Metinvest iron ore concentrate output rises 3% m/m in November

The attributable
production of iron ore concentrate of Metinvest’s (METINV) subsidiaries
amounted to 2.71 mmt in November, according to Concorde Capital’s analysis of
separate news reports by Interfax-Ukraine. This is a 0.1% m/m increase, or a 3.5% m/m rise on
a daily average basis. The holding’s pellet output was 636 kt in November, an
18.1% m/m drop (or a 15.5% m/m decline on a daily average basis).

Production at
Inhulets Iron Ore rose 1.9% m/m in November to the daily production rate of
28.5 kt. Production at Northern Iron Ore climbed 6.9% m/m to 32.7 kt per day.
Production at Central Iron Ore increased 3.3% m/m to 12.8 kt per day, whereas
output at Southern Iron Ore declined 0.2% m/m to 35.9 kt per day.

In 11M17,
Metinvest’s attributable output of iron ore concentrate dropped 5.5% yoy to
29.2 mmt.

Dmytro Khoroshun: Metinvest has offered investors yet
another month of impressive iron ore production against the backdrop of a high
volume of complaints about Ukrzaliznytsia’s railcar supply for Ukraine’s iron
ore miners. It will be interesting to see by how much the holding boosts its
production volumes due to the recently signed shipping agreement with Lemtrans, the acquisition of 1,800 railcars, and what they cost (in particular,
what will
Lemtrans’ rates be compared
to Ukrzaliznytsia’s, and railcar purchase price compared to the market price).

We continue to expect Metinvest will produce about 31.9 mmt of
attributable iron ore in 2017, a 5% yoy decrease. And we are also keeping our
neutral view on METINV Eurobonds.