TIDMEVR

RNS Number : 2820N

Evraz Plc

29 January 2021

29 January 2021 - EVRAZ plc (LSE: EVR; "EVRAZ" or the "Group") today released its trading update for the fourth quarter and full year 2020.

Q4 2020 vs Q3 2020 HIGHLIGHTS

-- In Q4 2020, EVRAZ' consolidated crude steel output rose by 7.4% QoQ, mainly due to higher production volumes at EVRAZ NTMK following the completion of scheduled capital repairs during Q3 2020, as well as improved production volumes at EVRAZ North America, which grew by 26.6% QoQ.

-- Total sales of steel products increased by 12.0% QoQ, driven primarily by sales of semi-finished products, which grew by 30.4%. This, in turn, was mainly the result of a recovery in export markets and weaker demand for finished construction products in Russia due to seasonal factors.

-- Total raw coking coal production rose by 26.1% QoQ, driven by the relaunch of production at the Razrez Raspadsky open pit as well as better production volumes at the Raspadskaya mine.

-- Coking coal concentrate production grew by 6.4% QoQ, mainly due to increased coal mining volumes.

-- External sales volumes of coking coal products fell by 19.2% QoQ, due to a deficit of GZh grade coal amid longwall move at the Uskovskaya mine as well as elevated levels of Q2-Q3 2020 sales amid utilisation of stockpiles.

-- External sales of iron ore products decreased by 8.4% QoQ, amid higher consumption of pellets by EVRAZ NTMK following the successful launch of blast furnace no. 6 in Q3 2020.

-- Sales of vanadium products rose by 51.4% QoQ, mainly due to higher steel utilisation rates, following increased FeV demand also from the automotive industry as well as some increase of oxide and FeV sales to China during Q4 2020.

FY2020 vs FY2019 HIGHLIGHTS

-- In 2020, EVRAZ' consolidated crude steel production remained almost flat YoY (-1.3%), despite challenges created by the COVID-19 pandemic. In addition, turbulence in the oil and gas markets led to lower demand, resulting in decrease of production volumes at EVRAZ North America.

-- Sales volumes of semi-finished products increased by 6.1% YoY, primarily due to a change in the product mix in favour of higher slab and billets sales to export destinations following a decrease in demand in Russia during the COVID-19 pandemic.

-- Sales of finished products declined by 10.1%, mainly attributable to the sale of Palini e Bertoli in 2019, as well as lower tubular and flat-rolled products sales at EVRAZ North America, amid unfavourable market conditions caused by the COVID-19 pandemic.

-- Production of raw coking coal fell by 21.0% YoY, due to a halt in mining at the Razrez Raspadsky open pit from May to September 2020, the idling of the Mezhegeyugol mine from March 2020 and lower production volumes at the Raspadskaya mine due to challenging geological conditions.

-- External iron ore product sales rose by 52.7% YoY, primarily as a result of higher shipments to external markets amid lower consumption of pellets by EVRAZ NTMK during a major overhaul of blast furnace no.6, which was successfully launched in Q3 2020.

-- Sales of final vanadium products declined by 2.2% YoY, mainly due to reduced global FeV demand, following the imposition of COVID-19 restrictions (which were partially compensated by changing the regional sales and product mix to serve the more active Chinese oxide market during 2020).

 
 Product, '000 tonnes          Q4       Q3     Q4 2020/ Q3 2020, change    12m      12m     12m 2020/ 12m 2019, change 
                               2020     2020                                2020     2019 
--------------------------  -------  -------  -------------------------  -------  -------  --------------------------- 
 Total crude steel 
  production                  3,467    3,227                       7.4%   13,630   13,814                        -1.3% 
   Russia                     3,044    2,893                       5.2%   12,050   11,953                         0.8% 
   North America                423      334                      26.6%    1,580    1,861                       -15.1% 
 Total raw coking coal 
  mined                       6,021    4,775                      26.1%   20,653   26,140                       -21.0% 
 Total coking coal 
  concentrate 
  production                  4,088    3,873                       5.6%   15,528   15,922                        -2.5% 
 Iron ore products 
  production                  3,642    3,508                       3.8%   14,205   13,765                         3.2% 
 Total sales of steel 
  products                    3,410    3,046                      12.0%   13,062   13,479                        -3.1% 
   Semi-finished products     1,707    1,309                      30.4%    6,183    5,828                         6.1% 
   Finished products          1,703    1,737                      -1.9%    6,879    7,651                       -10.1% 
 Total sales of 
  third-party steel 
  products                      209      267                     -21.7%      848      801                         5.9% 
 Sales of coking coal 
  products                    2,797    3,460                     -19.2%   12,336   11,053                        11.6% 
 Sales of iron ore 
  products                      445      486                      -8.4%    1,732    1,134                        52.7% 
 Sales of vanadium in slag    1,763    1,605                       9.8%    6,129    6,451                        -5.0% 
 Sales of vanadium final 
  products (1)                4,207    2,779                      51.4%   12,604   12,883                        -2.2% 
--------------------------  -------  -------  -------------------------  -------  -------  --------------------------- 
 

