EVRAZ Q1 2021 TRADING UPDATE
29 April 2021 - EVRAZ plc (LSE: EVR; "EVRAZ" or the "Group") today released its trading update for the first quarter of 2021.
Q1 2021 vs Q4 2020 HIGHLIGHTS
· In Q1 2021, EVRAZ' consolidated crude steel output fell by 1.7% QoQ, mainly due to unscheduled downtime of the sintering machine at EVRAZ ZSMK.
· Total sales of steel products dropped by 9.9% QoQ, driven primarily by lower sales of semi-finished products amid reduced steel availability due to lower pig-iron production volumes as well as seasonal decline in sales of construction products and local decrease in demand for rails in Russia.
· Total raw coking coal production climbed by 7.8% QoQ. Most of the growth came from the Novokuznetsk site, where the Uskovskaya mine finished moving to a new longwall and the Erunakovskaya mine dealt with the impact on its production from higher gas levels in Q4 2020. While the Mezhdurechensk site's overall output was little changed, Razrez Raspadsky increased its volumes by 120% QoQ after resuming production in Q3 2020.
· Coking coal concentrate production grew by 3.6% QoQ, mainly due to increased coal mining volumes.
· External sales of iron ore products fell by 30.1% QoQ. One of the primary drivers was a decline in concentrate production at EVRAZ KGOK which went down due to lower Fe content in mined ore and severe weather conditions, resulted in unscheduled equipment repairs. In addition, shipments of iron ore products to EVRAZ NTMK were increased to restore reserves.
· External sales of vanadium products fell by 19.7% QoQ due to serving the more active Chinese oxide market (supported by destocking) as well as accelerating oxide sales by changing the regional oxide sales mix in Q4 2020.
| Product, '000 tonnes | Q1 | Q4 | Q1 2021/ Q4 2020, change | Q1 | Q1 2021/ |
| Total crude steel production | 3,409 | 3,467 | -1.7% | 3,559 | -4.2% |
| Russia | 2,921 | 3,044 | -4.0% | 3,121 | -6.4% |
| North America | 488 | 423 | 15.4% | 438 | 11.4% |
| Total raw coking coal mined | 6,492 | 6,021 | 7.8% | 5,692 | 14.1% |
| Total coking coal concentrate | 4,236 | 4,088 | 3.6% | 3,747 | 13.1% |
| Iron ore products production | 3,394 | 3,642 | -6.8% | 3,595 | -5.6% |
| Total sales of steel products 1 | 3,071 | 3,410 | -9.9% | 3,225 | -4.8% |
| Semi-finished products | 1,406 | 1,707 | -17.6% | 1,443 | -2.6% |
| Finished products | 1,665 | 1,703 | -2.2% | 1,782 | -6.6% |
| Total sales of third-party steel products | 134 | 209 | -35.9% | 175 | -23.4% |
| Sales of coking coal products | 2,824 | 2,797 | 1.0% | 3,278 | -13.8% |
| Sales of iron ore products | 311 | 445 | -30.1% | 355 | -12.4% |
| Sales of vanadium in slag | 1,135 | 1,763 | -35.6% | 765 | 48.4% |
| Sales of vanadium final products 2 | 3,378 | 4,207 | -19.7% | 3,168 | 6.6% |
Note. Numbers in this table and the tables below may not add up to totals due to rounding.
1 Q1 2021 production and sales volumes of EVRAZ North America are preliminary
2 In tonnes of pure vanadium
CONFERENCE CALL DETAILS
A conference call to discuss the trading update will be held on Friday, 30 April 2021, at:
· 10:00 (New York time)
· 15:00 (London time)
· 17:00 (Moscow time)
Key speakers:
· Alexey Ivanov, Senior Vice President, Commerce and Business Development
· Evgeny Terekhov, Commercial Director, Coal Division
· Olesya Afanasyeva, Senior Vice President, CFO, EVRAZ North America
To join the call, please dial:
| +44 (0)330 027 1846 (local access) or 0800 031 4838 (toll free) | UK |
| +7 499 609 1260 (local access) or 8 800 100 9471 (toll free) | Russia |
| +1 334 777 6978 (local access) or 800 367 2403 (toll free) | US |
Access code: 8070374
To avoid any technical inconvenience, it is recommended that participants dial in 10 minutes before the start of the call.
