Metinvest affiliate Pokrovske Coal output jumps 25% in 10M19

Private joint stock company Pokrovske Coal produced
14.1 kt of raw coking coal per day in October, a 16.8% m/m plunge, according to
Concorde Capital’s analysis of Energy Ministry data.

In 10M19, Pokrovske Coal produced 4.10 mmt of coal, a
25.1% yoy jump.

Recall, Pokrovske Coal said in its 2018 annual report
that it plans to boost coal production 42% yoy
to 5.63 mmt in 2019. Metinvest (METINV), Ukraine’s largest steelmaker, owns 25%
in Pokrovske Coal assets.

Dmytro Khoroshun: Pokrovske’s
coal output slowdown in October is generally explained by a dire situation on
world steel markets and the resulting drop in Ukraine’s iron and steel
production volumes.

Recall, as a result of the currently low steel prices,
Metinvest’s partner Dniprovskyy Steel decided not to restart some of its
capacities after maintenance in early October.
Also, Metinvest’s own daily steel production rate lost 14.5%
m/m in October after dropping 7.0% m/m in
September.

However, Ukrainian iron and steel export prices have
apparently stabilized in the beginning of November, which might support coking
coal demand in Ukraine in the coming months.

If Pokrovske Coal maintains its October production
rate for the next two months, it will boost its production 24% yoy to 5.0 mmt
in 2019.

We maintain our bullish view on METINV bonds.