Metinvest steel prices resume rising

Ukraine FOB prices for the types of iron and steel
products exported by Metinvest (METINV), Ukraine’s largest producer, increased
during Aug. 28 – Sept. 4, 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 350/t on Sept. 4, 23% above their 2019 low of USD 285/t on Nov. 1 and 5%
above their 1Q20 high of USD 333/t on Mar. 20.

 

Billet prices rose 2% w/w to USD 410/t on Sept. 4
after rising 1% during Aug. 21-28, 17% above their 2019 low of USD 350/t on
Oct. 4 and in line with their 1Q20 high of USD 410/t on Jan. 10.

 

Slab prices added 2% w/w to USD 440/t on Sept. 4, 31%
above their 2019 low of USD 335/t on Nov. 1 and 5% above their 1Q20 high of USD
420/t on Jan. 17.

 

HRC prices jumped 5% w/w to USD 503/t on Sept. 4, 38%
above their 2019 low of USD 365/t on Oct. 25 and 5% above their 1Q20 high of
USD 478/t on Feb. 21.

 

Growing demand in Turkey, MENA and Europe drove the
HRC prices higher, Metal Expert noted.

 

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 rebounded strongly in May-September. 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-October.

 

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.