Metinvest steel output down in 1Q12, external iron ore sales up

Metinvest (METINV) reported steel production of 3.3 mmt in 1Q12 yesterday, which implies a 8.7% yoy and 2.9% qoq decline. Metinvest attributed this to deteriorating markets for steel products. The biggest decline in output was in semi-finished products (down 34-37% qoq), while flat products manufacturing remained stable and long products dropped 7.7% qoq, but were up +1.3% yoy. Large diameter pipe production grew 31.4% yoy and 12% qoq to 205 kt thanks to ongoing projects in Kazakhstan and Turkmenistan, while production of other pipes slid 19% yoy. Due to lower intragroup consumption of iron ore, Metinvest increased sales of concentrate to 3.3 mmt (+2.4% yoy) and of pellets to 2.1 mmt (+51.3% yoy). The company’s coking coal segment declined at Ukrainian subsidiary Krasnodon but grew at American unit United Coal Company, leading to an overall increase in coal mining of 10.7% yoy to 2.97 mmt in 1Q12.