Metinvest attributable steel output drops 4.4% in December

Attributable steel production at Ukraine’s largest steel producer Metinvest (METINV) was 25.2 kt per day (or 783 kt per month) in
December, a 4.4% 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), Ilyich Steel (MMKI UK) and a 49.9% portion of
Zaporizhstal’s (ZPST UK) result. (Production at Metinvest’s Yenakiyeve Steel
was halted on Feb. 20.)

The two Mariupol-based mills decreased output by 9.0%
m/m to 19.5 kt per day, including Ilyich Steel (a 4.1% m/m increase to 9.2 kt
per day) and Azovstal (an 18.1% m/m decrease to 10.3 kt per day).
Zaporizhstal’s output increased 15.2% m/m to 11.5 kt per day.

Also, the holding’s hot iron output dropped by 0.5%
m/m to 29.9 kt per day in December.

In 2017, Metinvest’s attributable steel output was
9.65 mmt, or 6.7% less yoy. Excluding Yenakiyeve Steel, which Metinvest does
not control anymore, the holding’s output rose 10.9% yoy to 9.30 mmt in 2017.

Dmytro Khoroshun: Metinvest`s
attributable steel output for 2017 was in line with our expectations. For 2018,
we expect about 9.3 mmt of attributable steel production, or 4% down yoy.
However, if Ukrzaliznytsia, Ukraine’s state railway company, increases 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 the attributable steel
production might remain roughly flat yoy around 9.7 mmt or even slightly exceed
that level.

We are keeping our neutral view on METINV Eurobonds.