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Evraz Plc - EVRAZ Q2 2020 TRADING UPDATE

RNS Number : 5365U
Evraz Plc
30 July 2020
 

EVRAZ Q2 2020 TRADING UPDATE

30 July 2020 - EVRAZ plc (LSE: EVR; "EVRAZ" or the "Group") today released its trading update for the second quarter of 2020.

Q2 2020 vs Q1 2020 HIGHLIGHTS

·     In Q2 2020, EVRAZ' consolidated crude steel output fell by 5.1% QoQ, mainly due to capital repairs and gas pause at EVRAZ ZSMK in June as well as capital repairs at EVRAZ NTMK in May.

·     Total sales of steel products rose by 4.9% QoQ. Sales of semi-finished products increased by 19.5% QoQ following change in the product mix in favour of slab and billets resulted from decline in demand for finished products during the COVID-19 pandemic.

·     Sales of finished products fell by 6.9% amid weak market demand in Russia and North America as well as due to lower production volumes in Russia following scheduled capital repairs.

·     Total raw coking coal production decreased by 26.8% QoQ, driven by weaker demand for coal on global markets. Production at the Razrez Raspadsky open pit and at Mezhegeyugol has been suspended until favourable market conditions are restored. The decline was also due the move of the longwall at the Alardinskaya mine.

·     External sales volumes of coking coal products dropped by 14.6% QoQ, caused by lower shipments to Europe amid unfavourable market conditions.

·     External sales of iron ore products jumped by 25.6% QoQ amid higher shipments to the domestic market in Q2 2020.

·     Sales of vanadium products fell by 22.6% QoQ mainly due to lower steel utilisation rates as well as general decrease of vanadium demand following COVID 19 restrictions. The regional sales and product mix was changed to serve the more active Chinese oxide market during Q2 2020.

 

 

Product, '000 tonnes

Q2
2020

Q1
2020

Q2 2020/ Q1 2020, change

H1
 2020

H1
2019

H1 2020/ H1 2019, change

Total crude steel production

3,377

3,559

-5.1%

6,936

6,986

-0.7%

Russia

2,992

3,121

-4.1%

6,113

5,992

2.0%

North America

385

438

-12.1%

823

994

-17.2%

Total raw coking coal mined

4,165

5,692

-26.8%

9,857

13,840

-28.8%

Total coking coal concentrate
production

3,820

3,747

1.9%

7,567

8,142

-7.1%

Iron ore products production

3,460

3,595

-3.8%

7,055

7,169

-1.6%

Total sales of steel products

3,382

3,224

4.9%

6,605

6,510

1.5%

   Semi-finished products 1

1,724

1,443

19.5%

3,167

2,702

17.2%

   Finished products 1, 2

1,658

1,781

-6.9%

3,438

3,808

-9.7%

Total sales of third-party steel products

197

175

12.6%

372

376

-1.1%

Sales of coking coal products

2,800

3,278

-14.6%

6,079

5,585

8.8%

Sales of iron ore products

446

355

25.6%

801

699

14.6%

Sales of vanadium in slag

1,996

765

n/a

2,761

2,836

-2.6%

Sales of vanadium final products 3

2,450

3,168

-22.6%

5,618

5,784

-2.9%

Note. Numbers in this table and the tables below may not add up to totals due to rounding.

1 The Q1 2020 data have been adjusted

2 The H1 2019 data have been adjusted

3 In tonnes of pure vanadium

 

 

STEEL SEGMENT

Total production volumes

Product, '000 tonnes

Q2 2020

Q1 2020

Q2 2020/ Q1 2020, change

H1 2020

H1 2019

H1 2020/ H1 2019, change

Pig iron production

2,792

2,828

-1.3%

5,620

5,457

3.0%

EVRAZ ZSMK

1,532

1,556

-1.5%

3,088

3,001

2.9%

EVRAZ NTMK

1,260

1,272

-0.9%

2,532

2,456

3.1%

Crude steel production

2,992

3,121

-4.1%

6,113

5,992

2.0%

EVRAZ ZSMK

1,878

1,980

-5.2%

3,858

3,837

0.5%

EVRAZ NTMK

1,114

1,141

-2.4%

2,255

2,155

4.6%

Total steel products production, net of re-rolled volume1

2,739

2,867

-4.5%

5,606

5,381

4.2%

EVRAZ ZSMK

1,657

1,743

-4.9%

3,401

3,423

-0.6%

EVRAZ NTMK

994

1,032

-3.7%

2,025

1,638

23.6%

EVRAZ Caspian Steel

88

92

-3.9%

180

122

47.5%

Iron ore products production

3,460

3,595

-3.8%

7,055

7,169

-1.6%

Pellets (EVRAZ KGOK)

