TIDMEVR
RNS Number : 3562B
Evraz Plc
30 January 2020
EVRAZ Q4 2019 TRADING UPDATE
30 January 2020 - EVRAZ plc (LSE: EVR; "EVRAZ" or the "Group")
today released its trading update for the fourth quarter and full
year of 2019.
Q4 2019 vs Q3 2019 HIGHLIGHTS
-- In Q4 2019, EVRAZ' consolidated crude steel output rose by
2.1% QoQ, mainly due to higher production volumes at EVRAZ ZSMK
after the scheduled capital repairs during July-August ended.
-- Steel product sales climbed by 6.6% QoQ, driven primarily by
semi-finished products, which grew by 17.7%. This, in turn, was
mainly a result of higher steel production at EVRAZ ZSMK and
seasonally weaker market demand for finished construction products
in Russia. In addition, sales of railway products in Russia grew by
17.8% following completion of capital repairs at EVRAZ ZSMK's rail
and beam shop in Q3 2019.
-- Total raw coking coal production decreased by 5.3% QoQ due to
lower production volumes amid a scheduled longwall move at the
Raspadskaya mine in Q4 2019. Coking coal concentrate production
dropped by 16.7% QoQ due to softer market demand.
-- External sales volumes of coking coal products fell by 14.9%
QoQ due to lower market demand.
-- External sales of iron ore products surged by 68.5% QoQ
following the completion of capital repairs of EVRAZ KGOK's
roasting machines that took place during August and September.
-- Sales of vanadium final products were down by 2.0% QoQ due to
lower FeV demand mainly from North American steel producers amid
reduced utilisation rates.
FY2019 vs FY2018 HIGHLIGHTS
-- In 2019, EVRAZ' consolidated crude steel production climbed
by 6.1% YoY, mainly due to higher production volumes of pig iron at
EVRAZ ZSMK as the blast furnace no.3 underwent a lengthier and more
complex process of capital repair in 2018 (category II) vs the
blast furnace no.1 in 2019 (category III).
-- Sales volumes of semi-finished products jumped by 22.8% YoY,
primarily due to higher semi-finished product sales from Russia to
the export markets amid greater production volumes and a sharp
increase of slab sales in North America amid greater demand from
customers.
-- Production of raw coking coal grew by 8.1% YoY due to higher
production volumes at the Osinnikovskaya, Erunakovskaya and
Uskovskaya mines, driven by improvements in capital repairs and
equipment maintenance.
-- External iron ore product sales fell by 42.5% YoY, primarily
as a result of higher consumption of pellets in 2019 by EVRAZ NTMK
after the launch of blast furnace no. 7 in Q2 2018 and by EVRAZ
ZSMK amid higher pig iron production.
Q4 2019/ Q3 2019, 12m 2019/ 12m 2018,
Product, kt Q4 2019 Q3 2019 change 12m 2019 12m 2018 change
------------------------ -------- -------- ------------------------ --------- --------- ------------------------
Total crude steel
production(1) 3,449 3,379 2.1% 13,814 13,019 6.1%
Russia 3,008 2,953 1.9% 11,953 10,967 9.0%
Ukraine 0 0 n/a 0 154 n/a
North America 441 426 3.5% 1,861 1,898 -1.9%
Total raw coking coal
mined 5,981 6,319 -5.3% 26,140 24,188 8.1%
Total coking coal
concentrate
production 3,537 4,244 -16.7% 15,923 16,188 -1.6%
Iron ore products
production 3,277 3,319 -1.3% 13,765 13,515 1.8%
Total sales of steel
products(1) 3,609 3,386 6.6% 13,502 12,235 10.4%
Semi-finished
products 1,699 1,443 17.7% 5,844 4,760 22.8%
Finished products 1,910 1,943 -1.7% 7,658 7,475 2.4%
Total sales of
third-party steel
products 200 225 -11.1% 801 900 -11.0%
Sales of coking coal
products 2,514 2,953 -14.9% 11,053 11,048 0.0%
Sales of iron ore
products 273 162 68.5% 1,134 1,972 -42.5%
Sales of vanadium in
slag(2) 1,923 1,693 13.6% 6,451 6,701 -3.7%
Sales of vanadium final
products(3) 3,514 3,585 -2.0% 12,883 12,352 4.3%
------------------------ -------- -------- ------------------------ --------- --------- ------------------------
Note. Numbers in this table and the tables below may not add up
to totals due to rounding.
