ZFER & NFER Reduce Output.

In 1Q06 Zaporizhya (ZFER: BUY) and Nikopol Ferroalloy (NFER: Pending) decreased their outputs by 1.2% and 7% yoy respectively. ZFER decreased more electricity intensive FeSi by 36% yoy, while NFER reduced FeMn production by 26% yoy. At the same time, production of SiMn increased by 2% at NFER and 3% at ZFER yoy. Concorde Capital: Global demand is growing faster for SiMn than for FeSi and FeMn, driving the output of the former. We believe ZFER production levels will stay at about the same level as 2005 with SiMn making up a larger share in the company’s output structure. As for NFER, we expect the company to improve only after its ownership issues are resolved.