Metinvest iron ore concentrate output falls 4.3% m/m in September
21 October 2016
Metinvest’s (METINV) attributable production of iron ore concentrate before processing slid 4.3% m/m in September to 2.5 mmt (-14% yoy), according to Concorde Capital’s analysis of separate reports by Interfax-Ukraine. In 9M16, output of attributable concentrate decreased 4.8% yoy to 25.7 mmt. Output of merchant attributable products slid 5.4% to 24.6 mmt in 9M16, based on our estimates.
Metinvest is Ukraine’s largest steel producer. Though the holding company was headquartered in Donetsk before the war (having since been moved to Kyiv), most of its assets are located outside the occupied territories of Donbas, including the Donetsk and Dnipro regions.
Igor Zholonkivskyi: Metinvest’s decline in iron ore mining corresponds with its recent interim decline in steel output, as announced by the holding’s CEO last week. As this result is below our initiatial expectations, we are revising our forecast of Metinvest’s merchant attributable products output to 33.4 mmt in 2016 (which would be a 4.0% decline yoy), from 35.2 mmt estimated before.
This adjustment is not material enough prompt a change in our forecast for the holding’s 2016 EBITDA of USD 1.2bln. We remain bullish on METINV Eurobonds (trading now at 81%-82% of par), anticipating that a successful long-term restructuring by end-November will be a price catalyst.
