Metinvest steel output drops 12% m/m in December

Steel production at Ukraine’s largest producer
Metinvest (METINV) was 27.4 kt per day (850 kt per month) in December, a 12.5%
m/m decrease, according to Concorde Capital’s analysis of separate news reports
by Interfax-Ukraine.

Ilyich Steel reported a 0.5% m/m loss in steel
production to 11.6 kt per day, while Azovstal’s output dropped 16.0% m/m to
10.6 kt per day and production at Dniprovskyy Coke plunged 26.3% m/m to 5.2 kt
per day in December.

The holding’s hot iron output dropped 15.2% m/m to
28.0 kt per day in December.

In 2021, Metinvest’s steel output was 9.51 mmt (26.1
kt per day), or 15.3% more yoy.

Dmytro Khoroshun: Steel production
volumes at Metinvest will amount to at least 29-30 kt per day in the coming
months, we continue to expect.

The December drop in hot iron and steel production
below this level was disappointing, but we currently see no reason for the
underperformance to extend.

In particular, we do not think that any deficit of
coking coal was a significant factor, because production of dry blast furnace
coke at the four producers Metinvest consolidates (Avdiivka Coke, Azovstal,
Zaporizhcoke and Dniprovskyy Coke) amounted to 12.3 kt per day in December, we
calculate from Metal Expert and Interfax-Ukraine data. This is only 1% below
the November level and about 13% above the September-October levels, when
Metinvest likely experienced a deficit of coking coal. Including the fifth
producer Yuzhkoks, a Metinvest associate, coke production in December was 13.9
kt of dry blast furnace coke per day, unchanged m/m, we estimate.

Nevertheless, Ukraine’s chronic dependence on
imported coking coal, particularly on supplies from Russia, is a permanent risk
factor for the country’s iron and steel producers.