Metinvest attributable steel output drops 4.4% in December
Attributable steel production at Ukraine’s largest steel producer Metinvest (METINV) was 25.2 kt per day (or 783 kt per month) in December, a 4.4% m/m decrease in average daily terms, according to Concorde Capital’s analysis of separate news reports by Interfax-Ukraine. That result includes Azovstal (AZST UK), Ilyich Steel (MMKI UK) and a 49.9% portion of Zaporizhstal’s (ZPST UK) result. (Production at Metinvest’s Yenakiyeve Steel was halted on Feb. 20.)
The two Mariupol-based mills decreased output by 9.0% m/m to 19.5 kt per day, including Ilyich Steel (a 4.1% m/m increase to 9.2 kt per day) and Azovstal (an 18.1% m/m decrease to 10.3 kt per day). Zaporizhstal's output increased 15.2% m/m to 11.5 kt per day.
Also, the holding's hot iron output dropped by 0.5% m/m to 29.9 kt per day in December.
In 2017, Metinvest's attributable steel output was 9.65 mmt, or 6.7% less yoy. Excluding Yenakiyeve Steel, which Metinvest does not control anymore, the holding’s output rose 10.9% yoy to 9.30 mmt in 2017.
Dmytro Khoroshun: Metinvest`s attributable steel output for 2017 was in line with our expectations. For 2018, we expect about 9.3 mmt of attributable steel production, or 4% down yoy. However, if Ukrzaliznytsia, Ukraine’s state railway company, increases the throughput of the Kamysh-Zarya-Volnovakha raw material supply route, which currently limits the utilization rate of Metinvest’s two Mariupol plants to 70-80%, then the attributable steel production might remain roughly flat yoy around 9.7 mmt or even slightly exceed that level.
We are keeping our neutral view on METINV Eurobonds.