Metinvest subsidiary Pokrovske Coal output remained low in September

Pokrovske Coal, Ukraine’s largest coking coal miner
and a subsidiary of Metinvest (METINV), produced 4.58 mmt of raw coking coal
(16.8 kt per day) in 9M21, a 7.1% yoy rise, according to Concorde Capital’s
analysis of Ukraine’s Energy Ministry data.

Daily coal production rate at Pokrovske Coal rose 6%
to 12.7 kt in September following a 19.5% m/m drop in August and
a 22.1% m/m fall in July.

In 2020, Pokrovske Coal’s output was 6.13 mmt of raw
coking coal (16.8 kt per day), a 22.6% yoy rise. In 2019, Pokrovske Coal
produced 5.0 mmt of coal (13.7 kt per day), a 25.8% yoy jump.

Dmytro Khoroshun: September’s
daily production rate at Pokrovske Coal remained low, 24% below the average
2020 level, which is negative for Metinvest.

If Pokrovske Coal’s mining volumes do not rebound, Metinvest
might have to decrease its iron and steel production in the next few months.
The negative effect of the low production at Metinvest’s own coal miner might
be exacerbated by the reported problems with coking coal imports from Russia
into Ukraine because of the lack of railway rolling stock.

We are again revising down Pokrovske Coal’s 2021
output estimate to 5.8-6.1 mmt (15.8-16.8 kt per day), or a decrease of up to
6% yoy.

We maintain our neutral view on METINV bonds.