Russia-based steelmaker Evraz warned of possible challenges in May and June as the company expects a short-term dip in demand for steel in Russia due to the economic impact of COVID-19 pandemic.
The company has not faced issues with production, supply of raw materials and shipment of products, but Evraz expects a short-term drop in steel demand, especially in the Russian market, caused by widespread restrictions to control the virus. Sales to the construction sector will be impacted the most, followed by a small dip in sales of rail products, according to Evraz’s operational update.
Evraz forecasted a lesser impact on exports due to devaluation of the Russian ruble and the company’s flexibility to direct steel products to overseas markets. The company is monitoring business conditions and plans to optimise measures to counter the negative impact of the pandemic. The company has adequate liquidity reserve, as per the release.
In 2019, Evraz produced 13.8mn mt crude steel compared to 13.0mn mt in 2018 and iron ore production was 13.8mn mt compared to 13.5mn mt a year ago. For the year, Evraz’s EBITDA was $2,601mn, down 31pc from $3,777mn in 2018. EBITDA margin declined to 22pc from 29.4pc due to lower vanadium and coal product sales prices combined with higher expenses due to an increase in iron ore prices. Evraz’s net profit in 2019 declined to $365mn compared to $2,470mn in FY2018.