Metinvest iron ore concentrate output rises 3.6% in 7M19

The attributable production of iron ore concentrate at
the subsidiaries of Metinvest (METINV), Ukraine’s largest steel producer,
amounted to 2.79 mmt (89.9 kt per day) in July, according to Concorde Capital’s
analysis of separate news reports by Interfax-Ukraine. This is a 2.1% m/m loss
on a daily average basis. The holding’s pellet output was 1,030 kt in July, a
0.5% m/m gain on a daily average basis.

Concentrate production at Inhulets Iron Ore lost 7.4%
m/m in July to a daily rate of 28.8 kt. Production at Northern Iron Ore slid
0.3% m/m to 33.6 kt per day. Production at Central Iron Ore gained 2.3% m/m to
12.0 kt per day, whereas output at Southern Iron Ore increased 1.3% m/m to 33.7
kt per day.

In 7M19, Metinvest’s attributable output of iron ore
concentrate rose 3.6% yoy to 19.47 mmt, or 91.8 kt per day.

Dmytro Khoroshun: Despite
Metinvest’s steel production in July remaining lower than usual due to
planned repairs and a hot iron mixer accident at Azovstal,
its iron ore output remained close to normal levels, which is positive.

If Metinvest manages to maintain its iron ore production
volumes, and to increase sales to third parties, the holding will mitigate the
financial impact of the recent accident at its Azovstal steel plant.

We maintain our estimate for Metinvest’s 2019
attributable iron ore concentrate output at 33 mmt (91 kt per day), or 4-5%
more yoy. The management guidance for Metinvest’s subsidiaries
(excluding Southern Iron Ore) is for a 4-5% yoy increase, or by 1.2-1.3 mmt.

We maintain our bullish view on METINV bonds.