Metinvest's steel and iron ore production flat QoQ in 4Q14

Metinvest's steel and iron ore production flat QoQ in 4Q14



6 лютого 2015 года
ICU

Metinvest announced yesterday that its crude steel production increased 1% QoQ to 1.75mt in 4Q14, while the production of iron ore concentrate remained unchanged QoQ at 8.44mt. At the same time, the company's output of coking coal concentrate declined 18% QoQ to 0.78mt. Overall in 2014, Metinvest reduced its production of crude steel by 26% to 9.2mt, production of iron ore concentrate by 6% to 34.9mt, and production of coal concentrate by 26% to 4.1mt. The company explains the production decline mainly by disruptions caused by the military conflict in the Eastern Ukraine, with the hardest negative impact in 2H14. The conflict resulted in shutdowns of Yenakievo Steel, Avdiivka Coke and Donetsk Coke in August-October, restricted raw material supplies due to the damaged railway infrastructure, and hindered transportation through rebel-controlled territories.

Investment implications: Metinvest managed to stabilize its steel production in 4Q14 after it relaunched Yenakieve Steel in October. However, escalation of the conflict in Donbass in January heightens disruption risks for Metinvest's operations. The current situation around Avdiivka Coke, which supplies coke to Metinvest's steel mills, is of the highest concern due to the most intensive shelling occurring in the plant's vicinity. Although the situation with raw material supplies to Azovstal and Ilyich Steel looks to have stabilized after the railway connection between Zaporizhzhia region and Mariupil was repaired following the terrorist attack in January, both plants may suffer if separatists decide to take a more active offensive on Mariupil.

Источник: ICU

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