Metinvest semi-finished steel prices rise further

Ukraine FOB prices for semi-finished steel products
exported by Metinvest (METINV), Ukraine’s largest producer, increased during
Sept. 4 – 11, according to Metal Expert, an industry consultancy.

 

Billet prices inched up 1% w/w to USD 415/t on Sept.
11, 19% above their 2019 low of USD 350/t on Oct. 4 and 1% above their 1Q20
high of USD 410/t on Jan. 10.

 

Slab prices jumped 6% w/w to USD 465/t on Sept. 11,
39% above their 2019 low of USD 335/t on Nov. 1 and 11% above their 1Q20 high
of USD 420/t on Jan. 17.

 

HRC prices were flat w/w at USD 503/t on Sept. 11, 38%
above their 2019 low of USD 365/t on Oct. 25 and 5% above their 1Q20 high of
USD 478/t on Feb. 21.

 

Metal Expert did not provide an update for pig iron
prices (Metal Expert’s FOB Black Sea assessment for a group of countries that
includes Ukraine), which stood at USD 350/t on Sept. 4, 23% above their 2019
low of USD 285/t on Nov. 1 and 5% above 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: Ukraine’s
FOB iron and steel prices rebounded strongly in May-September. Therefore, we
expect the monthly EBITDA of Metinvest’s metallurgical segment (including JVs)
to remain depressed in July, in line with May’s USD 39 mln and June’s USD 24
mln (adjusted for one-offs). But then we expect it to stabilize and possibly
rebound strongly in August-October.

 

However, the strong iron ore prices at the global
markets, which were one of the reasons for the recent rebound in iron and steel
prices, will keep the profitability of Metinvest’s metallurgical division
subdued throughout 2H20.

 

We maintain our neutral view on METINV bonds.