Metinvest steel prices continue rising

Ukraine FOB prices for the types of steel products
exported by Metinvest (METINV), Ukraine’s largest producer, increased further
during July 17-31, according to Metal Expert, an industry consultancy.

 

Billet prices rose 1% w/w to USD 385/t on July 31 (a
preliminary assessment), following a 1% w/w gain on July 24, 10% above their
2019 low of USD 350/t on Oct. 4 and 6% below their 1Q20 high of USD 410/t on
Jan. 10.

 

Slab prices gained 2% w/w to USD 395/t on July 31
after adding 1% w/w on July 24, 18% above their 2019 low of USD 335/t on Nov. 1
and 6% below their 1Q20 high of USD 420/t on Jan. 17.

 

HRC prices jumped 5% w/w to USD 433/t on July 31 after
remaining flat w/w on July 24, 18% above their 2019 low of USD 365/t on Oct. 25
and 9% below their 1Q20 high of USD 478/t on Feb. 21.

 

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.

 

Ukrainian steel prices benefited from Asian (particularly,
Chinese) demand, the euro’s strengthening against the U.S. dollar, and positive
sentiment in Turkey, Metal Expert said.

 

Dmytro Khoroshun: Ukraine’s
FOB iron and steel prices have so far rebounded 18-24% in May-July after
dropping 20-25% from late March to early May. Therefore, we expect the monthly
EBITDA of Metinvest’s metallurgical segment (including JVs) to drop in May-July
from March’s USD 108 mln and likely below April’s USD 64 mln, but then to
stabilize and possibly rebound in August-September.

 

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 3Q20.

 

We maintain our neutral view on METINV bonds.