The Q1 2021 trading update presentation will be available on the Group's website, www.evraz.com, on Friday, 30 April 2021, 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
| Product, '000 tonnes | Q1 | Q4 | Q1 2021/ Q4 2020, change | Q1 | Q1 2021/ Q1 2020, change |
| Pig iron production | 2,683 | 2,851 | -5.9% | 2,828 | -5.1% |
| EVRAZ ZSMK | 1,424 | 1,564 | -9.0% | 1,556 | -8.5% |
| EVRAZ NTMK | 1,259 | 1,287 | -2.2% | 1,272 | -1.0% |
| Crude steel production | 2,921 | 3,044 | -4.0% | 3,121 | -6.4% |
| EVRAZ ZSMK | 1,810 | 1,933 | -6.4% | 1,980 | -8.6% |
| EVRAZ NTMK | 1,111 | 1,111 | - | 1,141 | -2.6% |
| Total steel products production, net of re-rolled volume | 2,656 | 2,876 | -7.6% | 2,867 | -7.4% |
| EVRAZ ZSMK | 1,559 | 1,758 | -11.3% | 1,743 | -10.6% |
| EVRAZ NTMK | 1,014 | 1,043 | -2.8% | 1,032 | -1.7% |
| EVRAZ Caspian Steel | 83 | 75 | 10.7% | 92 | -9.8% |
| Iron ore products production | 3,394 | 3,642 | -6.8% | 3,595 | -5.6% |
| Pellets (EVRAZ KGOK) | 1,574 | 1,660 | -5.2% | 1,665 | -5.5% |
| Sinter (EVRAZ KGOK) | 921 | 928 | -0.8% | 916 | 0.5% |
| Concentrate saleable (EVRAZ KGOK, EVRAZ ZSMK) | 899 | 1,054 | -14.7% | 1,014 | -11.3% |
| Coking coal concentrate production | 367 | 473 | -22.4% | 486 | -24.5% |
| From own raw coal 1 | 313 | 371 | -15.6% | 350 | -10.6% |
| From third-party raw coal | 54 | 102 | -47.1% | 136 | -60.3% |
| Gross vanadium slag production 2 | 4,798 | 5,037 | -4.7% | 4,979 | -3.6% |
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 Q1 2021, pig iron production decreased by 5.9% QoQ, mainly due to unscheduled downtime of the sintering machine at EVRAZ ZSMK. Another factor was capital repairs at EVRAZ NTMK's blast furnace no. 6 in February 2021.
Crude steel production volumes went down by 4.0% QoQ, in line with the decline of pig iron production volumes.
The total output of steel products fell by 7.6% QoQ, mainly as a result of a decrease in EVRAZ ZSMK's pig iron production volumes. EVRAZ Caspian Steel increased its output by 10.7% QoQ, due to higher market demand.
Output of iron ore products decreased by 6.8% QoQ. One of the primary drivers was unscheduled equipment downtime of the secondary concentrate production facilities at EVRAZ ZSMK. Concentrate production at EVRAZ KGOK went down due to lower Fe content in mined ore and severe weather conditions, which also caused unscheduled equipment downtime.
Total sales volumes
| Product, '000 tonnes | Q1 | Q4 | Q1 2021/ Q4 2020, change | Q1 | Q1 2021/ |
| Coke | 74 | 74 | - | 105 | -29.5% |
| Steel products, external sales | 2,642 | 3,046 | -13.3% | 2,707 | -2.4% |
| Semi-finished products | 1,406 | 1,707 | -17.6% | 1,353 | 3.9% |
| Slabs | 666 | 849 | -21.6% | 570 | 16.8% |
| Billets | 624 | 722 | -13.6% | 656 | -4.9% |
| Other steel products1 | 116 | 136 | -14.7% | 127 | -8.7% |
| Finished products | 1,236 | 1,339 | -7.7% | 1,354 | -8.7% |
| Construction products | 794 | 845 | -6.0% | 839 | -5.4% |
| Railway products | 279 | 320 | -12.8% | 358 | -22.1% |
| Other steel products | 163 | 174 | -6.3% | 157 | 3.8% |
| Steel products, inter-segment sales | 4 | 21 | -81.0% | 40 | -90.0% |
| Third-party steel products, external sales | 134 | 209 | -35.9% | 175 | -23.4% |
| Iron ore products, external sales | 311 | 445 | -30.1% | 355 | -12.4% |
| Pellets | 311 | 445 | -30.1% | 355 | -12.4% |
| Sales of vanadium in slag | 1,135 | 1,763 | -35.6% | 765 | 48.4% |
| Sales of vanadium final products2 | 3,378 | 4,207 | -19.7% | 3,168 | 6.6% |
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 Q1 2021, external sales of steel products fell by 13.3% QoQ, driven by lower sales volumes of semi-finished and finished products.
