TIDMEVR
RNS Number : 5923D
Evraz Plc
29 October 2020
EVRAZ Q 3 2020 TRADING UPDATE
29 October 2020 - EVRAZ plc (LSE: EVR; "EVRAZ" or the "Group")
today released its trading update for the third quarter of
2020.
Q3 2020 vs Q2 2020 HIGHLIGHTS
-- In Q3 2020, EVRAZ' consolidated crude steel output fell by
4.4% QoQ, mainly due to the planned shutdown of blast furnace no. 5
and the launch of blast furnace no. 6 after the completion of a
major overhaul at EVRAZ NTMK.
-- Total sales of steel products decreased by 9.5% QoQ. Sales of
semi-finished products fell by 24.1% QoQ following the increase of
sales of finished goods to the Russian market.
-- Sales of finished products increased by 5.7% QoQ amid better
market conditions in Russia and an improved product mix.
-- Total raw coking coal production went up by 14.6% QoQ, driven
by the completion of longwall moves at the Alardinskaya and
Esaulskaya mines in Q2 2020.
-- While production at the Razrez Raspadsky open pit remained
suspended during the reporting period due to unfavourable market
conditions, operations were resumed in October 2020 amid dwindling
stockpiles and rising prices for coal products.
-- External sales volumes of coking coal products climbed by
23.6% QoQ following an improvement in market conditions.
-- External sales of iron ore products grew by 9.0% QoQ amid
higher shipments to export markets in Q3 2020.
-- Sales of vanadium products rose by 13.4% QoQ, mainly due to
increased steel utilisation rates and a slight recovery of the
automotive industry. The regional sales and product mix was also
changed to serve the more active Chinese oxide market.
Product, '000 tonnes Q3 Q2 Q3 2020/ Q2 2020, change 9m 9m 9m 2020/ 9m 2019, change
2020 2020 2020 2019
---------------------------- ------- ------- ------------------------- ------- ------- -------------------------
Total crude steel
production 3,227 3,377 -4.4% 10,163 10,364 -1.9%
Russia 2,893 2,992 -3.3% 9,006 8,945 0.7%
North America 334 385 -13.2% 1,157 1,419 -18.5%
Total raw coking coal mined 4,775 4,165 14.6% 14,632 20,159 -27.4%
Total coking coal
concentrate
production 3,873 3,820 1.4% 11,440 12,385 -7.6%
Iron ore products
production 3,508 3,460 1.4% 10,563 10,488 0.7%
Total sales of steel
products 3,062 3,382 -9.5% 9,668 9,884 -2.2%
Semi-finished products 1,309 1,724 -24.1% 4,476 4,131 8.4%
Finished products 1,753 1,658 5.7% 5,192 5,753 -9.8%
Total sales of third-party
steel products 267 197 35.5% 639 601 6.3%
Sales of coking coal
products 3,460 2,800 23.6% 9,539 8,539 11.7%
Sales of iron ore products 486 446 9.0% 1,287 861 49.5%
Sales of vanadium in slag 1,605 1,996 -19.6% 4,366 4,529 -3.6%
Sales of vanadium final
products (1) 2,779 2,450 13.4% 8,397 9,369 -10.4%
---------------------------- ------- ------- ------------------------- ------- ------- -------------------------
Note. Numbers in this table and the tables below may not add up
to totals due to rounding.
(1) In tonnes of pure vanadium
CONFERENCE CALL DETAILS
A conference call to discuss the trading update will be held on
Thursday, 29 October 2020, at:
-- 08:00 (New York time)
-- 12:00 (London time)
-- 15:00 (Moscow time)
Key speakers:
-- Alexey Ivanov , Senior Vice President, Commerce and Business Development
-- Evgeny Terekhov , Head of sales, Coal Division
-- Olesya Afanasyeva , Vice President Finance, Interim CFO, EVRAZ North America
To join the call, please dial:
+44 (0)330 336 9411 (local access) or 0800 UK
279 7204 (toll free)
+7 495 646 9190 (local access) or 8 10 8002 Russia
8675011 (toll free)
+1 646-828-8193 (local access) or 888-394-8218 US
(toll free)
Access code : 6381713
To avoid any technical inconvenience, it is recommended that
participants dial in 10 minutes before the start of the call.
