Russian steel and vanadium producer Evraz’s sales of final vanadium products fell by 5.3% quarter-on-quarter in the first quarter of 2019 to 2.52 million tonnes, the company said in a trading update on Monday April 29.

This was down from 2.66 million tonnes of pure vanadium produced in the fourth quarter of 2018, and down by 19% year-on-year from the first quarter of 2018, when Evraz produced 3.11 million tonnes.

The fall in sales was mainly due to a sharp decline in demand from the automotive industry and high stock levels at steelmakers, which were accumulated during a period of sharp ferro-vanadium price increases, Evraz said.

“Lower car production and sales globally had a negative effect on demand for ferro-vanadium in the first quarter of the year,” Alexander Erenburg, the head of the vanadium division at Evraz, said during a conference call on April 29.

Weaker demand from the steel industry outside China, followed by heavy destocking at steelmakers, which was triggered by falling prices for ferro-vanadium, negatively affected first-quarter sales, Evraz added.

“Ferro-vanadium prices decreased by around $40 per tonne quarter on quarter, mostly due to the elevated price base in the fourth quarter of 2018, driven by speculations around new Chinese rebar standards,” Erenburg said.

Fastmarkets last assessed the price of ferro-vanadium, 78% min, free delivered duty-paid in Europe, at $41.50-43.00 per kg on April 26, down by 0.6% from the mid-week assessment of $41.50-43.50 per kg, itself down from from $43.50-44.50 per kg previously.

Ferro-vanadium prices have fallen by more than 60% from the all-time highs of $126-128 per kg reached last year. The price was now at its lowest level since November 2017, according to Fastmarkets’ historical data.

Ferro-vanadium prices in the Chinese and European markets both hit all-time highs last year, in part due to an expected increase in demand arising from the implementation of new rebar manufacturing standards in China, which came into effect on November 1, 2018.

But weaker-than-expected demand from steel mills in China and the increased use of ferro-niobium as a substitute for ferro-vanadium in that country have been blamed for the steep decline in the ferro-vanadium market.

Evraz now expected that “demand in the mid-term [will] improve as ferro-vanadium prices are back at reasonable level”, Erenburg said, although that will depend on further implementation of the rebar standard in China, he added.

Meanwhile, Evraz’s gross vanadium slag production increased by 1.6% to 4.5 million tonnes of pure vanadium in the first quarter of the year, up from 4.4 million tonnes in the previous quarter and up by 10.6% from 4 million tonnes from the first quarter of 2018.

Steel
Sales volumes of semi-finished steel products by Evraz rose by 27.50% quarter on quarter in January-March 2019, it said on April 29.

The company’s semi-finished steel sales increased to 1.279 million tonnes in the first quarter of 2019, up sharply from 1.003 million tonnes in the fourth quarter of 2018.

The sales increase followed the completion of capital repairs to blast furnace No3 at the company’s West Siberian Iron & Steel Works (ZSMK), which was done in August-December 2018.

But semi-finished sales volumes dropped year-on-year from 1,303 million tonnes in January-March 2018.

Of the total semi-finished steel sales volume in the first quarter of 2019, 482,000 tonnes were slabs, up from 387,000 tonnes in October-December 2018.

Fastmarkets’ weekly price assessment for CIS export slab averaged $453-460 per tonne fob Black Sea over the first quarter of 2019, up from an average of $441-450 per tonne fob Black Sea during the fourth quarter of 2018.

The US Department of Commerce has twice denied exclusion requests for steel slab imported from Russia to Evraz North America’s operations in Portland, Oregon, made in February and April, the company said.

Slab remains subject to a 25% tariff, as a part of the United States’ Section 232 tariffs. But another exclusion request may be submitted to Department of Commerce, Evraz said.

Billet sales accounted for 646,000 tonnes in the first quarter of 2019, up quarter on quarter from 504,000 tonnes.

Evraz added 130mm billet to the product range from its West Siberian Iron & Steel Works (ZSMK) following the modernization of its continuous casting machine in March this year.

Fastmarkets’ daily index for CIS export billet averaged $436 per tonne fob Black Sea over the first quarter of 2019, down from an average of $447 per tonne fob Black Sea during the fourth quarter of 2018.

“Sales of construction products declined by 5.4% quarter on quarter due to a decrease in market demand during [January-March] 2019, amid a seasonal slowdown of construction work in Russia,” Evraz said.

Evraz’s sales volumes of construction products, including rebar, totaled 729,000 tonnes in January-March 2019, down from 771,000 tonnes in October-December 2018.

Fastmarkets’ weekly price assessment for domestic 12mm A500C rebar in Russia, including 20% VAT, averaged 36,175-36,783 roubles ($558-568) per tonne cpt Moscow over the first quarter of 2019. This was down from 38,179-38,607 roubles per tonne in the fourth quarter of 2018.

Source from Fastmarkets MB