EVRAZ Sees North American Sales for Rail, Tube Decline
08/19/2016 - Russia’s EVRAZ saw its sales fall nearly 28 percent in the first half of 2016, primarily on lower prices and weaker demand. But the second quarter brought about improving conditions, and the company is therefore “cautiously optimistic” about the second half, it said on Thursday.
For the first six months of the year, EVRAZ reported sales of US$3.5 billion, down from US$4.9 billion in the first half of 2015.
“Overall, the first half of 2016 can be divided into two distinct parts for EVRAZ and the sector. In the first quarter, conditions were largely unchanged from the end of 2015, but in the second quarter, steel market conditions improved, and the group demonstrated a stronger performance, largely due to a supportive pricing environment in its main markets,” said EVRAZ chief executive Alexander Frolov in a statement.
In North America, the company’s sales dropped 33 percent to US$832 million during the half due to lower average prices and sales volumes. It said its volumes were particularly affected by weak demand for oil country tubular goods and rail products.
The company sold 184,000 metric tons of rail products in the first half, down 34 percent from the same time last year. At the same time, tubular volumes declined 22 percent to 318,000 metric tons.
EVRAZ said OCTG demand continues to be impaired by a slowdown in drilling, while rail demand has dropped due to moderate capital expenditures on behalf of the major railroads and surplus inventories.
Looking ahead, the company said it expects the OCTG and rail markets to remain challenging.
“The North American operations will likely experience headwinds from large volumes of dumped and subsidized large-diameter pipe imports into Canada, which will extend onto 2017-2018 should no trade remedies be put into place against unfairly traded (large-diameter) pipe from China and Japan this October,” the company said.
“In addition, results may be negatively impacted by delays in approvals of key large pipeline projects in the U.S. and Canada and continuing weak demand for rails.”
“Overall, the first half of 2016 can be divided into two distinct parts for EVRAZ and the sector. In the first quarter, conditions were largely unchanged from the end of 2015, but in the second quarter, steel market conditions improved, and the group demonstrated a stronger performance, largely due to a supportive pricing environment in its main markets,” said EVRAZ chief executive Alexander Frolov in a statement.
In North America, the company’s sales dropped 33 percent to US$832 million during the half due to lower average prices and sales volumes. It said its volumes were particularly affected by weak demand for oil country tubular goods and rail products.
The company sold 184,000 metric tons of rail products in the first half, down 34 percent from the same time last year. At the same time, tubular volumes declined 22 percent to 318,000 metric tons.
EVRAZ said OCTG demand continues to be impaired by a slowdown in drilling, while rail demand has dropped due to moderate capital expenditures on behalf of the major railroads and surplus inventories.
Looking ahead, the company said it expects the OCTG and rail markets to remain challenging.
“The North American operations will likely experience headwinds from large volumes of dumped and subsidized large-diameter pipe imports into Canada, which will extend onto 2017-2018 should no trade remedies be put into place against unfairly traded (large-diameter) pipe from China and Japan this October,” the company said.
“In addition, results may be negatively impacted by delays in approvals of key large pipeline projects in the U.S. and Canada and continuing weak demand for rails.”
