Metinvest reported 1Q24 iron ore concentrate production of 4.9 Mt, up 36% q-o-q and 111% y-o-y. Crude steel production totaled 469 kt, down 5.1% q-o-q and 4.5% y-o-y, with the volume of finished and semi-finished products up 1.8% q-o-q and down 9.1% y-o-y at 750 kt. Quarterly coking coal concentrate production fell by 4.5% q-o-q and 26% y-o-y to 1.1 Mt. Lastly, coke production totaled 283 kt, off 3.4% q-o-q and 11% y-o-y.

Russian advances in northern Kharkiv region slow towards weekend, but offensive pressure still strong

An IMF mission will start discussions with Ukrainian authorities on the fourth review of the Fund’s $15.6bn 4-year EFF program in the coming weeks, aiming to bring this review to the IMF Executive Board by the end of June, IMF Communications Director Julie Kozack said at a regular press briefing yesterday.

According to the latest monthly survey conducted by the Ukrainian Institute for Economic Research (IER), the percentage of manufacturing enterprises operating at a capacity load of 75%+ (compared to pre-war level) stood at 58% in April, flat m-o-m, and the share of idle firms was also unchanged, at 4%. Security concerns again rose to first place on the list of business obstacles cited by respondents, mentioned by 55% of the sample, up from 46% in March and comparable to the previous high last December. Input costs slipped to second place on 51% (vs. 53% in March) after topping the list for two months. Labor deficit followed on 43%, down from 50% in March. Other obstacles included demand weakness, supply chain disruptions, complicated logistics, and power outages.

Despite an extremely challenging wartime environment, the Ukrainian economy recovered by 5.3% y-o-y in 2023 and remained on an upward trend in early 2024, supported by surging exports via a Black Sea corridor established by the Ukrainian military. While power shortages caused by renewed Russian attacks on energy infrastructure and a new mobilization wave will be constraints on growth, we estimate Ukraine’s real GDP will increase by 4.0% y-o-y this year, unchanged from our previous forecast, assuming that Black Sea ports operate at full capacity (vs. up to 30% expected before).

Ukrainian banks reported combined net profit of UAH 41bn ($1.1bn) in 1Q24, up 18% y-o-y and up from a net loss of UAH 23bn in 4Q23. Non-performing loans as a share of the overall portfolio dropped by 1.3pp q-o-q and 2.7pp y-o-y to 36.1% as of end-1Q24. CAR (NBU methodology) stood at 20.4% as of end-March, down 0.6pp q-o-q and 0.4pp y-o-y.

Secretary of State Antony Blinken, on the second day of his visit to Kyiv on Wednesday, announced $2bn in additional military assistance, both for weapons purchases and to finance the development of Ukraine’s defense industrial base. He also said the US and Ukraine were close to finalizing their security cooperation agreement, similar to ones Ukraine concluded with five other G7 countries and several other nations earlier this year, which could be signed “in a matter of weeks”.

Ukraine’s merchandise trade deficit stood at $2.6bn in April, narrowing slightly from $2.7bn in March as exports rose by 4.3% m-o-m to $3.4bn (+12% y-o-y) while imports were flat m-o-m at $6.0bn (+24% y-o-y).

The Ministry of Finance placed UAH 8.9bn ($223m) of hryvnia-denominated bonds and EUR 54m of F/X-denominated papers at a primary auction yesterday.

Ukraine’s iron ore exports rose by 2.0% m-o-m to 3.4 Mt in April (+104% y-o-y), bringing the 4M24 volume to 12.4 Mt (+133% y-o-y). In value terms, iron ore exports were down 15% m-o-m to $265m last month (+41% y-o-y), totaling $1.1bn in 4M24 (+91% y-o-y).

Ukraine exported 6.6 Mt of grain and oilseeds in April, the tenth month of the marketing year (MY) 2023/24 (July 2023 – June 2024), up 18% m-o-m and 60% y‑o‑y. Grain exports totaled 6.3 Mt, up 22% m-o-m and 61% y-o-y, oilseed exports stood at 319 kt (-28% m-o-m, +43% y-o-y), and sunflower oil exports came in at 627 kt (+3.5% m-o-m, +16% y-o-y).

Following a series of Russian attacks on the Ukrainian energy system since late March, the power transmission system operator Ukrenergo introduced caps on power consumption for industrial enterprises effective May 8 and continued to curb power use during nighttime. The company partially compensated for the lack of commercial imports by providing emergency support.

Metinvest announced the results of its tender offer to holders of its 2025 and 2026 Eurobonds. The company accepted EUR 37m worth of 2025 notes, reducing their outstanding (post-settlement) principal to EUR 197m, and $56.3m of 2026 notes, cutting their post-settlement amount to $438m. The offer is to be settled on May 15.

Ukraine’s headline CPI inched up by 0.2% m-o-m in April, slowing from 0.5% in March and keeping the y-o-y tally at 3.2%, unchanged from a month earlier. Core inflation, an indicator adjusted for administratively regulated tariffs and prices of raw foods and energy, increased by 0.7% m-o-m, slowing from 1.0% m-o-m in March but accelerating on a y-o-y basis to 4.4% y-o-y from 4.2% in March.

Russian forces start limited offensive in Kharkiv region, situation keeps evolving

Parliament on Thursday dismissed two government ministers, Deputy PM for Infrastructure and Regional Development Oleksandr Kubrakov and Agriculture Minister Mykola Solsky. No replacements were immediately named. Separately, President Volodymyr Zelensky appointed former commander-in-chief of the Ukrainian army Valeriy Zaluzhny as Ukraine’s new ambassador to the UK, three months after dismissing him from the top military post. In a related decree, Zelensky dismissed Zaluzhny from military service, citing health reasons.