Metinvest steel prices continue rising

Ukraine FOB prices for the types of steel products
exported by Metinvest (METINV), Ukraine’s largest producer, increased during
July 10-17, according to Metal Expert, an industry consultancy.

 

Billet prices rose 3% w/w to USD 375/t on July 17, 7%
above their 2019 low of USD 350/t on Oct. 4 and 9% below their 1Q20 high of USD
410/t on Jan. 10.

 

Slab prices inched up 1% w/w to USD 385/t on July 17,
15% above their 2019 low of USD 335/t on Nov. 1 and 8% below their 1Q20 high of
USD 420/t on Jan. 17.

 

HRC prices were unchanged at USD 410/t on July 17, 12%
above their 2019 low of USD 365/t on Oct. 25 and 14% below their 1Q20 high of
USD 478/t on Feb. 21.

 

Pig iron prices (Metal Expert’s FOB Black Sea
assessment for a group of countries that includes Ukraine) gained 2% w/w to USD
318/t on July 17, 11% above their 2019 low of USD 285/t on Nov. 1 and 5% 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.

 

Ukrainian steel prices continued benefiting from
Chinese demand, Metal Expert said.

 

Dmytro Khoroshun: Ukraine’s
FOB iron and steel prices have so far rebounded 15-20% 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 negative view on METINV bonds.