The Q 3 2020 trading update presentation will be available on
the Group's website, www.evraz.com , on Thursday,
29 October 2020, at the following link:
https://www.evraz.com/en/investors/reports-and-results/presentations/
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
Q3 2020/ Q2 2020,
Product, '000 tonnes Q3 2020 Q2 2020 change 9m 2020 9m 2019 9m 2020/ 9m 2019, change
------------------------- -------- -------- ------------------------ -------- -------- -------------------------
Pig iron production 2,686 2,792 -3.8% 8,306 8,252 0.7%
EVRAZ ZSMK 1,556 1,532 1.6% 4,644 4,517 2.8%
EVRAZ NTMK 1,130 1,260 -10.3% 3,662 3,735 -2.0%
Crude steel production 2,893 2,992 -3.3% 9,006 8,945 0.7%
EVRAZ ZSMK 1,880 1,878 0.1% 5,738 5,703 0.6%
EVRAZ NTMK 1,013 1,114 -9.1% 3,268 3,242 0.8%
Total steel products
production, net of
re-rolled volume(1) 2,600 2,739 -5.1% 8,206 8,149 0.7%
EVRAZ ZSMK 1,608 1,657 -3.0% 5,008 5,047 -0.8%
EVRAZ NTMK 930 994 -6.4% 2,956 2,607 13.4%
EVRAZ Caspian Steel 62 88 -29.5% 242 208 16.3%
Iron ore products
production 3,508 3,460 1.4% 10,563 10,488 0.7%
Pellets (EVRAZ KGOK) 1,607 1,616 -0.6% 4,888 4,672 4.6%
Sinter (EVRAZ KGOK) 833 905 -8.0% 2,654 2,709 -2.0%
Concentrate saleable
(EVRAZ KGOK,
Evrazruda) 1,068 939 13.7% 3,021 3,107 -2.8%
Coking coal concentrate
production 475 496 -4.2% 1,457 1,454 0.2%
From own raw coal(2) 317 480 -34.0% 1,147 1,004 14.2%
From third-party raw
coal 158 16 887.5% 310 450 -31.1%
Gross vanadium slag
production(3) 4,419 5,098 -13.3% 14,496 13,713 5.7%
------------------------- -------- -------- ------------------------ -------- -------- -------------------------
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 Q3 2020, pig iron production fell by 3.8% QoQ, mainly due to
the planned shutdown of blast furnace no. 5 and launch of blast
furnace no. 6 at EVRAZ NTMK after completion of major overhaul.
Crude steel output decreased by 3.3% QoQ, primarily due to lower
pig iron availability.
Total output of steel products fell by 5.1% QoQ amid lower crude
steel availability. EVRAZ Caspian Steel reduced production by 29.5%
QoQ due to lower demand.
Output of iron ore products went up by 1.4% QoQ, mainly due to
an increase in primary concentrate production volumes at EVRAZ ZSMK
(former Evrazruda). This was partly offset by scheduled capital
repairs at EVRAZ KGOK's sinter plant in July-August 2020.
Total sales volumes
Product, '000 tonnes Q3 2020 Q2 Q3 2020/ Q2 2020, change 9m 9m 9m 2020/ 9m 2019, change
2020 2020 2019
---------------------- -------- ---------- ------------------------- --------- ------- -------------------------
Coke 130 81 60.5% 316 271 16.6%
Steel products,
external sales 2,703 2,921 -7.5% 8,331 8,199 1.6%
Semi-finished
products 1,309 1,670 -21.6% 4,332 3,970 9.1%
Slabs 436 737 -40.8% 1,743 1,723 1.2%
Billets 735 820 -10.4% 2,211 1,753 26.1%
Other steel
products(1) 138 113 22.1% 378 494 -23.5%
Finished products 1,394 1,251 11.4% 3,999 4,228 -5.4%
Construction
products 925 783 18.1% 2,547 2,476 2.9%
Railway products 310 311 -0.3% 979 1,024 -4.4%
Flat products 0 0 n/a 0 268 -100.0%
Other steel
products 159 157 1.3% 473 460 2.8%
Steel products,
inter-segment sales 3 3 0.0% 46 308 -85.1%
Third-party steel
products, external
sales 267 197 35.5% 639 601 6.3%
Iron ore products,
external sales 486 446 9.0% 1,287 861 49.5%
Pellets 486 446 9.0% 1,287 861 49.5%
Sales of vanadium in
slag 1,605 1,996 -19.6% 4,366 4,529 -3.6%
Sales of vanadium
final products(2) 2,779 2,450 13.4% 8,397 9,369 -10.4%
---------------------- -------- ---------- ------------------------- --------- ------- -------------------------
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 Q3 2020, external sales of steel products fell by 7.5% QoQ.
Sales of semi-finished products went down by 21.6% QoQ following
the increase of sales of finished goods to the Russian market.
Sales of finished products rose by 11.4% QoQ due to better
market conditions in Russia and an improved product mix.
Sales of iron ore products surged by 9.0% QoQ amid higher
shipments to export markets in Q3 2020.
Sales of vanadium products grew by 13.4% QoQ, primarily due to
increased steel utilisation rates and a slight recovery of the
automotive industry. The regional sales and product mix was also
changed to serve the more active Chinese oxide market.
