Metinvest's steel and iron ore production down QoQ in 1Q15

Metinvest's steel and iron ore production down QoQ in 1Q15



6 травня 2015 года
ICU

Metinvest announced yesterday that its crude steel production declined 4% QoQ to 1.672mt in 1Q15, while the production of iron ore concentrate fell 12% QoQ to 7.449mt. At the same time, the company's output of coking coal concentrate increased 8% QoQ to 0.846mt. In YoY terms, Metinvest reduced its 1Q15 production of crude steel by 39%, production of iron ore concentrate by 16%, and production of coal concentrate by 31%. According to the company, the drop in crude steel output was a consequence of the complete shutdown of Metinvest's Yenakieve Steel operation located in separatist-controlled territories of Donbass, and of disruptions in the supplies of coal and iron ore at Azovstal and Ilyich Steel, the company's other two steel-making assets which are located close to the conflict's front line. Furthermore, Metinvest's iron ore production was depressed by lower internal consumption and lower demand from external Ukrainian customers. The company's coal output suffered from logistical disruptions at Ukrainian asset, Krasnodon Coal, although partly mitigated by recovering production at United Coal, its USA asset.

Investment implications: Despite some signs of restoring production activities in separatist-occupied territories, disruption risks for Metinvest's operations due to the military conflict in Donbass remain high. By our estimates, even if the situation in Donbass stabilizes and Metinvest reaches the target levels of 50% capacity utilization for Enakievo Steel and 70-80% for Mariupol Steel and Azovstal through 2015, the company's crude steel output may still fall 15-20% to 7.2-7.6mt this year.

Источник: ICU

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