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Metals and Mining
November 13, 2008
Metinvest pawning Khartsyzk Pipes’ shares?
On November 12, 2008, 272.57 mln of shares of Khartsyzk Pipes & Tubes (10.49%) changed hands. Most remarkably, the deal went through the PFTS exchange, the price being UAH 2.12 (USD 0.367) per share, for the deal’s total of USD 100.15 mln. We argue that the deal was not technical, and instead likely indicates that Metinvest needs cash, likely for an acquisition. The shares may now serve as the collateral. Should more HRTR deals go through, it may indicate a complete and permanent sellout, but only with additional support for such a possibility.
Metals and Mining
November 4, 2008
Enakievo ISW group: bonus season approaches
The corporate structure of the Enakievo ISW group requires a cleanup: the OJSC Enakievo ISW and Metalen LLC should merge. We speculate that the reorganization: (1) will take place by the year’s end, (2) will follow a particular scenario, and (3) will be positive for Enakievo ISW’s stock.
Metals and Mining
October 30, 2008
Flash Note: Kostyantin Zhevago and the Global Crisis
After an adventurous summer, the young Ukrainian business wizard is about to learn many useful lessons and to face his toughest opponent yet.
Metals and Mining
October 29, 2008
Flash Note: Coal, Coke Depreciate Following Steel
Depression on the steel market is confidently pushing its way upstream. The record-high USD 600-700 per mt domestic coke prices during Jul-Sep had been highly detrimental for domestic steelmakers. However, for more than a month, Ukrainian coke and coal prices have been falling. Last week, the price of coal imported from Russia has at last joined the downward dynamics. Notably, Ukrainian coke prices detached from world export levels and fell to levels close to domestic Russian and Chinese prices. This costs decrease is hugely positive for Ukrainian steelmakers. Meanwhile, even as coke fell to USD 332 per mt, coke makers continue to preserve some margins by depressing coal prices. Nevertheless, even though shares of coke makers are being traded at record-cheap levels on T12M multiples, the outlook is uncertain due to production volume decreases, which are expected to accelerate.
Metals and Mining
October 16, 2008
Sokrat Flash Note: Azovstal Dividends: a Ballsy Game
At the October 25 AGM, Azovstal’s shareholders will decide on dividends for 2002–2007 (maximum USD 0.264 per share, 124% yield). Azovstal has got some cash and, more importantly, the balls — the grinding ones, for supplies of which, together with other steel products, Azovstal can collect from its currently highly profitable ore-mining Metinvest Group partners. The wild card is Azovstal’s huge accounts receivable due from the Group’s traders (USD 0.211 per share, 100% yield), which are much less liquid assets under the current difficult conditions on the steel markets. Whether Metinvest has got the balls to actually declare dividends, and how much, remain open questions for ballsy investors to bet on.


Daily monitor

Metals and Mining
December 31, 2008
PGOK acquires 6.4% treasury shares. Will it cancel?

At a December 30 EGM, shareholders of Poltava GOK [PGOK UZ, U/R], also called Ferrexpo Poltava Mining, voted two representatives of DCM DECOmetal International Trading GmbH, off of its Supervisory Board. According to a company press release, the decision is related to the fact that on December 22, 2008, Poltava GOK bought back all shares that were owned by DCM DECOmetal International Trading GmbH.

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Metals and Mining
December 30, 2008
Enakievo ISW group output up 49% MoM in Dec: POSITIVE

According to Metal Courier estimates, the Enakievo ISW group, which includes OJSC Enakievo Iron & Steel Works [ENMZ UZ, U/R], smelted 199 thsd mt of steel in December, which is up 49% MoM. This month’s output is only 14% below the 11M08 average of 230 thsd mt.

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Metals and Mining
December 30, 2008
Zaporizhstal’s output up 20% MoM in December: POSITIVE

Zaporizhstal [ZPST UZ, U/R] increased crude steel output to 283 thsd mt in December, according to Metal Courier estimates, which is up 20% MoM and only 15% below the average 11M08 level of 333 thsd mt per month.

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Metals and Mining
December 30, 2008
Ukraine’s steel output up 25% MoM in Dec: POSITIVE

Metal Courier has reported preliminary estimates of steel production numbers for December. The total crude steel output of Ukrainian steelmakers amounted to 1.99 mln mt this month, which is 25% above the November reading of 1.60 mln mt, but still 38% below the average 11M08 monthly level of 3.19 mln mt.

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Metals and Mining
December 30, 2008
MMKI’s output up 44% MoM in December: POSITIVE

Mariupol Illich Iron & Steel Works [MMKI UZ, U/R] increased crude steel output to 295 thsd mt in December, according to Metal Courier estimates, which is up 44% MoM but still 39% below the average 11M08 level of 483 thsd mt per month.

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