Metinvest domestic iron ore client to conduct repairs in 3Q18

Dniprovskyy Steel (DMK), a Ukrainian iron & steel
plant, plans to conduct a 55-day repairs of a blast furnace and an oxygen
converter starting July 15, according to Metal Expert, an industry consultancy.
Metinvest (METINV), Ukraine’s largest steel maker and iron ore producer,
supplies DMK with iron ore and resells its products.

In late June – early July, Inhulets Iron Ore, a
Metinvest iron ore plant, sent a vessel with iron ore products to Mexico, a new
market for the company, according to the Facebook page of the plant’s CEO.

Recall, Azovstal, a Metinvest iron & steel plant,
planned a 27-day repair of converter No. 2
starting June 26.

Dmytro Khoroshun: We estimate
that the repairs at DMK will reduce Metinvest’s domestic iron ore sales by
about 200 kt in total, in addition to similar volumes that might be lost due to
repairs at Azovstal. Selling iron ore to Mexican clients might allow Metinvest
to uphold iron ore production volumes despite the repairs at domestic clients.

However, the logistics of supplies to Mexico makes
these sales much less profitable in comparison with sales inside Ukraine. If
Metinvest secures longer-term contracts with Mexican clients, it might want to
swap the logistically inefficient physical supplies with, for example, supplies
from Brazil to European clients.