1,616

1,665

-2.9%

3,281

3,216

2.0%

Sinter (EVRAZ KGOK)

905

916

-1.2%

1,821

1,826

-0.3%

Concentrate saleable (EVRAZ KGOK, Evrazruda)

939

1,014

-7.4%

1,953

2,127

-8.2%

Coking coal concentrate production

496

486

2.1%

982

943

4.1%

From own raw coal2

480

350

37.1%

830

597

39.0%

From third-party raw coal

16

136

-88.2%

152

346

-56.1%

Gross vanadium slag production3

5,098

4,979

2.4%

10,077

8,979

12.2%

Note. Numbers in this table and the tables below may not add up to totals due to rounding.
1 Including EVRAZ Palini e Bertoli which was sold in Q4 2019.
2 From Coal segment
3 In tonnes of pure vanadium

In Q2 2020, pig iron production remained almost flat QoQ at the Russian mills.

Crude steel output decreased by 4.1% QoQ, mainly due to capital repairs and gas pause at EVRAZ ZSMK in June as well as capital repairs at EVRAZ NTMK in May.

Total output of steel products fell by 4.5% QoQ mainly due to lower crude steel availability at EVRAZ NTMK and EVRAZ ZSMK. EVRAZ Caspian Steel reduced production by 3.9% QoQ due to lower demand from customers.

Output of iron ore products fell by 3.8% QoQ, mainly due to a decrease in primary concentrate production volumes and the degree of fluxing at mining operations of EVRAZ ZSMK (former Evrazruda).
 

Total sales volumes

Product, '000 tonnes

Q2 2020

Q1
2020

Q1 2020/ Q4 2019, change

H1
2020

H1
2019

H1 2020/ H1 2019, change

Coke

81

105

-22.4%

178

4.5%

Steel products, external sales

2,921

2,707

7.9%

5 353

5.1%

Semi-finished products

1,670

1,353

23.4%

2 572

17.5%

   Slabs

737

570

29.2%

1 054

24.0%

   Billets

820

656

25.0%

1 191

23.8%

   Other steel products1

114

128

-10.8%

327

-26.3%

Finished products2

1,251

1,353

-7.6%

2 780

-6.3%

   Construction products

783

839

-6.6%

1 593

1.8%

   Railway products

311

358

-13.0%

710

-5.8%

   Flat products

0

0

n/a

189

-100.0%

   Other steel products

157

157

-0.2%

288

9.0%

Steel products, inter-segment sales

3

40

-91.7%

301

-85.4%

Third-party steel products, external sales

197

175

12.6%

376

-1.1%

Iron ore products, external sales

446

355

25.6%

699

14.6%

Pellets

446

355

25.6%

699

14.6%

Sales of vanadium in slag

1,996

765

n/a

2 836

-2.6%

Sales of vanadium final products3

2,450

3,168

-22.6%

5 618

5 784

-2.9%

Note. Numbers in this table and the tables below may not add to totals due to rounding.

1 Includes tonnes of pig iron

2 EVRAZ Palini e Bertoli was sold in Q4 2019

3In tonnes of pure vanadium

 

In Q2 2020, external sales of steel products increased by 7.9% QoQ. Sales of semi-finished products climbed by 23.4% QoQ, due to a change in the product mix to higher slab and billets sales volumes and a decrease in the volumes of finished products due to market conditions during the COVID-19 pandemic.

 

Sales of finished products dropped by 7.6% QoQ due worsening market conditions during the pandemic as well as lower production volumes amid scheduled capital repairs at EVRAZ ZSMK and EVRAZ NTMK.

 

Sales of iron ore products surged by 25.6% QoQ amid higher shipments to the domestic market in Q2 2020.

 

Sales of vanadium products fell by 22.6% QoQ mainly due to lower steel utilisation rates as well as general decrease of vanadium demand following COVID 19 restrictions. The regional sales and product mix was changed to serve the more active Chinese oxide market during Q2 2020.

