Metinvest steel output rebounds 7% m/m in July

Steel production at Ukraine’s largest producer
Metinvest (METINV) was 18.8 kt per day (or 583 kt per month) in July, a 7.3% m/m
gain, according to Concorde Capital’s analysis of separate news reports by
Interfax-Ukraine. That result includes Azovstal (AZST UK) and Ilyich Steel
(MMKI UK) figures.

Ilyich Steel reported a 10.5% m/m increase in steel
production to 9.1 kt per day, while Azovstal’s output rose 4.4% m/m to 9.7 kt
per day in July. The holding’s hot iron output inched up 2.0% m/m to 18.9 kt
per day.

In 7M19, Metinvest’s steel output was 4.51 mmt, or
3.0% more yoy.

Dmytro Khoroshun: Azovstal’s
9.7 kt per day July performance is impressive, given that the plant shut down one of its two oxygen converters in June
and likely delayed its restart to August or later
because of a July 12 accident with a hot iron mixer.
Ilyich Steel’s m/m steel production gain might be a result of its restarting
one of its three oxygen converters that was shut down at the end of May.

If Metinvest maintains Azovstal’s July 9.7 kt per day
steel production rate in the remainder of 2019 and boosts Ilyich Steel’s steel
output to the 11.3 kt per day rate demonstrated in April,
the holding’s 2019 steel output would be 7.7 mmt, or 6% more yoy.

We are keeping our estimate for Metinvest’s 2019 steel
production at 7.3-7.7 mmt (or 0-6% up yoy).

We maintain our bullish view on METINV bonds.