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Metals and Mining
September 3, 2010Ukraine’s steel — waiting for justice

Recent stabilization in the global environment should make an impact on the domestic steel sector. Less negative news on the property market in China and positive movements regarding European debt concerns give domestic steel-makers a chance to end the year not so bad. A decline in the price of iron ore in China, after some capacities were withdrawn from the market, should make the input and output prices of steelmakers more balanced, while an expected global restocking cycle should fuel demand and result in an increase in output. Despite some livening in 3-4Q10, we do not regard domestic steelmaking companies as the best investment targets due to expected weak financial results because of the deterioration of steel markets and outstripping growth in raw materials for most of the year.

Metals and Mining
March 31, 2010Time to collect stones

Driven by economic and political stabilization, Ukrainian stock market posted a 63% growth YTD, however this growth was far more modest than that, showed by our picked iron ore makers: Poltava GOK (+158% YTD), Pivnichnyi GOK (+293% YTD), Ferrexpo (+78% YTD). Nonetheless, a sharp increase in global iron ore prices and the recovery in iron ore demand on the part of world steel industry continue to pave the way for the further increase in the capitalization of domestic iron ore producers. In this regard, we recommend BUYing shares in Ferrexpo, while we assign a HOLD rating to the shares of Poltava GOK and Pivnichnyi GOK, which have only modest growth potential.

Metals and Mining
February 16, 2010Ukraine’s coke - back on track

Ukraine’s coke sector appears to be ahead of the whole domestic metallurgy sector. Increased coke consumption per tonne of pig iron, which should remain at the same level for at least one year, and further steel sector recovery should boost coke output by 5.4% in 2010. At the same time, driven by the global coke shortage and increased raw materials’ prices, the average domestic coke price in 2010 should increase by 25-30%. These factors should help Ukraine’s coke makers to boost FY2010 net revenues, making the coke sector a most attractive investment target.

Metals and Mining
December 30, 2009Steel sector update

Driven by both internal and external factors, Ukraine’s steel sector is showing clear signs of recovery. Monthly growth in steel output and capacity utilization, underpinned by positive changes in world steel demand and national currency devaluation, impart domestic steelmakers with the chance to end the year on an upbeat note. In the successful 3Q-4Q09, Ukrainian steelmakers emerged from the red, thereby substantially improving their end-of-year financial results. We expect that, in 2010, Ukraine’s steelmakers will continue doing well financially on the back of the further recovery of world steel demand, which should push Ukraine’s average steel export prices up by 10-20% and boost its overall steel output by 7% YoY.

Metals and Mining
June 16, 2009NFER, a Ukrainian commodities hedge fund?

May go bust. Creditors will not mind. Minority shareholders should SELL.

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Daily monitor

Metals and Mining
September 3, 2010Ferrexpo pellet output down 8.7% MoM in August

Ferrexpo [FXPO LN], Ukraine’s second-largest iron ore producer—and which controls Poltava GOK [PGOK UZ]—decreased pellet output by 8.7% MoM in August to 787,000 tonnes (+15.5% in 8M10). These results were published by the Company.

Metals and Mining
September 3, 2010Ukraine increased coke output in August by 7.4% MoM

Domestic producers showed increased coke output in August by 7.4% MoM to 1.5 mln tonnes (+7.4% in 8M10), Ukrcoke reported.

Metals and Mining
September 2, 2010Komsomolets Donbassa released details of the long-term strategy

According to information disclosed by the CEO of Komsomolets Donbassa [SHKD UK], the company targets the increase in output to 5 mln tons of coal by 2014. This target should be achieved thanks to installation of new equipment based on progressive technologies and investments into human resources.

Metals and Mining
September 2, 2010Steel output up by 6% MoM in August

Ukraine’s steelmakers increased steel output in August by 6% MoM to 2.6 mln tons, Metall-Courier reported. The highest growth among domestic peers was posted by IUD subsidiaries Alchevsk ISW [ALMK UK], at 56% MoM (-20% in 8M10); by Dzerzhinka [DMKD UK], at 43% MoM (-24% in 8M10); and by Petrovskyi ISW [DMZP UK], at 57% MoM (-7% in 8M10). Other steelmakers, whose shares are actively trading on UX, namely Mariupol Illich ISW, Azovstal, and Yenakievo ISW, posted a monthly increase in output at 14%, 2%, and -3%, respectively.

Metals and Mining
September 1, 20101H10 iron ore export from Ukraine up by 42%

According to the Ukrainian News agency, in 1H10, Ukraine increased its iron ore export by 42% to 18.6 mln tonnes.

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