The Russian mining and steel producer Evraz Group has announced its operation results for the second quarter of 2009.
Accordingly, due to the growing export demand for semi-finished products and relatively stable demand from Russian customers for construction and railway products, Evraz's Russian steelmaking operations in Q2 2009 reached full capacity utilization at 13.5 million mt of crude steel per year. Meanwhile, due to its increasing degree of vertical integration in raw material supply, Evraz's Russian iron ore mining assets are currently operating at approximately 80 percent of total capacity, while its Russian coal mining assets are operating at about 100 percent.
Evraz's sales volumes of finished steel products to the Russian market in Q2 2009 amounted to about 50 percent of the Q2 2008 level, representing an increase of 15 percent compared to Q4 2008. Meanwhile, low cost of production and relatively more favorable pricing trends in the international market for semi-finished products have enabled Evraz to increase export sales volumes by about ten percent in Q2 2009 compared to Q1 2009. In Q3 2009, Evraz expects to further increase its exports, which are mainly directed to Southeast Asia, including China, and the Middle East.
On the other hand, Evraz's steelmaking capacity utilization in North America is currently averaging 55 percent, as demand varies across different groups. Thus, due to still robust demand for rails and large diameter pipes, Evraz's current North American rolling capacity utilization for these products stands at an average of 78 and 80 percent respectively. Meanwhile, weak demand for OCTG pipes and commercial plates resulted in a decrease of capacity utilization for these products to approximately 25 percent. However, Evraz expects to benefit from the anticipated infrastructure investments in the US, to be undertaken pursuant to the US government's economic stimulus packages.
In addition, Evraz's Ukrainian steelmaking operations are currently utilizing about 80 percent of their capacity, Evraz's Czech steelmaking operations are working at approximately 40 percent of their capacity, its rolling mill in Italy is operating at almost 100 percent of total capacity, while the capacity utilization of its South African operations is around 70 percent.
Currently, Evraz continues to implement measures aimed reducing costs, targeting in 2009 a 40 percent reduction of labor costs and a 50 percent reduction of services and auxiliary materials costs compared with the previous year.