Daily Insight-Ukraine, Russia to settle gas deals in RUB; C/A imbalance measures; steel output, Metinvest

In 10M11, Ukrainian steel mills increased their output of crude steel by 8% YoY, to 29.1mt; rolled steel by 6% YoY, to 25.4mt; pig iron by 6% YoY to 24.1mt; and steel pipes by 34%, YoY, to 1.9mt, as reported by UGMK. In October 2011, Ukrainian steel mills increased their output of crude steel by 3% MoM, to 3mt; rolled steel by 5% MoM, to 2.6mt; and pig iron by 7% MoM, to 2.6mt, according to UGMK.info. Production of steel pipes in Ukraine rose by 2% MoM to 186,000t.

Investment implications: Actual steel production results in October were almost in line with steelmakers\' plans. However, this output growth was not justified by the weak demand, and the 120,000t increase in October steel production transformed into a 140,000t increase in Ukrainian steel inventories in Black Sea ports during the last month. With the market remaining sluggish, we expect Ukrainian steel production to finally slip in November.