Cash cost, US$/t Q3 Q2 Q3 2020 / Q2 2020, change 9m 9m 9m 2020 / 9m 2019, change
2020 2020 2020 2019
-------------------------- ------ ------ -------------------------- ------- ------- --------------------------
Slab cash cost vertically
integrated 200 198 1% 206 234 -12%
Iron ore products (Fe
62%) 35 35 0% 36 39 -8%
-------------------------- ------ ------ -------------------------- ------- ------- --------------------------
Average selling prices
US$/tonne (ex-works) Q3 Q2 9m 9m
2020 2020 2020 2019
-------------------------------------------------------------------------------------- ------ ------ ------ ------
Coke 135 148 149 225
Steel products 435 401 437 493
Semi-finished products(1) 315 296 318 378
Construction products 473 441 474 548
Railway products 796 812 848 780
Other steel products 477 490 492 590
Pellets 61 47 54 77
Metal Bulletin Ferro-Vanadium basis 78% min, free DDP, consumer plant, 1st grade
Western Europe(2) 24.23 24.94 25.74 56.35
Ryan's Notes N.A. FeV 80% min, US ex-warehouse, duty paid(2) 21.81 23.28 25.23 67.87
-------------------------------------------------------------------------------------- ------ ------ ------ ------
(1) Includes prices for pig iron
(2) US$/kgV
In Q4 2020, pig iron production volumes are expected to increase
following the launch of blast furnace no.6 at EVRAZ NTMK.
Iron ore pellet production volumes are expected to rise
following the completion of scheduled repairs of the roast and
sinter machines at EVRAZ KGOK's sinter plant in Q3 2020.
STEEL, NORTH AMERICA SEGMENT
Production and sales volumes
Product, '000 tonnes Q3 Q2 2020 Q3 2020/ 9m 2020 9m 9m 2020/ 9m 2019, change
2020 Q2 2020, change 2019
---------------------------------- ------ -------- ----------------- -------- ------ -------------------------
Crude steel 334 385 -13.3% 1,157 1,419 -18.5%
EVRAZ US mills 181 210 -13.8% 642 711 -9.7%
EVRAZ Canadian mills 153 175 -12.6% 516 708 -27.1%
Total steel products production,
net of re-rolled volume 377 446 -15.6% 1,291 1,700 -24.1%
EVRAZ US mills 257 288 -10.8% 856 1,092 -21.6%
EVRAZ Canadian mills 119 158 -24.5% 435 608 -28.5%
Sales of steel products 359 461 -22.1% 1,337 1,686 -20.7%
Semi-finished products 0 54 -100.0% 144 161 -10.6%
Construction products 61 68 -10.1% 194 201 -3.5%
Railway products 91 107 -15.0% 304 339 -10.3%
Flat-rolled products 100 69 44.9% 269 408 -34.1%
Tubular products 107 163 -34.4% 426 577 -26.2%
---------------------------------- ------ -------- ----------------- -------- ------ -------------------------
In Q3 2020, crude steel production was 13.3% lower QoQ, which
was attributable primarily to continued depressed demand across
North American steel markets due to the slow economic recovery amid
the COVID-19 pandemic and energy market uncertainty.
Total output of steel products declined by 15.6%, as steep drops
in demand brought on by the pandemic remained in place for OCTG and
other products in the Group's portfolio. In addition, production
was affected by a planned maintenance outage in Pueblo.
Semi-finished products sales fell by 100.0% following fulfilment
of the contract with a key customer.
Flat-rolled product sales spiked 44.9% QoQ as the Q3 2020
volumes improved over extremely low Q2 2020 levels. Higher sales
were driven by service centres' purchases to replenish inventories,
which dropped to historically low levels in Q2 2020. Demand,
however, remains soft given continued market uncertainty.
Construction product sales decreased by 10.1% due to maintenance
downtime in July and August 2020.
Railway product sales decreased by 15.0% amid the usual seasonal
slowdown of purchases from Class I railroads, accompanied by a
planned maintenance outage in September.
Sales volumes of tubular products dropped by 34.4% QoQ, as the
Group's OCTG mills in Canada and the US remained idled. At the same
time, line pipe production continued to be stable with both large
and small diameter mills producing to current orders.
Prices for construction products remained flat QoQ, while those
for tubular products rose by 9% QoQ, driven primarily by changes in
the order mix. Prices for flat-rolled products, however, showed a
6% QoQ decline, as producers continued to compete for the limited
available demand, putting downward pressure on prices.
