Evraz expects drop in domestic steel demand due to Covid-19

Russian steelmaker Evraz said on Thursday that domestic steel demand is expected to fall in the near term due to the "significant economic downturn" caused by Covid-19 restrictions across the world.

"This will, no doubt, affect firstly our construction products sales and then our railway products sales, to a slightly lesser extent," it said. However, the impact on exports is expected to be less significant due to the recent devaluation of the rouble and the company’s ability to redirect steel from domestic sales to export markets.

"While the impact on the group has been limited so far, we are likely to experience challenges in the near term. While our enterprises have been operating at full capacity, the situation is likely to be more complex in May and June. In the light of this, Evraz is working on a comprehensive package of optimisation measures that we expect to partially mitigate these negative effects."

Evraz said it remains well capitalised with a "strong" liquidity cushion. As at the end of December 2019, it had net debt of $3.45bn, reflecting cash of $1.4bn. Short-term loans and the current portion of long-term loans stood at $140m and total scheduled debt maturities in 2020 will amount to no more than $52m, it said.

In addition, in March Evraz signed a $750m, five-year committed syndicated unsecured credit facility. Proceeds from the facility will be used for general corporate purposes, including refinancing of public debt maturities in the first quarter of 2021, it said.