(1) The Q4 2019 production and sales volumes of EVRAZ North
America are preliminary.
(2) The 12m 2018 data have been adjusted.
(3) In tonnes of pure vanadium
STEEL SEGMENT
Total production volumes
Q4 2019/ Q3 2019, 12m 2019/ 12m 2018,
Product, kt Q4 2019 Q3 2019 change 12m 2019 12m 2018 change
------------------------ -------- -------- ------------------------ --------- --------- ------------------------
Pig iron production 2,764 2,795 -1.1% 11,016 9,993 10.2%
EVRAZ ZSMK 1,555 1,516 2.6% 6,072 5,195 16.9%
EVRAZ NTMK 1,209 1,279 -5.5% 4,944 4,644 6.5%
EVRAZ DMZ 0 0 n/a 0 153 -100.0%
Crude steel production 3,008 2,953 1.9% 11,953 11,121 7.5%
EVRAZ ZSMK 1,956 1,866 4.8% 7,659 6,851 11.8%
EVRAZ NTMK 1,052 1,087 -3.2% 4,294 4,116 4.3%
EVRAZ DMZ 0 0 n/a 0 154 -100.0%
Total steel products
production, net of
re-rolled volume(1) 2,871 2,766 3.8% 11,018 9,934 10.9%
EVRAZ ZSMK 1,770 1,624 9.0% 6,817 6,216 9.7%
EVRAZ NTMK 983 969 1.4% 3,590 3,058 17.4%
EVRAZ DMZ 0 0 n/a 0 132 -100.0%
EVRAZ Caspian Steel 76 86 -11.6% 283 180 57.2%
Iron ore products
production 3,277 3,319 -1.3% 13,765 13,515 1.8%
Pellets (EVRAZ KGOK) 1,531 1,456 5.2% 6,203 6,509 -4.7%
Sinter (EVRAZ KGOK) 802 883 -9.2% 3,511 3,541 -0.8%
Concentrate (EVRAZ
KGOK, Evrazruda) 944 980 -3.7% 4,051 3,465 16.9%
Coking coal concentrate
production 493 511 -3.5% 1,947 2,057 -5.3%
From own raw coal(2) 331 407 -18.7% 1,335 1,216 9.8%
From third-party raw
coal 162 104 55.8% 612 841 -27.2%
Gross vanadium slag
production(3) 4,667 4,734 -1.4% 18,380 17,052 7.8%
------------------------ -------- -------- ------------------------ --------- --------- ------------------------
Note. Numbers in this table and the tables below may not add up
to totals due to rounding.
(1) Including EVRAZ Palini e Bertoli
(2) From Coal segment
(3) In tonnes of pure vanadium
In Q4 2019, EVRAZ` pig iron production remained almost flat QoQ,
with a 5.5% QoQ decrease in production volumes at EVRAZ NTMK mainly
due to capital repairs at blast furnace no. 5 in October. This was
partly offset by production at EVRAZ ZSMK going up by 2.6% after
the scheduled capital repairs during July-August ended. In FY2019,
production of pig iron climbed by 10.2% YoY, primarily because
blast furnace no. 3 underwent a lengthier and more complex capital
repair (category II) in FY2018 than blast furnace no. 1 underwent
in FY2019 (category III).
Crude steel production volumes edged up by 1.9% QoQ, mainly due
to increased pig iron production volumes at EVRAZ ZSMK. In FY2019,
production of crude steel rose by 7.5% YoY, which was in line with
pig iron production volumes.
