Page 72 - UKRRptMay19

● Metinvest
Metinvest, Interpipe to feel effects of Russia trade restrictions The Russian government decided on April 18 to restrict coal exports to Ukraine starting June 1, allowing such exports only under permits issued by Russia’s Ministry of Economic Development.
The decision also adds pipes to the list of goods forbidden to import from Ukraine. In 2018 Ukraine exported 61.6 kt of pipes to Russia, which is 9% of Interpipe’s total 2018 pipe sales.
The restrictions on coal imports from Russia will mostly affect steam coal, not coking coal, Interfax-Ukraine reported on April 18, citing Anatoliy Starovoyt, the general director of Ukrkoks, an association of Ukrainian coking coal consumers. The lost imports from Russia may be substituted by imports from other countries, Starovoyt said, but these seaborne imports may face logistical problems related to insufficient seaport capacities, according to Interfax- Ukraine.
In 2018, Ukraine produced 2.4mmt of coking coal concentrate at its domestic mines, and imported about 6.5mmt of coking coal and concentrate from Russia, 4.0mmt from the US and Canada, 0.4mmt from Kazakhstan and 88 kt from Australia, according to Starovoyt.
In 2018, Metinvest consumed around 6.2mmt of coal, including 1.2mmt of coal for pulverized coal injection (PCI) and 5.0mmt of coking coal concentrate. This matches the 43% value reported by Metinvest as its needs (at Azovstal and Ilyich Steel) being covered by Metinvest’s own asset, United Coal Company (UCC, 2.7mmt of coking coal concentrate produced in 2018). Pokrovske Coal, in, which Metinvest acquired 25% in 2018 with an option to acquire the remaining 75%, produced around 2.5mmt of coking coal concentrate in each of 2017 and 2018. Production of coking coal concentrate at Metinvest (UCC) and its close affiliate (Pokrovske Coal) amounted to about 5.2mmt in 2018, or about 104% of its own needs (without considering needs in PCI coal). However, Metinvest also needs coking coal for the production and supply of coke to its joint venture Zaporizhstal (we estimate 2.7mmt of coking coal concentrate per year) and its trading partner Dniprovskyy Steel (1.5mmt).
Metinvest needs a grand total of about 9.1mmt of coking coal concentrate per year, of, which UCC and Pokrovske Coal together cover about 57%.
Metinvest made $1.2bn in net profits last year – almost double the 2017 level, the company reports. “Underpinned by favourable steel and iron ore prices and ongoing economic growth in Ukraine...revenues soared by 33% year-on-year,” Metinvest CEO Yuriy Ryzhenkov, writes of the 2018 company results. “In 2018, Metinvest delivered some of its best results in the last four years.” After the report, Ryzhenkov told S&P Global Platts in London that Metinvest’s crude steel output should rise by about 1mn tons this year, to 8.5mn tons.
Metinvest, Ukraine’s largest steelmaker, plans $1bn capital investments this year, a 20% increase over last year, the company tells analysts. Metinvest CEO Yuriy Ryzhenkov, says more than 60% of CapEx will be for maintenance and 35% will be for strategic development projects. Concorde Capital’s Dmytro Khoroshun reviews the company’s spending on debt, dividends and CAPEX and writes: “We think that it is realistic for Metinvest to cover this deficit with
72 UKRAINE Country Report May 2019 www.intellinews.com