Metinvest steel prices rise again last week

Ukraine FOB prices for the types of iron and steel
products exported by Metinvest (METINV), Ukraine’s largest producer, added to
their recent gains during Nov. 6 – 13, 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) jumped 4% w/w to USD
368/t on Nov. 13, 1% below their 3Q20 high of USD 370/t on Sept. 18.

 

Billet prices advanced 4% w/w to USD 428/t on Nov. 13,
3% above their 3Q20 high of USD 415/t on Sept. 11.

 

Slab prices gained 2% w/w to USD 458/t on Nov. 13, 2%
below their 3Q20 high of USD 465/t on Sept. 11.

 

HRC prices jumped 3% w/w to USD 520/t on Nov. 13, 3%
above their 3Q20 high of USD 503/t on Sept. 11.

 

Improved demand, particularly from China, as well as
rising scrap prices in Turkey, drove steel prices higher, according to Metal
Expert.

 

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: We continue
to expect steel prices to stabilize soon without exceeding substantially their
3Q20 levels.

 

In any case, Ukraine’s FOB iron and steel prices had rebounded
strongly in May-September, and have remained largely stable since
mid-September. Therefore, we expect the monthly EBITDA of Metinvest’s
metallurgical segment (including JVs) in September-December to be at least at
its July-August level of USD 60-90 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 and in early 1Q21.

 

We maintain our neutral view on METINV bonds.