Metinvest steel output rises 3% m/m in September, will drop in October

Steel production at Ukraine’s largest producer,
Metinvest (METINV), was 20.1 kt per day (or 604 kt per month) in September, a
2.7% m/m increase in average daily terms, according to Concorde Capital’s
analysis of separate news reports by Interfax-Ukraine. That result includes
Azovstal (AZST UK) and Ilyich Steel (MMKI UK) figures. (Production at
Metinvest’s Yenakiyeve Steel was halted in February 2017). No attributable
portion of Zaporizhstal’s (ZPST UK) result is included.

Ilyich Steel reported a 1.6% m/m drop in steel
production to 8.6 kt per day, while Azovstal’s output rose 6.1% m/m to 11.5 kt
per day.

The holding’s hot iron output plunged 9.3% m/m to 19.6
kt per day in September.

During 9M18, Metinvest’s steel output was 5.58 mmt, or
3.8% less yoy. Excluding Yenakiyeve Steel, which Metinvest does not control
anymore, the holding’s output rose 2.3% yoy in 9M18.

Azovstal stopped for repairs to oxygen converter No. 1
on Sept. 24, planning to restart it in mid-November, according to
Interfax-Ukraine, which sited a local corporate newspaper.

Dmytro Khoroshun: In October,
due to converter repairs, Azovstal’s steel output should decrease to about 6 kt
per day, which will result in a 25% m/m drop in Metinvest’s steel output to
about 15 kt per day, we estimate.

We expect Metinvest’s 2018 steel output at about
7.2-7.4 mmt, or 3-6% less yoy.