Page 64 - UKRRptSept18

The holding’s output of pig iron in the second quarter of 2018, 2.136 mmt, declined 1% q/q, whereas the first half of 2018 pig iron production rose 14% y/y to 4.292 mmt due to a 23% y/y jump to 2.292 mmt at Ilyich Steel and a 5% increase to 2.0 mmt at Azovstal. Total coke production in the second quarter of 2018 was down 2% q/q to 1.317 mmt, while merchant coke output rose 21% q/q to 437 kt. During the first half of 2018, Metinvest boosted its total coke production 25% y/y to 2.664 mmt, whereas output of merchant coke jumped 82% y/y to 800 kt. The the second quarter of 2018 output of semi-finished products at Metinvest, 857 kt, rose 9% q/q (merchant pig iron output dropped 15% q/q to 401 kt, but slabs output jumped 46% q/q to 456 kt). During the first half of 2018, the holding boosted its semi-finished product output 43% y/y to 1.644 mmt, owing to a 60% y/y surge in merchant pig iron output to 875 kt and a 27% y/y increase in slab output to 769 kt. The holding’s finished product output was unchanged q/q in the second quarter of 2018 at 1.473 mmt despite a 15% q/q drop in long products output to 196 kt, owing to a 3% q/q increase in flat products output to 1.232 mmt. During the first half of 2018, finished products output improved 6% y/y to 2.949 mmt owing to a 34% y/y jump in long products output to 427 kt and 2% y/y growth in flat products to 2.431 mmt. Total iron ore concentrate production in the second quarter of 2018, 7.062 mmt, rose 2% q/q, whereas output of merchant iron ore products advanced 9% q/q to 3.931 mmt due to a 17% q/q rise in merchant pellets production to 2.021 mmt. For the first half of 2018, total iron ore concentrate output increased 2% y/y to 13.987 mmt, while production of merchant iron ore products dropped 3% y/y to 7.536 mmt due to a 27% y/y slide in merchant concentrate output to 3.792 mmt that was offset in large part by a 45% y/y boost in merchant pellet production to 3.744 mmt. “It is positive that Metinvest was able to improve by 3% q/q its output (and, presumably, also its sales) of its finished flat products even after the introduction of a €60.5/t anti-dumping duty on imports of Ukrainian hot-rolled coil by the EU in October 2017. The q/q jump in the second quarter of 2018 slab production volume at the expense of merchant pig iron production is also positive. However, in light of the worldwide trend of rising steel trade protectionism, we are cautious about the prospects of Metinvest’s steel sales,” Dmytro Khoroshun of Concorde Capital said in a note. “In contrast, the prospects of Metinvest’s iron ore product sales are bright due to high premiums the market pays for the holding’s high-quality products, concentrate and especially pellets,” he added.
Metinvest, SCM acquire stake in Pokrovske Coal. Ukraine’s largest steelmaker M etinvest together with companies likely affiliated with its majority owner System Capital Management (SCM), acquired a controlling stake in Ukraine’s largest coking coal miner Pokrovske Coal, according to Pokrovske Coal’s filings, Concorde Capital said in a note on August 6. Since the second quarter of 2017 a 57.3% stake in Pokrovske Coal, which previously belonged to Ukraine’s steel producer Donetsksteel, has been owned by Ukraine’s Industrial Coal Holding LLC (ICH), which - according to an August 3 Interfax-Ukraine report - is owned by Metinvest B.V. (24.99%) and four other companies, three of, which (together 74.97% of ICH ownership) control about 71% of Dniprovskyy Coke. Metinvest has been seeking control over Dniprovskyy Coke, according to Interfax-Ukraine. Another 40.8% stake in Pokrovske Coal belongs to Fintest Trading Co Ltd. of Cyprus (Fintest). According to Pokrovske Coal’s financial statements, Fintest, which is the top holding company of Donetsksteel group, is the de facto controlling company of Pokrovske Coal as of end-2017. Pokrovske Coal was in default on $15mn of debt and was one of the guarantors for several loans to Donetsksteel group (as of end-2017), including a $701mn PXF and $227mn of other loans, the
64 UKRAINE Country Report September 2018 www.intellinews.com