Development
of product portfolio and customer base

Further rails portfolio development

Key developments 2016

  • Rails for European, Indian and Middle Eastern markets were certified at EVRAZ ZSMK.
  • Wheels for European, Latin American, Kazakhstan and Bangladesh markets were certified at EVRAZ NTMK.
  • EVRAZ NTMK resumed rail production early in the year to meet rising domestic demand.

Outlook for 2017

  • Maintain leading positions in the Russian and CIS transport segment by developing new profiles and supporting loyal clients.
  • Increase the premium product share in the export portfolio by boosting rail export sales.
  • Develop new European standard rail profiles for Deutsche Bahn (60Е2, 54Е4, 49Е5) at EVRAZ ZSMK.
  • Develop 4 new types of freight wheels for Europe, passenger wheels for Deutsche Bahn, and locomotive wheels for General Electric (US) at EVRAZ NTMK.
  • Expand rail export sales geography (Thailand, Vietnam, Mozambique, Poland etc).

H-beam consumption development

Key developments 2016

  • EVRAZ continued to implement its large beam demand improvement strategy using targeted pricing and working closely with developers and designers. This helped increase beam sales by 5% compared with 2015 despite a 10-15% decline in the construction market.
  • EVRAZ NTMK developed 58 new profiles of beams meeting Russia’s new GOST standard, as well as non-standard length beams to meet domestic customer needs.
  • Beams for the US and Hong Kong markets were certified at EVRAZ NTMK.

Outlook for 2017

  • Increase beam sales volumes by further implementing the beam promotion programme in residential construction and replacement of substitutes.
  • Boost the share of premium products in the export portfolio by expanding beam export sales.
  • Develop 13 beam profiles meeting the new GOST standard for Russia and the CIS, as well as 4 profiles meeting the ASTM (US) standard at EVRAZ NTMK.
  • Maintain leading positions on the Russian and CIS construction segment by developing new profiles and supporting loyal clients.

Construction product portfolio development

Key developments 2016

  • Rebars for the markets of the US, Germany, Poland, the Netherlands, Israel, the UK, and South Asia were certified at EVRAZ ZSMK.
  • Welded rebar with vanadium alloying for the Russian market was developed at EVRAZ ZSMK.
  • EVRAZ DMZ developed 9 new section profiles for the domestic and export markets.
  • Evraz Caspian Steel developed 8 mm rebar production, expanding the commodity market exposure and increasing market share in construction steel.
  • Production restarted in 2016 at Evraz Palini e Bertoli (Italy) thanks to an improved market environment.

Outlook for 2017

  • Maintain leading positions on the Russian and CIS construction segment by developing new profiles and supporting loyal clients.
  • Expand the share of premium products in the export portfolio by improving rebar export sales.
  • Develop and certify А500B rebars for the Malaysian market at EVRAZ ZSMK.
  • Develop 4 types of rebar meeting the new standard for Russia and the CIS at EVRAZ ZSMK.
  • Develop 4 new large channel profiles at EVRAZ NTMK.
  • Develop 5 planned European profiles at EVRAZ DMZ, fully filling out the European profile offering by the end of 2017.

Customer base development for value-added semis

Key developments 2016

  • Expanding the client base (auto manufacturing and pipe makers) by increasing marketing activity.

Outlook for 2017

  • Planned expansion of value-added semi offering by using more complex steel grades.

Customer focus and marketing

Key developments 2016

  • Implementing a customer loyalty programme increased Siberian market share for several construction products. Average market share growth was 3-15%.
  • Consumer focus, reliability and timely deliveries helped sign long-term contracts for grinding balls, which was one of the key factors behind EVRAZ’ market share in this segment rising from 64% to 70%, despite the appearance of two competitors.
  • By signing a contract with a key customer, EVRAZ restored its market share in Kazakhstan’s construction steel segment to 74% (up ~23 percentage points since 2015).
  • The first phase of a new online account for wholesale clients was launched, and the first stage of a unified call-centre for retail clients was completed.

Outlook for 2017

  • Launch the second phase of the online account with enhanced capabilities for wholesale clients, launch online accounts, and implement stages two and three of the call-centre for retail clients.
  • Several marketing initiatives are aimed at expanding sales volumes of steel products for the rail industry (wheels, railcar sections).

Quality increase

Key developments 2016

  • Work has begun at EVRAZ ZSMK’s rail rolling line to implement a new business management system that meets the IRIS international railway industry management system standard, and an audit review of the work has been conducted.
  • Deutsche Bahn AG’s specialists have performed a quality control audit of EVRAZ ZSMK’s rails, which was passed successfully.
  • The guarantee on head-hardened rails manufactured at EVRAZ ZSMK has been increased by 1.5 times to 700 million tonnes gross. The new guarantee is double any other in the world. This will reduce infrastructure servicing costs for buyers.
  • Steel production defects have fallen from 1% to 0.5% at EVRAZ DMZ, helping eliminate customer complaints.
  • EVRAZ DMZ’ rolling mills successfully passed an audit of the quality and environmental protection management systems. TÜV SÜD audited the quality management system for compliance with the ISO 9001:2008 standard and the environmental protection management system for compliance with the ISO 14001:2004 standard.

Outlook for 2017

  • Implement the new IRIS business management system at EVRAZ ZSMK.
  • Agree with Deutsche Bahn on the procedures for ultrasound and eddy-current testing of production at EVRAZ ZSMK.
  • Continue the steel defect reduction programme at EVRAZ DMZ.