to a non-repeat planned maintenance outage at EVRAZ Regina and unplanned downtime at EVRAZ Pueblo. We expect the market sentiment to continue to remain strong and improve QoQ in the product segments where EVRAZ operates.

COAL SEGMENT

Production volumes

 
 Product, '000 tonnes*           Q2       Q1     Q2 2021/ Q1 2021, change     H1       H1     H1 2021/ H1 2020, change 
                                 2021     2021                                2021     2020 
----------------------------  -------  -------  -------------------------  -------  -------  ------------------------- 
 Raw coking coal (mined)       5,098    6,492             -21.5%            11,590   9,857             17.6% 
 Coking coal concentrate 
  (production)                 3,380    3,869             -12.6%            7,249    6,585             10.1% 
----------------------------  -------  -------  -------------------------  -------  -------  ------------------------- 
 

* Starting from 2021, Raspadskaya includes Yuzhkuzbassugol and Mezhegeyugol; the data have been adjusted

In Q2 2021, overall raw coking coal output fell by 21.5% QoQ. The reduction was caused primarily by scheduled longwall movements at the Raspadskaya and Alardinskaya mines, as well as completion on the current longwall at the Osinnikovskaya mine ahead of the upcoming movement in Q3 2021. The Group's remaining mines increased their production volumes during the reporting period. Open-pit mining volumes also rose at the Razrez Raspadsky and Raspadskaya-Koksovaya sites.

Output of coking coal concentrate fell by 12.6% QoQ, mainly amid lower mining volumes.

Sales volumes

 
 Product, '000 tonnes           Q2       Q1     Q2 2021/ Q1 2021, change     H1       H1     H1 2021/ H1 2020, change 
                                2021     2021                                2021     2020 
---------------------------  -------  -------  -------------------------  -------  -------  ------------------------- 
 External sales                2,761    2,824                      -2.2%    5,585    6,079                      -8.1% 
   Raw coking coal               299      139                        n/a      438    1,198                     -63.4% 
   Coking coal concentrate     2,462    2,684                      -8.3%    5,147    4,880                       5.5% 
 Intersegment sales            1,682    1,540                       9.2%    3,222    3,503                      -8.0% 
    Raw coking coal              647      497                      30.3%    1,144    1,204                      -5.0% 
  Coking coal concentrate      1,035    1,044                      -0.9%    2,078    2,300                      -9.7% 
---------------------------  -------  -------  -------------------------  -------  -------  ------------------------- 
 

External sales volumes of raw coking coal doubled QoQ due to raised shipments to Ukrainian and Far East markets amid greater demand.

External sales volumes of coking coal concentrate fell by 8.3% QoQ because of logistical restrictions on shipments to the Russian Far East amid rising exports and the start of the repair season at Russian Railways. Domestic concentrate sales also fell because of customer requests to increase raw coal supplies.

Intersegment sales volumes of coking coal products rose by 9.2% QoQ, mainly because of an increase in the shipments of K-grade coal from the Raspadskaya-Koksovaya mine.

 
 Cash cost, US$/t             Q2       Q1     Q2 2021/ Q1 2021, change     H1       H1     H1 2021/ H1 2020, change 
                              2021     2021                                2021     2020 
-------------------------  -------  -------  -------------------------  -------  -------  ------------------------- 
 Coking coal concentrate      37       34               8.8%               36       34               5.9% 
-------------------------  -------  -------  -------------------------  -------  -------  ------------------------- 
 

Average selling prices

 
                              Q2       Q1       H1       H1 
  US$/t (ex-works)            2021     2021     2021     2020 
-------------------------  -------  -------  -------  ------- 
 Raw coking coal              59       46       53       36 
 Coking coal concentrate      86       68       76       67 
-------------------------  -------  -------  -------  ------- 
 

In Q3 2021, raw coal production is expected to increase QoQ, mainly because of the completion of longwall movements at the Alardinskaya and Raspadskaya mines, as well as work stabilisation amid favourable 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:

+7 495 937 6871

+44-207-290-1096

media@evraz.com

Investor Relations:

+7 495 232 1370

+44-207-290-1095

ir@evraz.com

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