Average selling prices
US$/tonne (ex-works) Q3 Q2 9m 9m
2020 2020 2020 2019
------------------------ ------ ------ ------ ------
Construction products* 649 647 660 772
Flat-rolled products* 719 764 765 958
Tubular products* 1,401 1,283 1,300 1,354
------------------------ ------ ------ ------ ------
* The Q2 2020 data have been adjusted
In Q4 2020, headwinds will remain for production and sales
volumes for all product groups due to the uncertainty in energy
markets and slow economic recovery during the resurgent COVID-19
pandemic, leaving North American customers cautious in their
purchasing decisions.
COAL SEGMENT
Production volumes
Product, '000 tonnes Q3 Q2 Q3 2020/ Q2 2020, change 9m 2020 9m 9m 2020/ 9m 2019, change
2020 2020 2019
----------------------------- ------ ------ ------------------------- -------- ------- -------------------------
Raw coking coal (mined) 4,775 4,165 14.6% 14,632 20,159 -27.4%
Yuzhkuzbassugol 3,341 2,053 62.7% 8,098 9,115 -11.2%
Raspadskaya 1,434 2,112 -32.1% 6,498 10,112 -35.7%
Mezhegeyugol 0 0 n/a 36 932 -96.1%
Coking coal concentrate
(production) 3,398 3,324 2.2% 9,983 10,931 -8.7%
Produced at Yuzhkuzbassugol
coal
washing plants 1,506 1,328 13.4% 4,245 4,840 -12.3%
Produced at the Raspadskaya
coal
washing plant 1,892 1,996 -5.2% 5,738 6,091 -5.8%
----------------------------- ------ ------ ------------------------- -------- ------- -------------------------
In Q3 2020, overall raw coking coal output grew by 14.6% QoQ,
primarily due to the completion of longwall moves at the
Alardinskaya and Esaulskaya mines in Q2 2020.
Production at Raspadskaya went down by 32.1% QoQ, mainly as a
result of the continued suspension of production at the Razrez
Raspadsky open pit, which began in May 2020 due to unfavourable
market conditions, as well as due to dome formation problems,
difficult gas conditions and increased water ingress at the
Raspadskaya mine. The Raspadskaya-Koksovaya mine also saw a
reduction in output due to additional gas safety work and the
gradual return to target mining volumes after completing a longwall
move.
Output of coking coal concentrate rose by 2.2% QoQ due to the
completion of longwall moves at the Osinnikovskaya, Esaulskaya and
Alardinskaya mines in Q2 2020, which was partly offset by lower
production volumes at Raspadskaya coal washing plant due to reduced
raw coal availability.
Sales volumes
Product, '000 tonnes Q3 Q2 Q3 2020/ Q2 2020, change 9m 9m 9m 2020/ 9m 2019, change
2020 2020 2020 2019
------------------------ -------------- ------ ------------------------- ------ ------ -------------------------
External sales 3,460 2,800 23.6% 9,539 8,539 11.7%
Raw coking coal 822 492 67.2% 2,021 1,685 19.9%
Coking coal
concentrate 2,638 2,309 14.3% 7,518 6,854 9.7%
Intersegment sales 1,824 1,880 -3.0% 5,327 4,882 9.1%
Raw coking coal 622 712 -12.6% 1,826 1,581 15.5%
Coking coal
concentrate 1,202 1,167 2.9% 3,501 3,301 6.1%
------------------------ -------------- ------ ------------------------- ------ ------ -------------------------
In Q3 2020, external sales volumes of coking coal products
climbed by 23.6% QoQ. Raw coking coal sales volumes grew by 67.2%
QoQ due to higher sales of coal from the Uskovskaya mine to serve
clients' needs.
Cash cost, US$/t Q3 Q2 Q3 2020 / Q2 2020, change 9m 9m 9m 2020 / 9m 2019, change
2020 2020 2020 2019
------------------------- ------ ------ -------------------------- ------ ------ --------------------------
Coking coal concentrate 31 34 -9% 33 35 -6%
------------------------- ------ ------ -------------------------- ------ ------ --------------------------
Average selling prices
Q3 Q2 9m 9m
US$/tonne (ex-works) 2020 2020 2020 2019
------------------------- ---------------- ------ ------ ------
Raw coking coal 30 39 34 53
Coking coal concentrate 57 65 64 103
------------------------- ---------------- ------ ------ ------
In Q3 2020, coking coal selling prices moved in line with global
benchmarks.
In Q4 2020, raw coal production is expected to increase QoQ amid
a return to the planned capacity after eliminating mining and
geological violations at the Raspadskaya and Raspadskaya-Koksovaya
mines. This will also be supported by the completion of a longwall
move at the Esaulskaya mine and resumption of production at the
Razrez Raspadsky open pit. Might be partly offset though by a
longwall move at the Uskovskaya mine in Q4 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
media@evraz.com
Investor Relations:
+7 495 232 1370
ir@evraz.com
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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