Metinvest iron ore concentrate output rises 4% in 1H20

The attributable production of iron ore concentrate at
the subsidiaries of Metinvest (METINV), Ukraine’s largest steel producer,
amounted to 2.95 mmt (98.2 kt per day) in June, according to Concorde Capital’s
analysis of separate news reports by Interfax-Ukraine. This is a 3.4% m/m gain
on a daily average basis. The holding’s pellet output was 708 kt in June, a
32.8% m/m rise on a daily average basis.

Concentrate production at Inhulets Iron Ore inched up
0.9% m/m in June to a daily rate of 32.2 kt. Production at Northern Iron Ore
gained 8.8% m/m to 35.1 kt per day. Production at Central Iron Ore lost 6.0%
m/m to 13.5 kt per day, whereas output at Southern Iron Ore added 5.6% m/m to
37.8 kt per day.

In 1H20, Metinvest’s attributable output of iron ore
concentrate rose 4.1% yoy to 17.35 mmt, or 95.3 kt per day.

Dmytro Khoroshun: Metinvest’s
stable iron ore concentrate production volumes are continuing to support its
overall profitability. This stability, together with the strong iron ore prices
at the global markets, were the main factors that likely allowed Metinvest to
avoid breaching its 3x net leverage covenants as of end-June, according to assumptions by S&P.

We are raising our expectations for Metinvest’s 2020
iron ore concentrate production to 34.3 mmt (93.6 kt per day), or 3% more yoy
(including the attributable share of Southern Iron Ore volume).

At a March conference call with investors
Metinvest’s CEO said the holding expects its total iron ore concentrate
production (excluding Southern Iron Ore) will remain at the 2019 level.

We maintain our neutral view on METINV bonds.