Metinvest Azovstal to delay restart of oxygen converter due to accident

The Azovstal plant of Ukraine’s largest steelmaker
Metinvest (METINV) would delay the restart of its oxygen converter No. 1, which
was shut down in June, to August
or beyond, according to a July 15 report by Metal Expert, an industry
consultancy. Previously, Azovstal planned to restart this converter in July,
according to Metal Expert, but the July 12 accident with its hot iron
mixer No. 1 caused the plant to change its
plans.

Metal Expert also said that Azovstal might reveal how
long it will take to repair its hot iron mixer by the end of July.

Dmytro Khoroshun: We
downgrade our estimate for Metinvest’s 2019 steel production to 7.3-7.7 mmt (or
0-5% up yoy) because of Azovstal’s mixer accident.

Nevertheless, we note that Metinvest might mitigate
the financial effects of the accident by increasing sales of iron ore products
to third parties.

Also, Metinvest might be compensated for the damages
to its equipment and the loss of production resulting from the accident if it
was properly insured and if its claims are eventually accepted.

We maintain our bullish view on METINV bonds.