Evraz Steel – Returning to Profit in North America and in Russia

by on
Style:
Category:
Ferrous Metals, Macroeconomics

Evraz, the Russian steelmaker with an extensive North American presence, can be said to have had a good recession, if such a thing is possible. The company has operations in eight locations across North America in addition to plants in Italy, the Czech Republic, Ukraine, South Africa and of course back in Russia. Although the company went into the recession with a crippling US$9.99bn of debt, it has managed to cut  this to $7.92bn according to an article in the Moscow Times. Evraz bought almost $5bn of North American assets in 2007-8 just before the crisis hit. Some thought it enough to pull the company down but the rigors of a severe recession have forced the company to re-appraise much of what it does and close obsolete production equipment especially in Russia. The group owned by Russian oligarch Roman Abramovich is the unfamiliar name behind many familiar domestic steel producers such as Oregon Steel and Rocky Mountain Steel. The company produces 5 million metric tons of rolled steel and 2.5 million metric tons of crude steel at eight locations annually at its Evraz Inc. N.A. operations in the United States and Canada. Slab is imported to meet some of the crude steel shortfall making up a significant portion of US steel import volumes. Mill capacity is running at between 70 and 90% depending on the location, driven by demand for steel tubes partially fueled by the shale gas boom but no doubt aided by the anti dumping actions taken against Chinese material. Demand for steel used in infrastructure and wind energy is also up and the group is seeing accelerated infrastructure spending contributing to a recovery in prices. In particular the groups East Coast Claymont operation is seeing a lot of bridge work generating additional demand. In an interview, Pavel Tatyanin is said to have added that rail demand, a key product at Evraz Rocky Mountain Steel, will also increase should the U.S. government proceed with plans to create high-speed rail networks.

Back in Russia the group is enjoying a rapid rebound in domestic demand with first quarter shipments of steel products on the railways increasing by 16.5%, with all raw materials and finished steel items showing double digit increases according to Steel Orbis. So confident is the group of expenditure on Russia’s high speed rail network that they have started a $440 million project to reconstruct the Novokuznetsk Metallurgical Combine (NKMK) mill (Evraz’s oldest and previously least efficient mill) to produce 25-meter and 100-meter rails for high-speed railway lines being built in Russia. There is even talk of China and Europe extending their high-speed rail networks into Russia’s eastern and western provinces.

The group may still be struggling under a mountain of debt but the business does seem more focused on growth markets and is positioning itself well to benefit from what opportunities exist in both home and overseas markets.

–Stuart Burns

Comments (3)

  1. Evgeny Borsuk USA says:

    When it comes to Russia, Evraz has quite the advantage. Abramovich is Putin’s bag man and you can expect to see a lot more business being steered towards this company. After all it is a fantastic way to concentrate the wealth of many into the hands of just a few. If not for this bag man relationship to Putin, Abramovich would have suffered the same fates as Berezovsky and Khodorkovsky.

  2. Evgeny Borsuk says:

    Barry Fagan, the slandering you are doing of Mr. Abramovich is illegal in the US, just as tax evasion is illegal in the US. As you know.

  3. Evgeny Borsuk says:

    Barry Fagan, it is also illegal to impersonate Evgeny Borsuk as you are doing for past few years.

Leave a Comment

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.