Metinvest crude steel output falls 2% qoq in 3Q16

Metinvest (METINV) reported a 2% qoq decline in crude steel production at its subsidiaries in 3Q16 to 2.15 mmt, according to its operating update published on Nov. 2. Yenakiyeve Steel (ENMZ UK) contributed the most to the growth with a 13% qoq increase to 509 kt, while Azovstal endured a 7% qoq decline in production to 950 kt.

The holding’s crude steel production grew 6% yoy to 6.3 mmt in 9M16. Production of square billets fell 48% yoy in 9M16 to 241 kt, while output of long steel products grew 28% yoy during the same period to 1.444 mmt. Output of slabs grew 17% and output of flat steel products increased 4% yoy in 9M16.

Total iron ore concentrate production at Metinvest’s subsidiaries declined 10% qoq to 7.137 mmt in 3Q16 and 4% yoy to 22.9 mmt in 9M16.

Andriy Perederiy: The operating performance of Metinvest’s subsidiaries is line with what we have preliminary observed in separate news reports of Interfax. The holding’s metallurgical segment output comes in marginally below our projections of flat qoq performance in 3Q16. Nevertheless, we reaffirm our estimate of Metinvest’s total attributable steel production (including JV’s not disclosed in the production report) in 2016 at 10.5 mmt (+9% yoy) and remain bullish on Metinvest Eurobonds trading now at about 86% of par.