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

(1) In tonnes of pure vanadium

STEEL SEGMENT

Total production volumes

 
                                                  Q4 2020/ Q3 2020,                              12m 2020/ 12m 2019, 
 Product, '000 tonnes      Q4 2020   Q3 2020           change            12m 2020   12m 2019           change 
------------------------  --------  --------  ------------------------  ---------  ---------  ------------------------ 
 Pig iron production         2,851     2,686                      6.1%     11,157     11,016                      1.3% 
  EVRAZ ZSMK                 1,564     1,556                      0.5%      6,208      6,072                      2.2% 
  EVRAZ NTMK                 1,287     1,130                     13.9%      4,949      4,944                      0.1% 
 Crude steel production      3,044     2,893                      5.2%     12,050     11,953                      0.8% 
   EVRAZ ZSMK                1,933     1,880                      2.8%      7,671      7,659                      0.2% 
   EVRAZ NTMK                1,111     1,013                      9.7%      4,379      4,294                      2.0% 
 Total steel products 
  production, net of 
  re-rolled volume(1)        2,876     2,600                     10.6%     11,082     11,018                      0.6% 
   EVRAZ ZSMK                1,758     1,608                      9.3%      6,766      6,817                     -0.7% 
   EVRAZ NTMK                1,043       930                     12.2%      3,999      3,590                     11.4% 
   EVRAZ Caspian Steel          75        62                     21.0%        317        283                     12.0% 
 Iron ore products 
  production                 3,642     3,508                      3.8%     14,205     13,765                      3.2% 
   Pellets (EVRAZ KGOK)      1,660     1,607                      3.3%      6,548      6,203                      5.6% 
   Sinter (EVRAZ KGOK)         928       833                     11.4%      3,582      3,511                      2.0% 
   Concentrate saleable 
    (EVRAZ KGOK, EVRAZ 
    ZSMK)                    1,054     1,068                     -1.3%      4,075      4,051                      0.6% 
 Coking coal concentrate 
  production                   473       475                     -0.4%      1,930      1,947                     -0.9% 
   From own raw coal(2)        371       317                     17.0%      1,518      1,335                     13.7% 
   From third-party raw 
    coal                       102       158                    -35.4%        412        612                    -32.7% 
 Gross vanadium slag 
  production(3)              5,037     4,419                     14.0%     19,533     18,380                      6.3% 
------------------------  --------  --------  ------------------------  ---------  ---------  ------------------------ 
 

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 2020, pig iron production increased by 6.1% QoQ, as the capital repair of blast furnace no. 5 was completed in Q3 2020 at EVRAZ NTMK. In FY2020, EVRAZ` pig iron production remained almost flat YoY.

Crude steel production volumes rose by 5.2% QoQ, as scheduled capital repairs during Q3 2020 were completed. In FY2020, the production of crude steel remained almost flat YoY, which was in line with pig iron production volumes.

The total output of steel products increase by 10.6% QoQ, following the completion of scheduled capital repairs at EVRAZ ZSMK in Q3 2020 and a change in the product mix at EVRAZ NTMK. EVRAZ Caspian Steel increased production by 21.0% QoQ, due to higher market demand. In FY2020, the total output of steel products remained flat YoY. This was mainly due to a 11.4% YoY increase in production at EVRAZ NTMK, amid higher volumes of semi-finished and construction products, partly offset by the sale of Palini e Bertoli.

Output of iron ore products went up by 3.8% QoQ, as scheduled capital repairs at EVRAZ KGOK were completed in Q3 2020. In FY2020, output of iron ore products rose by 3.2% YoY, following higher consumption of pellets, lower unscheduled downtime and increased operational efficiency at EVRAZ KGOK.

