Metinvest iron ore concentrate output rises 5.5% in 9M19

The attributable production of iron ore concentrate at
the subsidiaries of Metinvest (METINV), Ukraine’s largest steel producer,
amounted to 2.67 mmt (88.8 kt per day) in September, according to Concorde
Capital’s analysis of separate news reports by Interfax-Ukraine. This is an
8.6% m/m loss on a daily average basis. The holding’s pellet output was 631 kt
in September, a 39.8% m/m plunge on a daily average basis.

Concentrate production at Inhulets Iron Ore lost 9.9%
m/m in September to a daily rate of 30.6 kt. Production at Northern Iron Ore
dropped 13.6% m/m to 30.8 kt per day. Production at Central Iron Ore gained
7.5% m/m to 13.0 kt per day, whereas output at Southern Iron Ore decreased 6.6%
m/m to 31.5 kt per day.

In 9M19, Metinvest’s attributable output of iron ore
concentrate rose 5.5% yoy to 25.04 mmt, or 91.7 kt per day.

Dmytro Khoroshun: We maintain
our estimate for Metinvest’s 2019 attributable iron ore concentrate output at
33.3-34.2 mmt (91-94 kt per day), or 5-8% 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.

However, we note the September production volumes were
weaker than we expected after the recent record of 97.2 kt of concentrate per day in August.
Also, September pellet output was the lowest since April 2017.

Given that Metinvest lost substantial domestic demand
due to the recent capacity shutdowns at Dniprovskyy Steel and Dnipro
Metallurgical Plant, Metinvest might face a decrease in
iron ore production volumes in 2020 unless the situation on world steel markets
improves.

We maintain our bullish view on METINV bonds.