Metinvest launches slab casting machine at Ilyich
Ukraine’s largest steelmaker Metinvest (METINV) has launched its continuous casting machine No. 4 (2.5 mmt p.a. of slabs, a USD 150 mln investment) at Ilyich Steel, according to its March 1 release. Metinvest said that it plans to reduce its pig iron exports in order to boost steel production, for which its lack of casting capacity had been a bottleneck.
Dmytro Khoroshun: This launch is a positive development, in part because the quality of the relevant Metinvest products, slabs and HRC, will be improved as a result. Their production costs should also decrease. However, we are skeptical that Metinvest will be able to achieve the maximum steel-casting capacity load in the near future, for two reasons.
Firstly, Metinvest reported earlier that the commissioning of the new machine will increase Ilyich Steel’s slab casting capacity to 4 mmt p.a. However, the crude steel capacity of Ilyich Steel’s oxygen converters amounts to only 3.1 mmt p.a., according to Metinvest’s 2018 prospectus. So there are concerns that Metinvest might experience ecological problems when it tries to squeeze 4 mmt p.a. of steel from Ilyich Steel converters, similar to the issues it has experienced with Azovstal’s converter shop from time to time.
Secondly, the situation on the world steel markets, particularly the rising protectionism trend, complicates Metinvest’s sales of finished steel products (although slab sales continue to be mostly barrier-free).