Consolidated output of vanadium slag increased by 14.0% QoQ, due to higher volumes of pig iron duplex processing. In FY2020, output of vanadium slag climbed by 6.3% YoY, due to the higher vanadium content in pig iron.

Total sales volumes

 
 Product, '000 to 
  nnes               Q4 2020        Q3     Q4 2020/ Q3 2020, change     12m        12m      12m 2020/ 12m 2019, change 
                                    2020                                 2020       2019 
------------------  --------  ----------  -------------------------  ---------  ---------  --------------------------- 
 Coke                     74         130                     -43.1%        390        361                         8.0% 
 Steel products, 
  external sales       3,046       2,703                      12.7%     11,377     11,273                         0.9% 
 Semi-finished 
  products             1,707       1,309                      30.4%      6,039      5,636                         7.2% 
   Slabs                 849         436                      94.7%      2,592      2,443                         6.1% 
   Billets               722         735                      -1.8%      2,933      2,519                        16.4% 
   Other steel 
    products(1)          136         138                      -1.4%        514        674                       -23.7% 
 Finished products     1,339       1,394                      -3.9%      5,338      5,636                        -5.3% 
   Construction 
    products             845         925                      -8.6%      3,392      3,331                         1.8% 
   Railway 
    products             320         310                       3.2%      1,299      1,393                        -6.7% 
   Flat products           0           0                        n/a          0        321                      -100.0% 
   Other steel 
    products             174         159                       9.4%        647        591                         9.5% 
 Steel products, 
  inter-segment 
  sales                   21           3                     600.0%         67        318                       -78.9% 
 Third-party steel 
  products, 
  external sales         209         267                     -21.7%        848        801                         5.9% 
 Iron ore 
  products, 
  external sales         445         486                      -8.4%      1,732      1,134                        52.7% 
 Pellets                 445         486                      -8.4%      1,732      1,134                        52.7% 
 Sales of vanadium 
  in slag              1,763       1,605                       9.8%      6,129      6,451                        -5.0% 
 Sales of vanadium 
  final 
  products(2)          4,207       2,779                      51.4%     12,604     12,883                        -2.2% 
------------------  --------  ----------  -------------------------  ---------  ---------  --------------------------- 
 

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 Q4 2020, external sales of steel products rose by 12.7% QoQ. Sales of semi-finished products surged by 30.4% QoQ, driven by a recovery in export markets and weaker demand for finished construction products in Russia due to seasonal factors. This resulted in a change in the sales mix in favour of semi-finished products.

In FY 2020, sales volumes of semi-finished products were up 7.2% YoY, primarily due to a change in the product mix in favour of higher slab and billets sales to export destinations following a decrease in demand in Russia amid the COVID-19 pandemic.

Sales of finished products dropped by 3.9% QoQ, due to a change in the product mix. In FY2020, sales volumes of finished products declined by 5.3% YoY, mainly due to the sale of Palini e Bertoli in 2019 and lower demand for railway products on the domestic market.

Sales of iron ore products fell by 8.4% QoQ, amid higher consumption of pellets by EVRAZ NTMK, following the successful launch of blast furnace no. 6 in Q3 2020. In FY2020, primarily as a result of higher shipments to external markets amid lower consumption of pellets by EVRAZ NTMK at the time of a major overhaul of blast furnace no.6 which was successfully launched in Q3 2020.

Sales of vanadium products rose by 51.4% QoQ, mainly due to higher steel utilisation rates, following increased FeV demand also from the automotive industry as well as some increase of oxide and FeV sales to China during Q4. In FY2020, sales of final vanadium products declined by 2.2% YoY, mainly due to reduced global FeV demand, following the imposition of COVID-19 restrictions.

 
 Cash cost, US$/t           Q4      Q3     Q4 2020 / Q3 2020, change     12m      12m    12m 2020 / 12m 2019, change 
                            2020    2020                                 2020     2019 
------------------------  ------  ------  --------------------------  -------  -------  ---------------------------- 
 Slab cash cost 
  vertically integrated      224     200                       12.0%      213      236                         -9.7% 
 Iron ore products (Fe 
  62%)                        37      35                        5.7%       36       41                        -12.2% 
------------------------  ------  ------  --------------------------  -------  -------  ---------------------------- 
 
 