Total output of steel products grew by 3.8% QoQ, driven by a
9.0% QoQ uptick in production volumes at EVRAZ ZSMK due to higher
semi-finished production volumes following greater production of
steel at EVRAZ ZSMK and seasonally weaker market demand for
finished construction products in Russia. In FY2019, total output
of steel products rose by 10.9% YoY due to higher production of
semi-finished products at EVRAZ ZSMK and of construction products
at EVRAZ NTMK.
Output of iron ore products fell by 1.3% QoQ, mainly due to
capital repairs of roasting machine no. 1 at EVRAZ KGOK in October
2019. In FY2019, output of iron ore products rose by 1.8% YoY
following a shortage of concentrates in FY2018 amid repairs of the
primary equipment at EVRAZ ZSMK's mining operations (former
Evrazruda).
Consolidated output of vanadium slag fell by 1.4% QoQ due to
decreased volumes of pig iron duplex processing, which was partly
offset by higher vanadium content in pig iron. In FY2019, output of
vanadium slag climbed by 7.8% YoY due to greater volumes of pig
iron duplex processing and higher vanadium content in pig iron.
Total sales volumes
Product, kt Q4 Q3 2019 Q4 2019/ Q3 2019, change 12m 2019 12m 2018 12m 2019/ 12m 2018, change
2019
--------------------- ------- -------- ------------------------- --------- --------- ---------------------------
Coke 161 93 73.1% 432 569 -24.1%
Steel products,
external sales 3,073 2,847 7.9% 11,273 10,080 11.8%
Semi-finished
products 1,665 1,398 19.1% 5,636 4,703 19.8%
Slabs 719 669 7.5% 2,443 1,764 38.5%
Billets 767 562 36.5% 2,519 2,448 2.9%
Other steel
products(1) 179 167 7.2% 674 490 37.6%
Finished products 1,408 1,448 -2.8% 5,638 5,377 4.9%
Construction
products 855 883 -3.2% 3,331 3,138 6.2%
Railway products 370 314 17.8% 1,395 1,345 3.7%
Flat products 52 79 -34.2% 321 347 -7.5%
Other steel
products 131 172 -23.8% 591 548 7.8%
Steel products,
inter-segment
sales(2) 10 7 42.9% 318 573 -44.5%
Third-party steel
products, external
sales 200 225 -11.1% 801 900 -11.0%
Iron ore products,
external sales 273 162 68.5% 1,134 1,972 -42.5%
Pellets 273 162 68.5% 1,134 1,972 -42.5%
Sales of vanadium in
slag(3) 1,923 1,693 13.6% 6,451 6,701 -3.7%
Sales of vanadium
final products(4) 3,514 3,585 -2.0% 12,883 12,352 4.3%
--------------------- ------- -------- ------------------------- --------- --------- ---------------------------
Note. Numbers in this table and the tables below may not add to
totals due to rounding.
(1) Includes tonnes of pig iron
(2) The Q3 2019 data have been adjusted,
(3) The 12m 2018 data have been adjusted,
(4) In tonnes of pure vanadium
In Q4 2019, external sales of steel products went up by 7.9%
QoQ. Sales of semi-finished products surged by 19.1% QoQ, mainly
due to seasonally weaker market demand for finished construction
products and higher billet sales volumes to export markets. In
FY2019, greater crude steel production output drove an increase in
steel product sales volumes.
Sales of finished products dropped by 2.8% QoQ, mainly driven by
seasonally lower sales of construction, flat and other steel
products, albeit partly offset by higher sales volumes of railway
products. In FY2019, sales volumes of finished products were up by
4.9% YoY, mainly due to higher sales volumes of construction and
railway products.
Sales of construction products fell by 3.2% QoQ, following a
seasonal decrease of market demand. In FY2019, sales volumes of
construction products were up by 6.2% YoY, mainly due to higher
demand for beams at EVRAZ NTMK and small sections at EVRAZ
ZSMK.
Sales of railway products rose by 17.8% QoQ following the
completion of capital repairs at EVRAZ ZSMK's rail and beam shop
that took place in August and September. In FY2019, sales volumes
of railway products were up by 3.7% YoY, mainly due to increased
demand for wheels and profiles for wagon building.
