Metinvest steel output drops 4% qoq in 1Q18

Ukraine’s largest steel maker Metinvest (METINV)
reported on Apr. 27 a 4% qoq decrease in steel production to 1.825 mmt at its
subsidiaries in 1Q18. Azovstal’s output plunged 7% qoq to 1.022 mmt in 1Q18, while
Ilyich Steel’s output remained flat qoq at 803 kt, according to the holding’s
operational results update.

Metinvest’s 1Q18 crude steel output fell 12% yoy due
to zero output at Yenakiyeve Steel (production was halted on Feb. 20, 2017) and
a 6% yoy plunge at Azovstal, which was partially offset by a 12% yoy rise at
Ilyich Steel.

The holding’s output of pig iron in 1Q18, 2.156 mmt,
was flat qoq and 9% higher yoy.

Output of semi-finished products at Metinvest, 788 kt,
dropped 9% qoq (merchant pig iron output rose 14% qoq to 474 kt, slab output
fell 18% qoq to 313 kt) but surged 71% yoy (merchant pig iron production more
than tripled yoy). The holding’s finished product output, 1.476 mmt, was flat
qoq but declined 7% yoy (owing to a 35% plunge in long product output, whereas
flat product output increased 2% qoq and 1% yoy).

Total iron ore concentrate production, 6.924 mmt, slid
1% qoq but improved 4% yoy. Production of merchant iron ore concentrate (for
sale to third parties), 1.882 mmt, dropped 21% qoq and 23% yoy, while output of
merchant iron ore pellets, 1.723 mmt, jumped 24% qoq and 48% yoy.

Dmytro Khoroshun: It is
positive that Metinvest was able to maintain, qoq, its output (and, presumably,
also its sales) of flat products even after the introduction of a EUR 60.5/t anti-dumping duty
on imports of Ukrainian hot-rolled coil by the EU in October 2017.

However, the only notable increases in metal
product output values are those of a semi-finished product, merchant pig iron,
by 330 kt yoy and by 60 kt qoq. This means that Metinvest is experiencing
greater difficulties with boosting its sales of finished products, likely in
large part due to the worldwide trend of rising steel trade protectionism.