Metinvest steel output rises 13.7% m/m in December

Steel production at Ukraine’s largest producer, Metinvest
(METINV), was 21.0 kt per day (or 652 kt per month) in December, a 13.7% m/m
jump in average daily terms, 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. (Production at Metinvest’s Yenakiyeve
Steel was halted in February 2017). No attributable portion of Zaporizhstal’s
(ZPST UK) result is included.

Ilyich Steel reported an 11.6% m/m increase in steel
production to 9.5 kt per day, while Azovstal’s output gained 15.5% m/m to 11.5
kt per day.

The holding’s hot iron output gained 11.7% m/m to 23.2
kt per day in December.

During 2018, Metinvest’s steel output was 7.31 mmt, or
4.2% less yoy. Excluding Yenakiyeve Steel, which Metinvest does not control
anymore, the holding’s output slid 0.7% yoy in 2018.

Dmytro Khoroshun: We expect
Metinvest’s 2019 steel output at about 7.3-7.7 mmt, or up to 5% more yoy.

In detail, Metinvest’s plans to expand slab casting capacity at Ilyich Steel to
4 mmt per year might result in a steel production increase at that plant to 4
mmt per year, in addition to Azovstal’s 4.2-4.3 mmt per year, thus resulting in
8.2-8.3 mmt per year for the entire Metinvest group. However, we are skeptical
that such a high output might be achieved in 2019.