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Evraz Q2 2019 Trading Update for Steel Segment

Steel News - Published on Mon, 05 Aug 2019

Image Source: wikipedia.org
In Q2 2019, EVRAZ pig iron and crude steel output remained mostly flat QoQ at the Russian mills. Output of iron ore products fell by 2.8% QoQ to 3.5 million tonne, mainly due to unscheduled downtime of burning machine no. 1 at EVRAZ KGOK and a planned maintenance outage of the Tashtagol mine at Evrazruda.

In Q2 2019, external sales of steel products rose by 6.3% QoQ, primarily due to higher demand. Sales of semi- finished products were mostly flat QoQ. Sales of finished products grew by 11.4% QoQ, mainly driven by higher sales of construction products, which rose by 10.8% QoQ following an uptick in demand due to the construction season. Sales of final vanadium products climbed by 29.7% QoQ, as lower prices and FeV stocks at end users have stimulated spot demand, particularly in the EU, Asia and North America.

In Q2 2019, total output of steel products surged by 10.0% QoQ, with EVRAZ Pueblo’s output up 13.1% QoQ amid greater downstream demand following the rail mill restart after unplanned downtime in Q1 2019. Sales of semi-finished products jumped by 82.1% QoQ following higher demand from customers. Sales of construction products rose by 4.5% QoQ due to higher demand and favourable weather. Railway product sales climbed by 18.8% QoQ, as production volumes recovered after the rail mill outage in Q1 2019. Sales of flat-rolled products went up by 5.0% QoQ as a result of a planned maintenance outage and a railcar supply shortages in Q1 2019. Tubular product sales edged up by 1.6% QoQ due to the restart of coating operations at EVRAZ Regina.

Prices for construction products went down in Q2 2019, primarily driven by falling scrap prices and sluggish market demand. Prices for flat-rolled products were lower during the period as service centres temporarily curtailed purchases amid rapidly falling scrap prices and market uncertainty, which in turn was driven by soft demand. Prices for tubular products decreased slightly during Q2 2019, reflecting softening oil country tubular goods markets in addition to a seasonal decline in demand.

In Q3 2019, crude steel output is expected to remain at the average level seen in Q1-Q2 2019. Tubular sales volumes should increase compared with Q2 2019, as OCTG is expected to show healthier volumes. Meanwhile, volumes of line pipe and large-diameter pipe are expected to benefit from delayed coating and delivery recognition in Q2 2019. Sales of flat-rolled products are forecast to marginally improve over the Q2 2019 volumes, driven by customer production schedules and an expected uptick in purchasing activity from service centres.

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Posted By : Ratan Singh on Mon, 05 Aug 2019
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