Metinvest iron ore concentrate output drops 2% m/m in December

The attributable production of iron ore concentrate of
Metinvest’s (METINV) subsidiaries amounted to 2.74 mmt in December, according to
Concorde Capital’s analysis of separate news reports by Interfax-Ukraine. This
is a 0.8% m/m increase, or a 2.4% m/m drop on a daily average basis. The
holding’s pellet output was 954 kt in December, a 50.0% m/m jump (or a 45.2%
m/m rise on a daily average basis).

Production at Inhulets Iron Ore rose in December to
the daily rate of 29.4 kt per day, or a 3.2% m/m rise. Production at Northern
Iron Ore slid 0.2% m/m to 32.6 kt per day. Production at Central Iron Ore
decreased 0.2% m/m to 12.8 kt per day, whereas output at Southern Iron Ore
declined 18.4% m/m to 29.3 kt per day.

In 2017, Metinvest’s attributable output of iron ore
concentrate dropped 4.8% yoy to 31.9 mmt.

Dmytro Khoroshun: We expect
Metinvest’s 2018 attributable concentrate output to rise about 0.4% yoy to 32.0
mmt, approximately. However, if Ukrzaliznytsia, Ukraine’s state railway
company, enhances the throughput of the Kamysh-Zarya-Volnovakha raw material
supply route, which currently limits the utilization
rate of Metinvest’s two Mariupol plants to 70-80%, then Metinvest’s mining
operations will boost intra-group sales by an additional 0.5 mmt (about 2% of
the yearly production volume) of iron ore products, which might result in a
commensurate increase in yearly production volumes.

We are keeping our neutral view on METINV Eurobonds.