Customer focus

Steel

Strategic goal. EVRAZ aims to increase the share of value-added products in its sales portfolio, secure its domestic market shares in railway and construction steel products, and to expand rail export shipments.

Overview. Last year, the Group’s efforts on the domestic market supported demand for key products. In railway products, EVRAZ collaborated with its major client, Russian Railways, on shipment terms and services and benefited from the increase in its investment programme see Market review and Sales volumes review of Steel segment pages. In structural products, EVRAZ targeted the substitution of welded plates and tubes with beams by offering better terms for the latter. In overseas destinations, EVRAZ increased the sales of railway products (up 43 kt), as well as premium slabs and billets (up 810 kt). The combined EBITDA effect from these initiatives was $US170 million.

Outlook. In 2017, the Group will continue expanding domestic and overseas sales of railway products by debottlenecking operations, developing new products, and optimising logistics. It will also analyse a number of product portfolio development options. EVRAZ also aims to increase domestic consumption of beams by offering engineering solutions for the civil construction industry.

Coal

Strategic goal. The Group’s strategic goal is to maximise market share in Russia and Ukraine, while moving its export price formula closer to hard coking coal benchmarks.

Overview. Last year, EVRAZ’ efforts helped to secure its position on the Russian market and to further expand its customer base in Ukraine, Europe and Asia. Formula-based contracts with domestic clients helped the Group to benefit from the international coking coal price surge see Sales volumes review of Coal segment page. Altogether, sales and marketing improvements added US$3 million to EBITDA last year.

Outlook. During 2017, EVRAZ plans to increase sales of premium mid-vol coal grades, optimise logistics to export destinations, and increase the premium for semi-hard coking coal.

Steel, North America

Strategic goal. Evraz North America aims to be the leading North American producer of large-diameter pipe with superior product capabilities and technical expertise, as well as the leading producer of rails with a strong portfolio of premium rail and technical relationships with customers.

Overview. During 2016, EVRAZ completed major construction on the investment projects in Regina to upgrade steelmaking capabilities, install a new large diameter pipe mill, and a new coating facility see Prudent CAPEX strategy of Steel, NA segment page. Additionally, the heat-treat expansion project in Calgary ramped up, allowing the Group to compete more effectively for ERW OCTG pipe demand in Western Canada.

Outlook. In 2017, the Group will benefit from the approval of pipelines and a recovery in oil and gas exploration activity. In addition, favorable results on trade cases in tubular and flat products should result in a more favorable pricing environment.

See Development of product portfolio and customer base page for KPIs and detailed tracking.