Updated EVRAZ Russian Steel Production Data

In the 3rd quarter of 2014, steel production decreased by 2 percent compared to the 2nd quarter as a result of a decrease in pig iron output due to unscheduled maintenance work at one of the EVRAZ blast furnaces. Production of steel products, excluding re-rolled products, also decreased by 2 percent compared to the previous quarter, but remained unchanged from the same period last year.

The production of semi-finished products increased by 10 percent compared to the second quarter of 2014.

Railway production declined 28 percent QoQ and 27 percent YoY, driven by a reduction in rail shipments by customers in Russia and the CIS, including Russian Railways. At the same time, demand for reinforcing bars remained strong in Q3 2014, although total construction output declined 5 percent compared to Q2 2014 and Q3 2013.

Production of other building products, in particular beams, decreased due to a scheduled 22-day maintenance on one of the heating furnaces in August. The volume of production of construction products also decreased as a result of the closure of a loss-making workshop at EVRAZ.

Prices for semi-finished products have slightly decreased in line with world prices. However, prices for construction products increased at the peak of seasonal demand. Prices for railway products in dollar terms declined mainly as a result of the devaluation of the ruble.

Steel production is expected to increase in Q4 2014 compared to Q3 2014, driven by a further shift in favor of semi-finished products due to seasonal demand changes. Construction product prices are expected to be lower due to the traditional fall in demand in Russia and the CIS at this time of year.