16th Oct 2015 08:30
LONDON (Alliance News) - Evraz PLC on Friday said production of all of its products and commodities rose in the third quarter from the second, but in the first nine months of 2015 most production areas were down year-on-year.
Coking coal production was the only area to experience a quarter-on-quarter fall. However, all of Evraz's commodities were hit by lower commodities and steel prices.
The Russian steel maker and coal miner said crude steel production rose to 3.5 million tonnes in the third quarter of 2015, up 3.3% from 3.4 million tonnes in the immediately previous quarter on the back of completed repair works at Russian steel mills.
That brought crude steel production for the first nine months of 2015 to 10.8 million tonnes, which is down 7.4% from 11.7 million tonnes a year earlier.
Gross production of steel products in the third quarter rose 2% quarter-on-quarter to 3.4 million tonnes from 3.3 million tonnes, bringing production since the start of 2015 to 10.5 million tonnes from 11.2 million tonnes a year before, representing a 7% year-on-year fall.
Production of finished products rose 7% to 2.2 million tonnes in the third quarter from 2.0 million tonnes in the previous quarter.
Finished steel products comprised of construction products, which rose to 1.3 million tonnes in the quarter from 1.1 million tonnes, railway products which dropped 22% to 329,000 tonnes from 423,000 tonnes, flat-rolled products of 188,000 tonnes, up from 167,000 tonnes, tubular products of 213,000 tonnes from 165,000 tonnes and other steel products of 14,000 tonnes from 148,000 tonnes.
That pushed year-to-date production of finished steel products to 6.4 million tonnes, down 12.9% from 7.3 million tonnes a year earlier. In the nine month period, all the segments of finished steel products had fallen. Construction product production dropped 7% year-on-year, railway products were down 21%, flat-rolled products down 29%, tubular products fell by 19% and other steel products dropped by 3% year-on-year.
However, the share of finished steel products within consolidated steel volumes grew to 69% in the third quarter from 65% in the second quarter due to seasonal pick-up in demand for construction products in Russia and improved demand for linepipe in North America, Evraz said.
Its North American business was hurt by lower commodity prices. Evraz only received an average of USD672 per tonne of construction product in the first nine months of 2015, down from USD798 per tonne a year earlier, whilst flat-rolled product prices fell to USD751 per tonne from USD962. Tubular products followed suit, falling to USD1,147 per tonne from USD1,331.
Prices for steel products in Ukraine, which are already considerably lower than the price achieved in North America, also experienced similar year-on-year falls in the first nine months of 2015.
Saleable pig iron production in the third quarter rose 15% to 189,000 tonnes from 165,000 tonnes, pushing production in the first nine months to 425,000 tonnes from 229,000 tonnes a year ago.
Pig iron prices in the first nine months of 2015 averaged USD198 per tonne, a substantial fall from USD307 per tonne a year ago. Prices in the third quarter of 2015 had fallen even further to only USD189 per tonne. Those prices are for its operations in Russia and Kazakhstan.
Evraz's operations in Ukraine achieved an average pig iron price of USD247 per tonne in the nine-month period, down from USD331 per tonne a year earlier, with prices falling to USD223 per tonne in the third quarter.
Saleable coking coal production dropped 28% quarter-on-quarter to 207,000 tonnes from 286,000 tonnes with year-to-date production totalling 778,000 tonnes, which is down 7% from 833,000 tonnes a year earlier.
The dramatic fall in coal production since the start of 2015 was compounded by coke prices dropping to USD112 per tonne from USD126 per tonne a year earlier. Coal prices declined further in the third quarter of 2015 to only USD108 per tonne. Those prices are for Evraz's operations in Russia and Kazakhstan.
Operations in Ukraine achieved a coke price of USD176 per tonne in the nine month period, up from USD167 per tonne a year earlier but prices in the third quarter had fallen to an average of only USD152 per tonne.
Evraz shares were up 3.7% to 97.45 pence per share on Friday morning, the second best performer on the FTSE 250.
By Joshua Warner; [email protected]; @JoshAlliance
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