Metinvest shuts down another blast furnace at Azovstal

Ukraine’s largest steel producer Metinvest (METINV) started
shutting down blast furnace (BF) No. 6 on June 8-9, according to a June 7
report by mrpl.city, a local news site.

Dmytro Khoroshun: We expect
repairs of BF No. 6 to last two-three years. After this shutdown, Azovstal will
be operating two BFs: No. 2 (1.1 mmt of hot iron p.a.) and No. 4 (1.3 mmt
p.a.), with a total hot iron capacity of 2.4 mmt p.a. This should allow for
maximum steel production of about 2.7 mmt p.a., or 7.5 kt per day.

In the coming weeks, Azovstal should launch BF No. 3
(1.3-1.6 mmt p.a.), which should increase the plant’s total hot iron capacity
to 3.7-4.0 mmt p.a. (maximum steel production of about 4.2-4.55 mmt p.a., or
11.5-12.5 kt per day).

Provided Ilyich Steel keeps producing steel at the
10.5-11.0 kt per day rate (5M19 average: 10.7 kt per day), Metinvest’s total
steel production should keep up at 22.0-23.5 kt per day, or 8.0-8.6 mmt p.a.
However, while Metinvest launches BF No. 3 in June, its steel output for the month
might drop to as low as 18-19 kt per day on average, down 20-25% m/m.

We maintain our bullish view on METINV bonds.