Iron ore production at Metinvest falls 7% m/m in August

Обзоры по компаниям и отраслям 10.09.2014 The three iron ore miners of Ukrainian steel giant Metinvest have reported differing operating results for August. While Ingulets Iron Ore (unlisted) and Central Iron Ore (CGOK UK) kept almost stable total iron ore concentrate output last month – at 1.134 mmt (+0.4% m/m, -2.9% yoy) and 530 kt (flat m/m, -1% yoy) respectively – the holding’s largest iron ore miner Northern Iron Ore (SGOK UK) endured a sharp plunge in production to 982 kt of total iron ore concentrate (-18% m/m, -22% yoy). Pellet output by Northern Iron Ore plummeted even deeper to 492 kt (-31% m/m, -50% yoy). In September, Northern Iron Ore plans to reduce pellet production by another 16% to 415 kt, according to Metal Courier. The operating plans of the two other iron ore subsidiaries are to keep production volumes stable so far. Roman Topolyuk: Having been largely oriented on the local market, Northern Iron Ore has taken the largest hit from the recent loss of Ukrainian customers among the three miners. We estimate the marketable iron ore product output by Metinvest fell 7% m/m in August to 2.6 mmt (-10% yoy). In 8M14, the company endured a 2% decrease in marketable iron ore product output to 22.3 mmt. In the short term, the company has an option of improving this negative trend by loading more of Northern Iron Ore’s pellet production capacities with export contracts. In mid- to long-term, we are keeping our view of deteriorating production volumes and margins in Metinvest’s mining segment due to global oversupply of iron ore.