Metinvest steel prices inch up further

Ukraine FOB prices for the types of iron and steel
products exported by Metinvest (METINV), Ukraine’s largest producer, mostly
increased further during Aug. 7 – 14, 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) inched up 1% w/w to
USD 345/t on Aug. 14, 21% above their 2019 low of USD 285/t on Nov. 1 and 4%
above their 1Q20 high of USD 333/t on Mar. 20.

 

Billet prices slid 1% w/w to USD 398/t on Aug. 14, 14%
above their 2019 low of USD 350/t on Oct. 4 and 3% below their 1Q20 high of USD
410/t on Jan. 10.

 

Slab prices jumped 4% w/w to USD 430/t on Aug. 14, 24%
above their 2019 low of USD 335/t on Nov. 1 and 2% above their 1Q20 high of USD
420/t on Jan. 17.

 

HRC prices rose 2% w/w to USD 473/t on Aug. 14, 29%
above their 2019 low of USD 365/t on Oct. 25 and 1% 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.

 

Dmytro Khoroshun: Ukraine’s
FOB iron and steel prices have rebounded strongly in May-August. Therefore, we
expect the monthly EBITDA of Metinvest’s metallurgical segment (including JVs)
to remain depressed in June-July, below April’s USD 64 mln and likely lower
than May’s USD 39 mln. But then we expect it to stabilize and possibly rebound
strongly in August-September, remaining healthy in the beginning of 4Q20.

 

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.