Metinvest iron ore concentrate output rises 3% in 5M20

The attributable production of iron ore concentrate at
the subsidiaries of Metinvest (METINV), Ukraine’s largest steel producer,
amounted to 2.94 mmt (95.0 kt per day) in May, according to Concorde Capital’s
analysis of separate news reports by Interfax-Ukraine. This is a 2.7% m/m loss
on a daily average basis. The holding’s pellet output was 551 kt in May, a 2.1x
m/m surge on a daily average basis.

Concentrate production at Inhulets Iron Ore dropped
2.6% m/m in May to a daily rate of 31.9 kt. Production at Northern Iron Ore
lost 8.8% m/m to 32.3 kt per day. Production at Central Iron Ore added 10.4%
m/m to 14.4 kt per day, whereas output at Southern Iron Ore was flat m/m at
35.8 kt per day.

In 5M20, Metinvest’s attributable output of iron ore
concentrate rose 3.4% yoy to 14.4 mmt, or 94.7 kt per day.

Dmytro Khoroshun: Metinvest’s
stable iron ore concentrate production volumes are continuing to support its
overall profitability.

We tentatively expect Metinvest to produce 33.8 mmt
(92 kt per day) of iron ore concentrate in 2020, or 1% more yoy (including the
attributable share of Southern Iron Ore volume). However, if the situation at
the iron ore and steel markets deteriorates, Metinvest’s iron ore production in
2020 might drop up to 8% yoy to 31 mmt (85 kt per day).

At a March conference call with investors
Metinvest’s CEO said the holding expects its total iron ore concentrate
production (excluding Southern Iron Ore) will remain at the 2019 level.

We maintain our negative view on METINV bonds.