Sales of semi-finished products decreased by 17.6% QoQ, due to reduced steel availability amid lower pig-iron production volumes.
Sales of finished products dropped by 7.7% QoQ. Construction product sales volumes fell by 6.0% QoQ due to seasonally lower demand and limited customer purchases amid price volatility. Railway product sales decreased by 12.8% QoQ, driven by the local decline in demand of Russian Railways for rails as well as shift of execution deadlines for some tenders in Russia and on the export destinations.
Sales of iron ore products went down by 30.1% QoQ. One of the primary drivers was a decline in concentrate production at EVRAZ KGOK which went down due to lower Fe content in mined ore and severe weather conditions, resulted in unscheduled equipment repairs. In addition, shipments of iron ore products to EVRAZ NTMK were increased to restore reserves.
External sales of vanadium products fell by 19.7% QoQ due to serving the more active Chinese oxide market (supported by destocking) as well as accelerating oxide sales by changing the regional oxide sales mix in Q4 2020.
| Cash cost, US$/t | Q1 | Q4 | Q1 2021/ | Q1 | Q1 2021/ Q12020, change | |
| Slab cash cost vertically integrated | 277 | 224 | 23.7% | 223 | 24.2% | |
| Iron ore products (Fe 62%) | 40 | 37 | 8.1% | 38 | 5.3% | |
Average selling prices
| US$/tonne (ex-works) | Q1 2021 | Q4 2020 | Q1 2020 |
| Coke | 258 | 177 | 167 |
| Steel products | 583 | 455 | 477 |
| Semi-finished products1 | 484 | 374 | 346 |
| Construction products | 650 | 494 | 505 |
| Railway products | 838 | 732 | 925 |
| Other steel products | 669 | 516 | 509 |
| Pellets | 115 | 78 | 54 |
| Metal Bulletin Ferro-Vanadium basis 78% min, free DDP, consumer plant, 1st grade Western Europe2 | 30.91 | 24.38 | 26.54 |
| Ryan's Notes N.A. FeV 80% min, US ex-warehouse, duty paid2 | 32.03 | 23.11 | 27.18 |
1 Includes prices for pig iron
2 US$/kgV
In Q2 2021, pig iron production volumes are expected to slightly increase following the completion of equipment downtime in Q1 2021 at EVRAZ ZSMK. Iron ore pellets and sinter production volumes are expected to remain flat.
STEEL, NORTH AMERICA SEGMENT
Production and sales volumes
| Product, '000 tonnes | Q1 | Q4 | Q1 2021/ Q4 2020, change | Q1 | Q1 2021/ Q1 2020, change | |||
| Crude steel | 488 | 423 | 15.4% | 438 | 11.4% |
| ||
| EVRAZ US mills | 227 | 196 | 16.0% | 251 | -9.6% |
| ||
| EVRAZ Canadian mills | 261 | 227 | 14.7% | 188 | 38.8% |
| ||
| Total steel products production, net of re-rolled volume | 411 | 394 | 4.2% | 468 | -12.2% |
| ||
| EVRAZ US mills | 288 | 270 | 7.0% | 310 | -7.1% |
| ||
| EVRAZ Canadian mills | 123 | 125 | -1.7% | 158 | -22.2% |
| ||
| Sales of steel products | 429 | 364 | 17.8% | 518 | -17.2% |
| ||
| Semi-finished products | - | - | - | 90 | -100.0% |
| ||
| Construction products | 76 | 68 | 12.3% | 66 | 15.2% |
| ||
| Railway products | 108 | 99 | 8.2% | 106 | 1.9% |
| ||
| Flat-rolled products | 168 | 113 | 48.8% | 100 | 68.0% |
| ||
| Tubular products | 77 | 84 | -8.0% | 156 | -50.6% |
| ||
* Q1 2021 production and sales volumes are preliminary
In Q1 2021, EVRAZ Regina's crude steel production climbed by 14.7% QoQ, due to higher flat-rolled sales. Quick demand growth was driven by a market recovery from the downturn caused by the COVID-19 pandemic, as well as by fewer imports and relatively low levels of distributor inventory.
