Metinvest iron ore concentrate output rises 5% in 2M20

The attributable production of iron ore concentrate at
the subsidiaries of Metinvest (METINV), Ukraine’s largest steel producer, amounted
to 2.80 mmt (96.7 kt per day) in February, according to Concorde Capital’s
analysis of separate news reports by Interfax-Ukraine. This is a 4.2% m/m gain
on a daily average basis. The holding’s pellet output was 705 kt in February, a
5.2% m/m drop on a daily average basis.

Concentrate production at Inhulets Iron Ore jumped
10.4% m/m in February to a daily rate of 34.6 kt. Production at Northern Iron
Ore inched up 0.4% m/m to 35.0 kt per day. Production at Central Iron Ore
gained 3.2% m/m to 12.4 kt per day, whereas output at Southern Iron Ore
improved 0.8% m/m to 32.1 kt per day.

In 2M20, Metinvest’s attributable output of iron ore
concentrate rose 5.0% yoy to 5.68 mmt, or 94.7 kt per day.

Dmytro Khoroshun: We
tentatively expect Metinvest to produce (including the attributable share of
Southern Iron Ore volume) 33.4 mmt (91 kt per day) of iron ore concentrate in
2020, the same as in 2019. However, if the situation at the iron ore and steel
markets deteriorates, whether due to the coronavirus or a disappointing set of
economic stimulus measures in China, Metinvest’s iron ore production in 2020
might drop up to 10% yoy to 30 mmt (82 kt per day).

At a recent 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.