Development
of product portfolio and customer base

Marketing and customer focus

Tubular division

Key developments 2016

  • Reached key milestones in the Regina upgrade project and expanded capabilities to supply thick-wall LDP, as well as state-of-the-art internal and external coatings.
  • The combination of location and vertical integration are enabling EVRAZ to provide rapid turn-around of orders for OCTG distributors, enabling market share gains.
  • Ramped up capacity in the Calgary OCTG heat treat line, effectively shifting the product mix towards higher-value products.
  • EVRAZ obtained a favourable ruling in the trade case it brought in Canada against imports of LDP from China and Japan.
  • Hot-rolled coil producers in the US obtained a favourable ruling that in turn reduced the supply of dumped and subsidised raw material.
  • The Canadian government issued final approvals for two large pipeline projects.

Outlook for 2017

  • EVRAZ expects to fully leverage the Regina upgrade project during the year to achieve improved economics and build upon the successful outcomes on trade cases in Canada (LDP) and in the US (hot-rolled coil) to expand our share of wallet with LDP customers.
  • EVRAZ will leverage our strategic position and the favourable trends in the OCTG market to increase market share in Canada to 50%.
  • EVRAZ will continue developing or licensing premium OCTG connections and seamless pipe offerings to fill gaps in our product portfolio and continue shifting our mix towards higher-value engineered solutions.

Long division

Key developments 2016

  • Secured the first orders of APEX G2 rail from Class-1 railroads for in-track testing.
  • During 2016, we doubled the duration of our contract with one of our major Class-1 customers and secured a 33% increase in share of wallet. In the period, we also secured contracts that allow us to retain the highest share of wallet for a domestic producer with the Western Class-1 railroads.
  • Across the year, we expanded our capabilities to manage continuous welded rail, a key emerging trend with our Class-1 customers.
  • During the year, we built upon findings from trials of our rail-welding technology to enhance the industrialisation and robustness of the process ahead of larger-scale customer in-track testing.

Outlook for 2017

  • EVRAZ expects to continue increasing commercial sales of APEX G2 for customer in-track testing.
  • EVRAZ also expects to resume in-track testing of our rail-welding technology with Class-1 railroads and proceed to commercialisation upon obtaining qualification.
  • During 2017, EVRAZ will leverage our continuous welded rail capabilities to increase share with Eastern railroads. We expect to renew our contracts with key Eastern Class-1 railways during the year.

Flat division

Key developments 2016

  • Secured new annual contract with major wind tower producer.
  • Successfully renewed a 3-year contract with a major West Coast OEM customer.
  • Increased armour plate exports by 200%.

Outlook for 2017

  • Continue expanding long-term contracted OEM sales within the rail car and power transmission segments.
  • Expand full qualification of our armour products with two more armoured car manufacturers.
  • Re-enter the tool-steel plate market.

New product developments and quality increase

Tubular division

Key developments 2016

  • Extended our size range for premium connections to 11 ¾” OD in unconventional thermal wells.
  • Launched EVRlock heavy wall premium connection which extends the use of our QB1 and QB2 technology to the heavy-wall pipe used in fracking wells.
  • Introduced EVRlock QB which targets the thermal completions connection segment and provides best in-class resilience to galling even after sustained thermal use.

Outlook for 2017

  • Qualify heavy-wall LDP (up to 1” thickness) with customers.
  • Develop and launch sour-service line-pipe product line.
  • Continue expanding premium connections offerings to achieve a full portfolio. We will be launching the EVRlock EB, an API-compatible semi-premium connection for the US shale markets; developing high-burst, restricted-yield premium connections; and completing qualification of the EVRlock heavy wall premium connection we launched in 2016.

Long division

Key developments 2016

  • EVRAZ continued conducting customer testing of the APEX G2 next generation of premium rail with four Class-1 railroads.
  • EVRAZ has accumulated the required mileage to complete the first step required by the AAR to gain unconditional approval for rail wheels and expect to complete the second step in 2017.
  • Substantially completed the development of 3 new AAR locomotive wheels that have broad market appeal in North America.

Outlook for 2017

  • Expand in-track customer testing for the APEX G2 next-generation rail to two additional Class-1 railroads in North America.
  • Finalise qualification with one Class-1 railroad.
  • Extend the Apex G2 technology to our intermediate head hardened product line to achieve better fracture toughness and ductility.
  • Launch research into achieving hardness at deeper levels in our rail products.
  • Start the final step of the AAR process required to achieve unconditional qualification of rail wheels, a process that will likely extend into 2018.

Flat division

Key developments 2016

  • Commenced rolling of high-technology near-zero thermal expansion alloys for the aerospace industry.
  • Obtained full qualification of our ultra-high hardness 650 armour grades.
  • Obtained full qualification of API 2 W grades for offshore applications.

Outlook for 2017

  • Obtain qualification for structural fully restricted grades for use in seismic protection of structures.
  • Develop an enhanced plate surface compatible with high-speed laser cutting processes.
  • Obtain full qualification on additional domestic slab sources for armour grades.