Average selling prices

 
 US$/tonne (ex-works)                                                                     Q4      Q3      12m     12m 
                                                                                          2020    2020    2020    2019 
--------------------------------------------------------------------------------------  ------  ------  ------  ------ 
 Coke                                                                                      177     135     155     217 
 Steel products                                                                            455     435     442     483 
   Semi-finished products(1)                                                               374     315     333     361 
   Construction products                                                                   494     473     479     534 
   Railway products                                                                        732     796     818     823 
   Other steel products                                                                    516     477     498     576 
   Pellets                                                                                  78      61      60      70 
 Metal Bulletin Ferro-Vanadium basis 78% min, free DDP, consumer plant, 1st grade 
  Western Europe(2)                                                                      24.38   24.23   25.02   41.62 
 Ryan's Notes N.A. FeV 80% min, US ex-warehouse, duty paid(2)                            23.11   21.81   23.85   49.18 
--------------------------------------------------------------------------------------  ------  ------  ------  ------ 
 

(1) Includes prices for pig iron

(2) US$/kgV

In Q1 2021, pig iron production volumes are expected to decrease slightly as a result of fewer operational days in Q1 2021. Iron ore pellets and sinter production volumes are expected to remain flat.

STEEL, NORTH AMERICA SEGMENT

Production and sales volumes

 
 Product, '000 tonnes                Q4     Q3 2020       Q4 2020/       12m 2020    12m    12m 2020/ 12m 2019, change 
                                     2020              Q3 2020, change               2019 
---------------------------------  ------  --------  -----------------  ---------  ------  --------------------------- 
 Crude steel                          423       334              26.6%      1,580   1,861                       -15.1% 
   EVRAZ US mills                     196       181               8.3%        838     925                        -9.4% 
   EVRAZ Canadian mills               227       153              48.4%        743     936                       -20.6% 
 Total steel products production, 
  net of re-rolled volume             377       377               0.0%      1,668   2,212                       -24.6% 
   EVRAZ US mills                     270       257               4.8%      1,125   1,418                       -20.7% 
   EVRAZ Canadian mills               107       119             -10.4%        542     794                       -31.7% 
 Sales of steel products              364       343               6.2%      1,685   2,207                       -23.7% 
   Semi-finished products               0         0                n/a        144     192                       -25.0% 
   Construction products               68        61              11.8%        262     256                         2.3% 
   Railway products                    99        91               8.8%        404     441                        -8.4% 
   Flat-rolled products               113       100              13.0%        382     523                       -27.0% 
   Tubular products                    84        91              -7.7%        494     795                       -37.9% 
---------------------------------  ------  --------  -----------------  ---------  ------  --------------------------- 
 

In Q4 2020, crude steel production was 26.6% higher QoQ, following increased demand for flat-rolled and construction products driven by a market recovery. In FY2020, crude steel production was down 15.1% YoY, mainly due to market turbulence amid the COVID-19 pandemic and energy market uncertainty, which led to falling demand and lower production volumes.

Semi-finished products sales fell by 25.0% YoY, following the fulfilment of a contract with a key customer.

Sales of construction products and railway products went up by 11.8% and 8.8% respectively QoQ, due to improved market conditions and additional steel availability. Sales of railway products in FY 2020 decreased by 8.4% YoY, primarily due to reduced demand driven by the COVID-19 pandemic.

Flat-rolled product sales rose by 13.0% QoQ, as a result of improving market conditions. In FY2020, sales of flat-rolled products dropped by 27.0% YoY, as market demand contracted amid the COVID-19 pandemic.

Tubular products sales declined by 7.7% QoQ, and 37.9% YoY, as turbulence in the oil and gas markets led to falling demand, resulting in the idling of the Group's OCTG mills in Canada and the US. At the same time, line pipe production continued to be stable during the period as both large and small diameter mills were producing to current orders.

Average selling prices

 
 US$/tonne (ex-works)      Q4      Q3      12m     12m 
                           2020    2020    2020    2019 
-----------------------  ------  ------  ------  ------ 
 Construction products     677     649     664     745 
 Flat-rolled products      728     719     754     911 
 Tubular products         1 327   1 401   1 349   1 340 
-----------------------  ------  ------  ------  ------ 
 

In Q1 2021, production and sales volumes for construction, flat-rolled and rail products are expected to continue to improve in line with market recovery. For tubular products, the uncertainty in energy markets remains a significant factor impacting North American customers, however, the OCTG market has started demonstrating early signs of returning demand.

