Metinvest steel product prices stable

Ukraine FOB prices for the types of steel products
exported by Metinvest (METINV), Ukraine’s largest producer, did not move much
during Apr. 17-24, according to Metal Expert, an industry consultancy.

 

Billet prices slid 1% w/w to USD 350/t on Apr. 24, in line
with their 2019 low of USD 350/t on Oct. 4.

 

Slab prices inched up 1% w/w to USD 328/t on Apr. 24,
2% below their 2019 low of USD 335/t on Nov. 1.

 

HRC prices were unchanged w/w at USD 363/t on Apr. 24,
1% below their 2019 low of USD 365/t on Oct. 25.

 

Metal Expert’s pig iron prices (FOB Black Sea for a
group of countries that includes Ukraine) rose 4% w/w to USD 278/t on Apr. 24,
3% below their 2019 low of USD 285/t on Nov. 1.

 

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
previous period of low iron and steel prices lasted for about a month, namely
October 2019. In early November, prices started to rise, gaining about 10-20%
within the month. Nevertheless, only a month of such low prices was sufficient
for the EBITDA of Metinvest’s metallurgical segment to plunge to negative USD 36 mln in November and negative
USD 85 mln in December.

 

The current steel price slump, which started at the
end of March, is already lasting about a month. Therefore, we expect
Metinvest’s profitability to suffer in May-June, similarly to its performance
in November and December. We also do not see a clear reason for steel prices to
increase soon, and therefore see it likely that Metinvest’s profitability will
remain depressed in 3Q20.

 

We maintain our negative view on METINV bonds.