Metinvest in talks to acquire US Steel Kosice

Ukrainian vertically integrated steelmaker Metinvest has held preliminary talks with US Steel over acquiring its Kosice plant in Slovakia, according to market sources.

The move makes some sense for both parties. Metinvest has relied more heavily on raw material shipments since conflict broke out in the country, and Kosice is an integral buyer. Unsurprisingly, Ukrainian iron ore shipments and production are down massively at present. Over January-October, Ukrainian iron ore exports slumped by almost 39pc year on year to 22.4mn t, with material for European mills such as Kosice mainly being moved by rail.

That said, eastern European mill executives say about half of the raw material supplied into the region is still from Ukraine, and potentially even more for cash-strapped buyers who cannot afford seaborne tonnes.

Metinvest managed to push its coking coal production back towards pre-war levels of late, with third-quarter output only down 6.7pc as output rose at the Pokrovske mine in eastern Ukraine. It also sells coal to mills in central and eastern Europe.

Metinvest needs feed for its coil and plate re-rolling facilities in Europe, which have been forced to procure slab on the merchant market since the disruption to Ukrainian supply. No slab was produced at Metinvest's Ukrainian assets in the second or third quarters of this year, with the units buying from China and elsewhere. In a recent TV interview, Metinvest chief executive Yuriy Ryzhenkov said British Steel and ThyssenKrupp were supplying its Spartan plate mill in the UK with slab.

US Steel has also been interested in exiting its European operations for some time. It sold its Smederevo plant in Serbia to the government in 2013 for $1, before it was resold to Chinese giant Hebei Iron & Steel in 2016. There was also talk earlier this year that the company was in discussions with unnamed parties to sell the Kosice operations.

US Steel and its subsidiary US Steel Kosice both declined to comment on what they termed "rumour and speculation". Metinvest could not be reached for comment.

By Colin Richardson