Metinvest iron ore concentrate output rises 7% m/m in October

The attributable production of iron ore concentrate of
Metinvest’s (METINV) subsidiaries amounted to 2.71 mmt in October, according to
Concorde Capital’s analysis of separate news by Interfax-Ukraine. This is a
10.8% m/m increase, or a 7.2% m/m rise on a daily average basis. The holding’s
pellet output was 777 kt in October, an 18.4% m/m drop (or a 21.0% m/m decline
on a daily average basis).

After two months of m/m decreases, production at
Inhulets Iron Ore rebounded in October to the daily production rate of 27.9 kt,
or a 20.1% m/m rise. Production at Northern Iron Ore climbed 1.4% m/m to 30.6
kt per day. Production at Central Iron Ore dropped 3.0% m/m to 12.4 kt per day,
whereas output at Southern Iron Ore grew 7.6% m/m to 36.0 kt per day.

In 10M17, Metinvest’s attributable output of iron ore
concentrate dropped 6.7% yoy to 26.4 mmt.

Dmytro Khoroshun: Despite the
early October reports of a deterioration of the situation with Ukrzaliznytsia’s
railcar supply for Ukraine’s iron ore miners, Metinvest managed to boost its
daily iron ore output. Nevertheless, on Nov. 10, the CEO of Inhulets Iron Ore
reported further problems with Ukrzaliznytsia’s railcar supply, which will
likely remain a risk for the foreseeable future.

We continue to expect Metinvest will produce about
31.7 mmt of attributable iron ore in 2017, a 5.2% yoy decrease. And we are also
keeping our neutral view on METINV Eurobonds as we see a high refinancing risk
for the next twelve months.