COAL SEGMENT

Production volumes

 
 Product, '000 tonnes         Q4      Q3     Q4 2020/ Q3 2020, change   12m 2020    12m     12m 2020/ 12m 2019, change 
                              2020    2020                                           2019 
--------------------------  ------  ------  -------------------------  ---------  -------  --------------------------- 
 Raw coking coal (mined)     6,021   4,775            26.1%              20,653    26,140             -21.0% 
   Yuzhkuzbassugol           3,257   3,341            -2.5%              11,355    12,180             -6.8% 
   Raspadskaya               2,764   1,434            92.7%              9,262     12,824             -27.8% 
   Mezhegeyugol                0       0               n/a                 36      1,136              -96.8% 
 Coking coal concentrate 
  (production)               3,615   3,398             6.4%              13,598    13,975             -2.7% 
  Produced at 
   Yuzhkuzbassugol coal 
   washing plants            1,804   1,506            19.8%              6,049     6,247              -3.2% 
  Produced at the 
   Raspadskaya coal 
   washing plant             1,811   1,892            -4.3%              7,549     7,728              -2.3% 
--------------------------  ------  ------  -------------------------  ---------  -------  --------------------------- 
 

In Q4 2020, overall raw coking coal output grew by 26.1% QoQ, driven by re-launched production at the Razrez Raspadsky open pit as well as better production volumes at the Raspadskaya mine. In FY2020, production of raw coking coal went down by 21.0% YoY, due to a halt in mining at the Razrez Raspadsky open pit from May to September 2020, the idling of Mezhegeyugol mine starting from March 2020 and lower production volumes at the Raspadskaya mine amid challenging geological conditions.

Output of coking coal concentrate rose by 6.4% QoQ, mainly due to increased coal mining volumes.

Sales volumes

 
 Product, '000 
  tonnes                Q4             Q3        Q4 2020/ Q3 2020, change    12m      12m     12m 2020/ 12m 2019, change 
                       2020           2020                                   2020     2019 
----------------  -------------  -------------  -------------------------  -------  -------  --------------------------- 
 External sales           2,797          3,460                     -19.2%   12,336   11,053                        11.6% 
   Raw coking 
    coal*                   250            822                     -69.6%    2,271    1,929                        17.7% 
   Coking coal 
    concentrate*          2,547          2,638                      -3.4%   10,065    9,124                        10.3% 
 Intersegment 
  sales                   1,663          1,824                      -8.8%    6,990    6,569                         6.4% 
    Raw coking 
     coal                   496            622                     -20.2%    2,323    2,044                        13.6% 
  Coking coal 
   concentrate            1,166          1,202                      -2.9%    4,667    4,525                         3.1% 
----------------  -------------  -------------  -------------------------  -------  -------  --------------------------- 
 

*The 12m 2019 data have been adjusted

External sales volumes of coking coal products fell by 19.2% QoQ, due to a deficit of GZh grade coal amid longwall move at the Uskovskaya mine as well as elevated levels of Q2-Q3 2020 sales amid utilisation of stockpiles. In FY2020, external sales volumes of coking coal products increased by 11.6% YoY, following higher shipments of raw coal from the Uskovskaya mine. Coking coal concentrate sales volumes rose by 10.3% YoY, due to higher shipments to Southeast Asian countries and Russia, amid the greater utilisation of accumulated stockpiles during Q2-Q3 2020.

 
 Cash cost, US$/t            Q4      Q3     Q4 2020 / Q3 2020, change    12m     12m    12m 2020 / 12m 2019, change 
                             2020    2020                                2020    2019 
-------------------------  ------  ------  --------------------------  ------  ------  ---------------------------- 
 Coking coal concentrate     26      31              -16.1%              31      35               -11.4% 
-------------------------  ------  ------  --------------------------  ------  ------  ---------------------------- 
 

Average selling prices

 
                                  Q4                Q3           12m     12m 
  US$/tonne (ex-works)            2020              2020         2020    2019 
-------------------------  ----------------  ----------------  ------  ------ 
 Raw coking coal                         34                30    34      49 
 Coking coal concentrate                 56                57    62      99 
-------------------------  ----------------  ----------------  ------  ------ 
 

In Q1 2021, raw coal production is expected to increase QoQ, amid the completion of the longwall move at the Uskovskaya mine, a return to planned capacity after the resumption of production at the Razrez Raspadsky open pit, and favourable mining and geological conditions at the Esaulskaya mine. This will be partly offset by unfavourable mining and geological conditions at the Alardinskaya and Raspadskaya mines.

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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January 29, 2021 02:00 ET (07:00 GMT)

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