 

Cash cost, US$/t

Q2

2020

Q1

2020

Q2 2020 / Q1 2020, change

 H1

2020

 H1

2019

H1 2020 / H1 2019, change

Slab cash cost vertically integrated

198

223

-11%

210

230

-9%

Iron ore products (Fe 62%)

38

38

0%

38

38

0%

               

 

Average selling prices

US$/tonne (exworks)

Q2

2020

Q1

2020

H1

2020

H1

2019

Coke

148

167

159

233

Steel products

401

477

438

494

Semi-finished products1

296

346

319

387

Construction products

441

505

474

544

Railway products

812

925

873

753

Other steel products

490

509

500

596

Pellets

47

54

49

77

Metal Bulletin Ferro-Vanadium basis 78% min, free DDP, consumer plant, 1st grade Western Europe2

24.94

26.54

25.74

56.35

Ryan's Notes N.A. FeV 80% min, US ex-warehouse, duty paid2

23.28

27.18

25.23

67.87

1 Includes prices for pig iron

2 US$/kgV

 

During Q3 2020, pig iron production volumes are expected to decrease following ramp-up of blast furnace no.6, which will replace blast furnace no.5 at EVRAZ NTMK in July-August.

 

Iron ore pellets production volumes are expected to remain flat, while sinter production is expected to decrease due to capital repairs at EVRAZ KGOK's sinter plant in July - September 2020.

 

 

STEEL, NORTH AMERICA SEGMENT

 

Production and sales volumes

Product, '000 tonnes

Q2

2020

Q1 2020

Q2 2020/

Q1 2020, change

H1 2020

H1

2019

H1 2020/ H1 2019, change

Crude steel

385

438

-12.1%

823

994

-17.2%

EVRAZ US mills

210

251

-16.3%

461

486

-5.1%

EVRAZ Canadian mills

175

188

-6.9%

363

508

-28.5%

Total steel products production, net of re-rolled volume 1

461

486

-5.1%

947

1 163

-18.6%

EVRAZ US mills

300

336

-10.7%

636

735

-13.5%

EVRAZ Canadian mills

161

150

7.3%

311

428

-27.3%

Sales of steel products

457

517

-10.9%

978

1 158

-15.5%

Semi-finished products 1

54

90

-39.8%

144

130

10.8%

Construction products

68

66

2.5%

133

136

-2.2%

Railway products 1, 2

107

106

1.7%

213

223

-4.5%

Flat-rolled products 1

69

100

-31.1%

169

282

-40.1%

Tubular products 1

163

156

4.5%

319

387

-17.6%

               

1 The Q1 2020 data have been adjusted

2 The H1 2019 data have been adjusted

 

In Q2 2020, crude steel production was 12.1% lower QoQ, mainly attributable to falling demand across North American steel markets amid the COVID-19 pandemic and uncertainty driven by oil prices turmoil. In addition, production was affected by the shutdown of Regina Steel, which extended into early Q2 2020 with the advancement of a planned maintenance outage following the March 2020 cyber-attack.

 

Total output of steel products decreased by 5.1%, mainly driven by reduced demand for flat-rolled products from distributors adjusting to swift market changes brought on by the pandemic during the period and rapid deterioration of the energy markets in North America halting OCTG demand.

 

Canadian mills increased production by 7.3% QoQ due to higher large diameter (LD) and line pipe (LP) production following downtime in March triggered by the cyberattack and improved operational performance. This was partially offset by lower Canadian OCTG production due to the fall in market demand in wake of sharply reduced oil prices. Lower rig counts in Western Canada resulted in sharp reductions in demand, and the idling of pipe mills in Calgary, Red Deer and Camrose in Q2 2020.

 

US mills decreased production by 10.7% QoQ due to declined flat-rolled orders at EVRAZ Portland and OCTG orders at Pueblo Seamless. Similar to the Canadian OCTG mills, Pueblo Seamless volumes were also affected by oil price reductions, which resulted in the idling of the Seamless mill in early Q2 2020.

 

Semi-finished product sales fell by 39.8% following successful fulfilment of a contract with a key customer.

Flat-rolled product sales dropped by 31.1% QoQ as a result of weakening market demand.

 

Sales volumes of tubular products climbed by 4.5% QoQ, driven by the Canadian LD and LP production increases during the period relative to Q1 2020. Railway and construction products demand remained stable QoQ.

 

Prices for construction products decreased 4.7% QoQ, driven by lower scrap costs. Prices for tubular products rose driven primarily by a mix of orders, while prices for flat-rolled products remained unchanged on average.

