Page 73 - UKRRptDec20

Metinvest steel output to rise 10% m/m in November. ​Azovstal, one of the two steelmaking plants of Ukraine’s largest producer Metinvest (METINV), will boost its steel production to 10.5 kilotonnes per day (316 kt per month) in November, a 25% month-on-month jump, according to a November 12 report by Metal Expert, an industry consultancy. The increase will be due to the completion of repairs of oxygen converter No. 2, which started in mid-September and lasted for approximately 45 days, Metal Expert said.“We estimate steel production at Metinvest will increase 10% m/m to 22.3 kt per day in November as a result of Azovstal completing its repairs. We further expect Metinvest to boost its steel production to 23-24 kt per day in December-January, based on Azovstal’s daily production rates of 13.3 kt in June and 13.2 kt in August,” an analyst at the Kyiv-based Concorde Capital brokerage said in a research note.
● Interpipe
Pipe sales volume at Ukraine’s largest producer​ ​Interpipe​ was 34.4 kt in October, a 30.2% m/m plunge, ​according to the company’s monthly operational report released on Nov. 18. Railway product sales slid 4.5% m/m to 15.4 kt, while external billet sales surged 68.5% m/m to 3.2 kt. Total sales volume retreated 21.3% m/m to 53.0 kt.
The m/m plunge in pipe sales in October was driven by sales of line pipes (-36.9% m/m to 22.6 kt), which peaked in September due to large deliveries to the UAE that month, the report said.
During 10M20, Interpipe’s pipe sales dropped 22.0% y/y to 393.6 kt, driven mostly by a 53.9% plunge for OCTG pipes to 66.9 kt and a 40.4% drop for welded pipes to 68.4 kt. Railway product sales slid 2.4% y/y to 162.8 kt in 10M20, driven mostly by a 5.3% loss for wheels to 141.4 kt, partially offset by a 32.6% jump for wheelsets to 16.4 kt.
Ukraine's share of Interpipe’s pipe sales in 10M20 dropped 5pp from 2019 to 20%, and the share of sales in the Americas plunged 13pp to 11%. At the same time, Europe's share in pipe sales gained 6pp to 30%, and the share of MENA rose 9pp to 24%. The share of CIS countries in 10M20 climbed 2pp to 12%.
The share of Interpipe’s railway product sales in Ukraine in 10M20 dropped 9pp from 2019 to 13%, while the share of sales to Europe gained 9pp to 35% and the share of sales to CIS countries slid 1pp to 44%.
Regarding production volumes, which might be indicative of sales volumes in future months, Interpipe’s pipe production dropped 7.4% m/m to 38.3 kt in October, while railway product output slid 2.1% m/m to 15.4 kt. Steel production lost 2.8% m/m in October to 62.8 kt.
The October drop in pipes sales is negative because we estimate Interpipe makes about $100-125 of EBITDA in its steel segment per each ton of seamless pipes sold. This is despite the company’s pipe segment in itself bringing in almost no profit, as its EBITDA (before reallocation of steel segment EBITDA) was a negative $2mn in 6M20, or a negative $9 per ton of pipes sold.
At the same time, the stability of Interpipe’s railway product sales volumes is
73​ UKRAINE Country Report​ December 2020 ​ ​www.intellinews.com