Metinvest steel output decreases 5% m/m in June

Steel production at Ukraine’s largest producer,
Metinvest (METINV), was 21.5 kt per day (or 644 kt per month) in June, a 4.5%
m/m decrease 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 a 2.2% m/m rise in steel
production to 9.1 kt per day, while Azovstal output dropped 9.0% m/m to 12.3 kt
per day.

The holding’s hot iron output decreased 0.4% m/m to
23.8 kt per day in June.

During 1H18, Metinvest’s steel output was 3.78 mmt, or
5.5% less yoy. Excluding Yenakiyeve Steel, which Metinvest does not control
anymore, the holding’s output rose 3.4% yoy in 1H18.

Dmytro Khoroshun: The steel
production drop to 21.5 kt per day in June was in line with our estimate that
considered the 27-day repairs of Azovstal’s oxygen converter No. 2
that started on June 26. We expect Metinvest’s July daily steel output to drop
further m/m by about 19% to 17.4 kt because of the repairs.

We expect Metinvest’s 2018 steel output at about
7.3-7.5 mmt, or 3-5% less yoy.