Sales of flat products fell by 34.2% QoQ amid reduced market
demand for flat products in October and November 2019. In FY2019,
sales volumes were down by 7.5%, primarily due to lower market
demand.
Sales of iron ore products surged by 68.5% QoQ as a result of
capital repairs of EVRAZ KGOK's roasting machines in August and
September. In FY2019, sales volumes of iron ore dropped by 42.5%
YoY, primarily as a result of higher consumption of pellets in 2019
by EVRAZ NTMK after the launch of blast furnace no. 7 in Q2 2018
and by EVRAZ ZSMK amid higher pig iron production.
Sales of final vanadium products edged down by 2.0% QoQ due to
lower FeV demand mainly from North American steel producers amid
reduced utilisation rates. In FY2019, sales of final vanadium
products rose by 4.3% YoY due to higher FeV sales, mainly as a
result of increased demand in the EU and the development of new
sales markets in Asia.
Cash cost, US$/t Q4 Q3 2019 Q4 2019/ Q3 2019, change 12m 2019 12m 2018 12m 2019/ 12m 2018, change
2019
--------------------- ------- -------- ------------------------- --------- --------- ---------------------------
Slab cash cost,
vertically
integrated(1) 243 241 0.8% 236 225 4.9%
Iron ore products
(Fe 62%)(2) 47 41 14.6% 41 37 10.8%
--------------------- ------- -------- ------------------------- --------- --------- ---------------------------
(1) The 12m 2018 data have been adjusted.
(2) The Q3 2019 data have been adjusted.
Average selling prices
12m 12m
US$/t (ex works) Q4 2019 Q3 2019 2019 2018
-------------------------------------------------------------- -------- -------- ------ ------
Coke 80 214 167 217
Steel products(2) 454 490 483 537
Semi-finished products(1,2) 317 361 361 453
Construction products 488 557 534 583
Railway products 940 842 823 685
Other steel products 530 579 576 636
Pellets 53 76 70 65
Metal Bulletin Ferro-Vanadium basis 78% min, free DDP,
consumer plant, 1st grade Western Europe(3) 23.05 30.72 41.62 81.28
Ryan's Notes N.A. FeV 80% min, US ex-warehouse, duty paid(3) 26.05 34.93 49.18 86.29
-------------------------------------------------------------- -------- -------- ------ ------
(1) Includes prices for pig iron
(2) The Q3 2019 data have been adjusted.
(3) US$/kgV
In Q1 2020, pig iron production volumes are expected to slightly
increase following the completion of capital repairs of blast
furnace no. 5, which took place in October 2019 at EVRAZ NTMK.
Pellet production volumes at EVRAZ KGOK should rise after a period
of reduced market demand in November and December. The Group
expects sinter production volumes to increase as a result of the
completion of capital repairs of the sintering machine in October
2019.
STEEL, NORTH AMERICA SEGMENT
Production and sales volumes
Product, kt Q4 Q3 2019 Q4 2019/ Q3 2019, change 12m 2019 12m 2018 12m 2019/ 12m 2018, change
2019
--------------------- ------- -------- ------------------------- --------- --------- ---------------------------
Crude steel 441 426 3.5% 1,861 1,898 -1.9%
EVRAZ US mills 213 226 -5.8% 925 911 1.5%
EVRAZ Canadian
mills 228 200 14.0% 936 986 -5.1%
Total steel products
production, net of
re-rolled volume 510 539 -5.4% 2,212 2,220 -0.4%
EVRAZ US mills 324 358 -9.5% 1,418 1,376 3.1%
EVRAZ Canadian
mills 186 181 2.8% 794 844 -5.9%
Sales of steel
products 536 540 -0.7% 2,230 2,156 3.4%
Semi-finished
products 34 45 -24.4% 209 57 266.7%
Construction
products 55 65 -15.4% 256 287 -10.8%
Railway products 123 115 7.0% 461 421 9.5%
Flat-rolled
products 115 126 -8.7% 522 568 -8.1%
Tubular products 209 189 10.6% 782 823 -5.0%
--------------------- ------- -------- ------------------------- --------- --------- ---------------------------
* The Q4 2019 production and sales volumes data are
preliminary.
