Metinvest steel prices dropped again last week

Ukraine FOB prices for the types of iron and steel
products exported by Metinvest (METINV), Ukraine’s largest producer, continued
dropping during Aug. 13 – 20, according to Metal Expert, an industry
consultancy.

 

Pig iron prices (Metal Expert’s FOB Black Sea
assessment for a group of countries that includes Ukraine) were flat w/w at USD
563/t on Aug. 20, 52% above their 3Q20 high of USD 370/t on Sept. 18.

 

Billet prices dropped 3% w/w to USD 610/t on Aug. 20,
47% above their 3Q20 high of USD 415/t on Sept. 11.

 

Slab prices were flat w/w at USD 795/t on Aug. 20, 71%
above their 3Q20 high of USD 465/t on Sept. 11.

 

HRC prices lost 2% w/w to USD 895/t on Aug. 20, 78%
above their 3Q20 high of USD 503/t on Sept. 11.

 

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 FOB
steel prices might stabilize in the next few weeks, but we do not exclude a
further drop later in 2021.

 

The near-term stabilization might be due to steel and
iron ore prices in China apparently finding a local bottom after their recent
drop. Another reason is the steel production restrictions in China, which might
last at least until early 2022 due to Winter Olympics.

 

However, if steel demand in China also decreases, it
will pressure steel prices further down,

 

Metinvest’s monthly EBITDA will likely amount to at
least USD 400-500 mln in 2Q21 and in 3Q21 because of the high steel and iron
ore prices.

 

We maintain our neutral view on METINV bonds.