Metinvest to cooperate with machinery plant on repairs, modernization

Ukraine’s largest steelmaker Metinvest (METINV) and
Novokramatorsk Machinery Plant (NKMP) have signed a memorandum on strategic
cooperation, according to an NKMP July 24 press release. This long-term
agreement addresses the reconstruction and modernization of Ukraine’s metal and
mining assets, NKMP said.

Recall, Metinvest’s Azovstal plant experienced an accident with its hot
iron stationary mixer No. 1 on July 12. It is likely that this mixer had been supplied by NKMP in 2019
and had been installed right before the accident.

Dmytro Khoroshun: The
agreement with NKMP is positive for Metinvest because it might allow for
shortening the time to procure a new stationary hot iron mixer from NKMP in the
likely case Azovstal’s mixer No. 1 needs to be replaced as a result of the
accident. In the long term, having a local machinery plant as a strategic
partner will be positive for Metinvest because it will facilitate maintenance
and modernization that are much needed, especially after several years of
underinvestment, by the holding’s steelmaking and mining assets.

We expect Metinvest’s 2019 steel production at 7.3-7.7
mmt, or 0-5% higher yoy, provided that Azovstal continues operating at least
one stationary hot iron mixer.

We maintain our bullish view on METINV bonds.