In Q4 2019, crude steel production was up 3.5% QoQ. Volumes at
EVRAZ Regina's steelmaking operations were up, mainly driven by
higher production of large-diameter pipe (LDP) for current orders.
Steel production at EVRAZ Pueblo was down due to a planned
maintenance outage in October. In FY2019, EVRAZ Pueblo's steel
production was up 1.5% YoY, mainly due to higher rail demand.
During the same period, EVRAZ Regina's steel production fell by
5.1%, driven by a slowdown on the oil country tubular goods (OCTG)
and small line pipe markets due to high distributors' inventory,
aggressive local competition and construction delays on key
transmission pipelines.
In Q4 2019, sales of semi-finished products dropped by 24.4% due
to timing of customer orders for slabs.
Sales of construction products went down by 15.4% QoQ in Q4
2019, with continued sluggish demand caused by substantial customer
inventories, as well as foreign imports of wire rod and concrete
reinforcing bar, causing EVRAZ Pueblo's rod bar mill to be idled
for parts of November and December. In FY2019, construction product
sales were 10.8% lower than in FY2018, primarily due to reduced
demand for concrete reinforcing bar caused by inclement weather in
the beginning of 2019 and softer market demand as customers managed
inventory levels.
Sales of railway products in Q4 2019 increased by 7.0% QoQ with
the return to normal production levels after a separate maintenance
outage in September. In FY2019, sales of railway products climbed
by 9.5% YoY due to improved demand and market share growth, along
with greater sales volumes of the super-premium APEX G2 rails.
Flat-rolled product sales dropped by 8.7% QoQ in Q4 2019 and
8.1% YoY in FY2019 as a result of weakening market demand.
Tubular products sales volumes rose by 10.6% QoQ in Q4 2019 due
to a slight pickup in Canadian OCTG volumes and a higher LDP
recognition accumulated from production in Q3 and Q4 2019. Sales in
FY2019 were 5.0% lower than in FY2018 due to a significant
reduction in OCTG and line pipe demand, which was partly offset by
increased LDP sales carried over from 2018 and new orders.
Average selling prices
US$/t (ex works) Q4 Q3 12m 12m
2019 2019 2019 2018
----------------------- ------ ------ ------ ------
Construction products 644 699 745 820
Flat-rolled products 747 865 912 992
Tubular products 1,362 1,363 1,361 1,241
----------------------- ------ ------ ------ ------
In Q4 2019, prices for construction products decreased driven
primarily by sluggish market demand. Prices for flat-rolled
products dropped further during the period as service centres
continued to curtail purchases amid falling scrap prices and market
uncertainty driven by soft demand. Prices for tubular products were
flat compared with Q3 2019 due to higher-priced LDP orders offset
by continued softening of the OCTG markets and lower line pipe
prices. The fluctuation in prices for other steel products in the
quarterly and full-year comparatives is primarily driven by shifts
in product mix.
For Q1 2020, Canada's steel capacity is expected to be close to
full utilisation with crude steel output increasing by 10-15% QoQ
to address LDP production needs. Canadian tubular sales volumes are
expected to decrease by around 5-10% versus Q4 2019 driven by
extended recognition of current LDP orders and some volumes that
were pulled in December 2019 from January 2020. Sales of
flat-rolled products are forecast to improve in quarterly terms,
driven by the normal seasonal increase in Q1 2020 and significant
market softness in the prior quarter.
