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Metinvest steel product prices prolong depression

Metinvest steel product prices prolong depression

12 May 2020

Ukraine FOB prices for the types of steel products
exported by Metinvest (METINV), Ukraine’s largest producer, remained depressed
during May 1 – 8, according to Metal Expert, an industry consultancy.

 

Billet prices inched up 1% w/w to USD 340/t on May 8,
3% below their 2019 low of USD 350/t on Oct. 4 and 17% below their 1Q20 high of
USD 410/t on Jan. 10.

 

Slab prices slid 1% w/w to USD 325/t on May 8, 3%
below their 2019 low of USD 335/t on Nov. 1 and 23% below their 1Q20 high of
USD 420/t on Jan. 17.

 

HRC prices dropped 3% w/w to USD 350/t on May 8, 4%
below their 2019 low of USD 365/t on Oct. 25 and 27% below their 1Q20 high of
USD 478/t on Feb. 21.

 

Metal Expert’s pig iron prices (FOB Black Sea for a
group of countries that includes Ukraine) inched up 2% w/w to USD 283/t on May
8, 1% below their 2019 low of USD 285/t on Nov. 1 and 15% below their 1Q20 high
of USD 333/t on Mar. 20.

 

The prices provided by Metal Expert are sophisticated
estimates but they are not necessarily the same as the prices realized by
Metinvest for its specific products.

 

Dmytro Khoroshun: The current
deep slump in iron and steel prices (down 15-25% from their 1Q20 highs) has
extended well into its second month, with no clear reason for a rebound on the
horizon, except for the possible pickup in economic activity due to the
reopening of some sectors worldwide. Therefore, Metinvest’s profitability
during May-June will likely be depressed.

 

Furthermore, when discussing its assessment of HRC
prices, Metal Expert noted that the deals are currently being made for
July-August, which means the effects of the present price slump will depress
Metinvest’s profitability well into 3Q20.

 

We maintain our negative view on METINV bonds.

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