Metinvest steel output rises 7.2% m/m in February

Steel production at Ukraine’s largest producer,
Metinvest (METINV), was 22.0 kt per day (or 615 kt per month) in February, a
7.2% m/m jump, 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.

Ilyich Steel reported a 2.8% m/m drop in steel
production to 10.5 kt per day, while Azovstal’s output jumped 18.5% m/m to 11.5
kt per day.

The holding’s hot iron output lost 4.0% m/m to 21.0 kt
per day in February.

In 2M19, Metinvest’s steel output was 1.25 mmt, or
7.8% more yoy.

Dmytro Khoroshun: Ilyich
Steel’s steel output remains strong after the recent upgrade of one of its casting machines,
despite a 14-day repair of the plant’s blast furnace No. 3 in February, as
reported by Metal Expert, an industry consultancy. At the same time, steel
output at Azovstal rebounded strongly because the plant completed on Jan. 31 a
17-day repair at its blast furnace No. 2, according to Metal Expert.

If during the rest of 2019 Ilyich Steel maintains its
daily steel production rate at around 10.5-11.0 kt per day, and if it is
combined with Azovstal’s 2018 daily average of 11.7 kt per day, the resulting
Metinvest total output would be 22.3 kt per day, or about 8.1 mmt per year, up
from 7.32 mmt in 2018.

However, we are skeptical that such a high output
can be achieved this year, so currently we expect Metinvest’s 2019 steel output
at about 7.3-7.7 mmt, or up to 5% more yoy.