COAL SEGMENT
Production volumes
Product, kt Q4 Q3 Q4 2019/ Q3 2019, change 12m 2019 12m 2018 12m 2019/ 12m 2018, change
2019 2019
----------------------- ------- ------ ------------------------- --------- --------- ---------------------------
Raw coking coal
(mined) 5,981 6,319 -5.3% 26,140 24,188 8.1%
Yuzhkuzbassugol 3,065 3,043 0.7% 12,180 10,360 17.6%
Raspadskaya 2,712 2,965 -8.5% 12,824 12,740 0.7%
Mezhegeyugol 204 311 -34.4% 1,136 1,088 4.4%
Coking coal
concentrate
(production) 3,044 3,733 -18.5% 13,975 14,130 -1.1%
Produced at
Yuzhkuzbassugol coal
washing plants 1,407 1,570 -10.4% 6,247 6,419 -2.7%
Produced at the
Raspadskaya coal
washing plant 1,637 2,163 -24.3% 7,728 7,711 0.2%
----------------------- ------- ------ ------------------------- --------- --------- ---------------------------
In Q4 2019, overall raw coking coal output fell by 5.3% QoQ due
to lower production volumes, which was mainly a result of the
scheduled longwall move at the Raspadskaya mine in the period. In
FY2019, production of raw coking coal climbed by 8.1% YoY due to
the return to normal production levels after a maintenance outage
in 2018 at the Osinnikovskaya, Erunakovskaya and Uskovskaya mines,
driven by improvements to the repair system and equipment
maintenance in FY2019.
Output of coking coal concentrate dropped by 18.5%, primarily
due to lower market demand as China has exhausted annual coal
import quotas.
Sales volumes
Product, kt Q4 Q3 2019 Q4 2019/ Q3 2019, change 12m 2019 12m 2018 12m 2019/ 12m 2018, change
2019
--------------------- ------- -------- ------------------------- --------- --------- ---------------------------
External sales 2,514 2,953 -14.9% 11,053 11,048 0.0%
Raw coking coal* 527 741 -28.9% 2,212 1,725 28.2%
Coking coal
concentrate 1,987 2,212 -10.2% 8,841 9,323 -5.2%
Intersegment sales 1,688 1,712 -1.4% 6,569 6,016 9.2%
Raw coking coal 464 629 -26.2% 2,044 1,863 9.7%
Coking coal
concentrate 1,224 1,084 12.9% 4,525 4,153 9.0%
--------------------- ------- -------- ------------------------- --------- --------- ---------------------------
* The data include sales volumes of 1kt of coal recognised as
steam-grade coal based on its quality characteristics in FY2019 and
35kt in FY2018.
In Q4 2019, external sales volumes of coking coal products
decreased by 14.9%. Raw coking coal sales volumes fell by 28.9% QoQ
following change of sales mix in favour of coal concentrate. Coking
coal concentrate sales volumes dropped by 10.2% QoQ due to sluggish
market demand as China has exhausted annual coal import quotas.
Cash cost, US$/t Q4 Q3 2019 Q4 2019/ Q3 2019, change 12m 2019 12m 2018 12m 2019/ 12m 2018, change
2019
------------------------ ------- -------- ------------------------- --------- --------- -----------------------------
Coking coal concentrate 37 35 5.7% 35 47 -25.5%
------------------------ ------- -------- ------------------------- --------- --------- ---------------------------
Average selling prices
Q4 Q3 12m 12m
US$/t (ex works) 2019 2019 2019 2018
------------------------- ------ ------ ------- -------
Raw coking coal 35 45 49 65
Coking coal concentrate 84 88 99 120
------------------------- ------ ------ ------- -------
In Q4 2019, coking coal selling prices moved in line with global
benchmarks.
In Q1 2020, raw coal production is expected to slightly decrease
due to the completion of current coal seam mining at the Esaulskaya
mine before moving to a new seam.
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:
Moscow: +7 495 937 6871
media@evraz.com
Investor Relations:
Moscow: +7 495 232 1370
ir@evraz.com
EVRAZ is a vertically integrated steel, mining and vanadium
business with operations in the Russian Federation, Kazakhstan, US,
Canada and Czech Republic. EVRAZ is among the top steel producers
in the world based on crude steel production of 14mt in 2019. 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 2018
were US$12,836m and consolidated EBITDA amounted to US$3,777m.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
TSTMZGZMLLDGGZM
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