Metinvest steel prices mixed last week

Ukraine FOB prices for the types of iron and steel
products exported by Metinvest (METINV), Ukraine’s largest producer, showed
mixed dynamics during Oct. 9 – 16, according to Metal Expert, an industry
consultancy.

 

Billet prices inched up 1% w/w to USD 405/t on Oct.
16, 1% below their 1Q20 high of USD 410/t on Jan. 10.

 

Slab prices were flat w/w at USD 450/t on Oct. 16, 7%
above their 1Q20 high of USD 420/t on Jan. 17.

 

HRC prices dropped 2% w/w to USD 475/t on Oct. 16, 1%
below 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 358/t on Oct. 9, 8% 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: Ukrainian
steel prices are unlikely to climb from these levels because of the rising
risks of the second-wave coronavirus slowdowns in European economies. Chinese
demand, which has been driving prices during the last few months, is also
unlikely to provide an additional boost to global steel prices.

 

Nevertheless, Ukraine’s FOB iron and steel prices had
rebounded strongly in May-September. Therefore, we expect the monthly EBITDA of
Metinvest’s metallurgical segment (including JVs) in August-October to be at
least at its July level of USD 57 mln.

 

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.