Metinvest iron ore concentrate output rises 3.6% in 1H19

The attributable production of iron ore concentrate at
the subsidiaries of Metinvest (METINV), Ukraine’s largest steel producer, amounted
to 2.75 mmt (91.8 kt per day) in June, according to Concorde Capital’s analysis
of separate news reports by Interfax-Ukraine. This is a 0.1% m/m loss on a
daily average basis. The holding’s pellet output was 992 kt in June, a 29.6%
m/m jump on a daily average basis.

Concentrate production at Inhulets Iron Ore lost 0.5%
m/m in June to a daily rate of 31.1 kt. Production at Northern Iron Ore slid
0.2% m/m to 33.7 kt per day. Production at Central Iron Ore gained 3.6% m/m to
11.8 kt per day, whereas output at Southern Iron Ore decreased 1.6% m/m to 33.2
kt per day.

In 1H19, Metinvest’s attributable output of iron ore
concentrate rose 3.6% yoy to 16.65 mmt, or 92.0 kt per day.

Dmytro Khoroshun: Despite the drop in Metinvest’s steel production in June
due to planned repairs, its iron ore output increased, which is positive.

If Metinvest manages to maintain its production
volumes, and to increase sales to third parties, of the currently very profitable
iron ore products in July-August, the holding will mitigate the financial
impact of the recent accident at its Azovstal steel plant.

We maintain our estimate for Metinvest’s 2019 attributable
iron ore concentrate output at 33 mmt (91 kt per day), or 4-5% more yoy. The management guidance for Metinvest’s subsidiaries
(excluding Southern Iron Ore) is for a 4-5% yoy increase, or by 1.2-1.3 mmt.

We maintain our bullish view on METINV bonds.