 

 

Average selling prices

US$/tonne (ex-works)

Q2

2020

Q1

2020

H1

2020

H1

2019

Construction products*

681

715

698

808

Flat-rolled products*

891

904

899

999

Tubular products*

1 479

1 350

1 416

1 353

* The Q1 2020 data have been adjusted

 

In Q3 2020, significant uncertainty remains around production and sales volumes for all product groups due to continued turmoil in the oil & gas markets and the slow economic recovery during the resurgent COVID-19 pandemic, leaving North American customers cautious in purchasing strategies.

 

COAL SEGMENT

 

Production volumes

Product, '000 tonnes

Q2

2020

Q1

2020

Q2 2020/ Q1 2020, change

H1 2020

H1
2019

H1 2020/ H1 2019, change

Raw coking coal (mined)

4,165

5,692

-26.8%

9,857

13,840

-28.8%

Yuzhkuzbassugol

2,053

2,704

-24.1%

4,757

6,072

-21.7%

Raspadskaya

2,112

2,952

-28.5%

5,064

7,147

-29.1%

Mezhegeyugol

0

36

-100.0%

36

621

-94.2%

Coking coal concentrate (production)

3,324

3,261

1.9%

6,585

7,198

-8.5%

Produced at Yuzhkuzbassugol coal
washing plants

1,328

1,411

-5.9%

2,739

3,270

-16.2%

Produced at the Raspadskaya coal
washing plant

1,996

1,850

7.9%

3,846

3,928

-2.1%

 

In Q2 2020, overall raw coking coal output fell by 26.8% QoQ, primarily due to weaker market demand as well as lower production at the Razrez Raspadsky open pit and Mezhegeyugol, following the decision to suspend output due to unfavourable market conditions as well as the completion of a mining at longwall at the Raspadskaya mine.

 

Production at Yuzhkuzbassugol went down by 28.5% QoQ mainly due to the longwall move at the Alardinskaya mine.

 

Output of coking coal concentrate rose by 1.9% QoQ as Raspadskaya coal washing plant processed additional volumes of raw coal from the stockpiles in order to offset lower production at Yuzhkuzbassugol coal washing plants.

 

Sales volumes

Product, '000 tonnes

Q2

2020

Q1

2020

Q2 2020/ Q1 2020, change

H1

2020

H1

2019

H1 2020/ H1 2019, change

External sales

2,800

3,278

-14.6%

6,079

5,586

8.8%

Raw coking coal

492

707

-30.4%

1,198

944

26.9%

Coking coal concentrate

2,309

2,572

-10.2%

4,880

4,642

5.1%

Intersegment sales

1,880

1,624

15.8%

3,503

3,169

10.5%

    Raw coking coal

712

492

44.9%

1,204

952

26.5%

Coking coal concentrate

1,167

1,132

3.1%

2,300

2,217

3.7%

 

In Q2 2020, external sales volumes of coking coal products declined by 14.6% QoQ. Raw coking coal sales volumes fell by 30.4% QoQ, following lower shipments to Europe due to unfavourable market conditions. Coking coal concentrate sales volumes decreased by 10.2% QoQ, attributable to lower shipments and partly offset by stable demand in Russia and on the Chinese spot market.

 

Cash cost, US$/t

Q2

2020

Q1

2020

Q1 2020 / Q4 2019, change

H1

2020

H1

2019

Q1 2020 / Q1 2019, change

Coking coal concentrate

34

33

3%

34

34

0%

 

Average selling prices

 

US$/tonne (ex works)

 

Q2

2020

Q1

2020

H1

2020

H1

2019

Raw coking coal

39

33

36

59

Coking coal concentrate

65

70

67

110

 

In Q2 2020, coking coal selling prices moved in line with global benchmarks.

 

In Q3 2020, raw coal production is expected to increase QoQ due to the completion of the longwalls move at the Esaulskaya, Alardinskaya, Osinnikovskaya  and Uskovskaya mines in Q2 2020.

 

 

 

 

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

[email protected]

 

Investor Relations:

+7 495 232 1370

[email protected]

 

EVRAZ is a vertically integrated steel, mining and vanadium business with operations in Russia, Kazakhstan, the US, Canada and Czech Republic. EVRAZ is among the top steel producers in the world based on crude steel production of 14 million tonnes in 2019. A significant portion of the Group's internal consumption of iron ore and coking coal is covered by its mining operations. The Group's consolidated revenues for the year ended 31 December 2019 were US$11,905 million, and consolidated EBITDA amounted to US$2,601 million.

 


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