23 July 2014
Avdiyivka Coke (AVDK UK), the key coke producer of vertically integrated holding Metinvest (METINV), suffered damage to infrastructure and minor production facilities after bombardment during the night of July 22, company representatives reported in the media. An electric substation was destroyed. The company said it will need 1-2 days to restore its operations after the damage. During that time, the steelmakers of Metinvest, namely Ilyich Steel (MMKI UK), Yenakiyeve Steel (ENMZ UK) and Azovstal (AZST UK), will have to minimize coke consumption to its stockpiles, meaning a possible temporary reduction in hot iron and steel production. However, Metinvest stated in a later press release that the event will not substantially impact the holding’s steel production since it will substitute Avdiyivka’s supplies with coke from other enterprises.
Roman Topolyuk: From what can be understood from media reports, Avdiyivka’s coke batteries, its key production facilities, haven’t been damaged. Should the repairs require more time than estimated by company representatives, Metinvest’s production of hot iron (which increased 3% yoy to 5.8 mmt in 1H14) and steel (-8% yoy to 5.7 mmt in 1H14) could be negatively impacted. Avdiyivka covers up to 67% of Metinvest’s coke requirements, so to fully and promptly contract 3.8 mmt of coke on the open market, in annual terms, could be a challenge for the holding.