In Q1 2021, EVRAZ Pueblo's crude steel production rose by 16.0% QoQ, due to improved market conditions, as well as the resumption of operations after a planned maintenance shutdown in Q4 2020.
Sales of construction products in Q1 2021 increased by 12.3% QoQ amid improved demand and additional available steel capacity as the seamless mill remained idle.
Sales of railway products grew by 8.2% QoQ on improving market demand from major railways.
Sales of flat-rolled products surged by 48.8% QoQ as market conditions strengthened in Q1 2021.
Tubular volumes decreased by 8.0% QoQ, primarily driven by the completion of 2020 orders. In addition, some of the Group's OCTG facilities in the US and Canada remained idled in Q4 2020 and Q1 2021 due to low market demand.
Average selling prices
| US$/tonne (ex-works) | Q1 2021 | Q4 2020 | Q1 2020 |
| Construction products | 828 | 677 | 683 |
| Flat-rolled products | 871 | 728 | 812 |
| Tubular products | 1,491 | 1,327 | 1,249 |
In Q2 2021, steel production is expected to remain flat QoQ amid a planned maintenance outage at EVRAZ Regina. We expect the market sentiment to remain strong and improve QoQ in the product segments where EVRAZ serves. For tubular products, the improved market demand for OCTG will allow to restart some of the OCTG facilities that have been idle since 2020.
COAL SEGMENT
Production volumes
| Product, '000 tonnes* | Q1 | Q4 | Q1 2021/ Q4 2020, change | Q1 | Q1 2021/ |
| Raw coking coal (mined) | 6,492 | 6,020 | 7.8% | 5,692 | 14.1% |
| Coking coal concentrate (production) | 3,869 | 3,615 | 7.0% | 3,261 | 18.6% |
* Starting from 2021 Raspadskaya incl. Yuzhkuzbassugol and Mezhegeyugol, the data have been adjusted
In Q1 2021, overall raw coking coal output climbed by 7.8% QoQ. Most of the growth came from the Novokuznetsk site, where the Uskovskaya mine finished moving to a new longwall and the Erunakovskaya mine dealt with the impact on its production from higher gas levels in Q4 2020. While the Mezhdurechensk site's overall output was little changed, Razrez Raspadsky increased its volumes by 120% QoQ after resuming production in Q3 2020.
Output of coking coal concentrate rose by 7.0% QoQ, mainly due to increased coal mining volumes.
Sales volumes
| Product, '000 tonnes | Q1 | Q4 | Q1 2021/ Q4 2020, change | Q1 | Q1 2021/ |
| External sales | 2,824 | 2,797 | 1.0% | 3,278 | -13.8% |
| Raw coking coal | 139 | 250 | -44.3% | 707 | -80.3% |
| Coking coal concentrate | 2,684 | 2,547 | 5.4% | 2,572 | 4.4% |
| Intersegment sales | 1,540 | 1,663 | -7.4% | 1,624 | -5.2% |
| Raw coking coal | 497 | 496 | 0.0% | 492 | 1.0% |
| Coking coal concentrate | 1,044 | 1,166 | -10.5% | 1,132 | -7.8% |
External sales volumes of coking coal concentrate grew by 5.4% QoQ amid higher production volumes. External sales volumes of raw coking coal fell by 44.3% QoQ, due to a change in the product mix as the Group worked to maximise concentrate shipments.
Intersegment sales volumes of coking coal products dropped by 7.4% QoQ, mainly due to lower shipments of Zh and K-grade coal as the mines built up reserves to keep supply stable while moving to new longwalls in the summer. In addition, temporary stripping work at Raspadsky-Koksovy reduced the availability of OS-grade coal for sale.
| Cash cost, US$/t | Q1 | Q4 | Q1 2021/ Q4 2020, change | Q1 | Q1 2021/ |
| Coking coal concentrate | 34 | 26 | 30.8% | 33 | 3.0% |
Average selling prices
|
US$/tonne (ex-works)
| Q1 2021 | Q4 2020 | Q1 2020 |
| Raw coking coal | 46 | 34 | 33 |
| Coking coal concentrate | 68 | 56 | 70 |
In Q2 2021, raw coal production is expected to decrease QoQ amid the longwall move at the Alardinskaya and Raspadskaya mines. This will be partly offset by favourable mining and geological conditions at the Esaulskaya mine, as well as a planned production increase at the Razrez Raspadsky open pit.
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.
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