Metinvest steel output jumps 20% m/m in May

Steel production at Ukraine’s largest producer
Metinvest (METINV) was 18.7 kt per day (or 580 kt per month) in May, a 19.7%
m/m jump, according to Concorde Capital’s analysis of separate news reports by
Interfax-Ukraine.

Ilyich Steel reported a 13.7% m/m gain in steel
production to 8.9 kt per day, while Azovstal’s output advanced 25.6% m/m to 9.8
kt per day in May. The holding’s hot iron output increased 12.8% m/m to 20.5 kt
per day.

In 5M20, Metinvest’s steel output was 3.22 mmt (21.2
kt per day), or 5.2% less yoy.

In the first 17 days of June, the daily average of
22.2 freight trains traveled the Komysh-Zorya–Volnovakha railway section heading
to Mariupol, according to the website of the Center for Transport Strategies
(CFTS), which is 29% more than the daily average for May.

Dmytro Khoroshun: May’s m/m
gains in daily iron and steel production rates at Metinvest were better than the 5% increase we estimated
from the CFTS freight traffic data for May.

The 12.8% m/m gain in daily hot iron output was
possibly due to Metinvest’s steelmakers partially depleting their raw material
inventories. The 19.7% m/m jump in daily steel production rate was possibly in
part due to Metinvest’s steelmakers producing less merchant pig iron and
transforming more hot iron into steel.

The CFTS freight traffic data for June 1-17 suggest Metinvest’s
iron and steel daily production volumes might rise further m/m in June.
However, Metinvest’s steelmakers might use some of the raw materials they
receive in June to replenish their inventories.

We maintain our negative view on METINV bonds.