Metinvest steel prices rise last week

Ukraine FOB prices for the types of iron and steel
products exported by Metinvest (METINV), Ukraine’s largest producer, rose
during Oct. 30 – Nov. 6, according to Metal Expert, an industry consultancy.

 

Billet prices rose 1% w/w to USD 413/t on Nov. 6, 1%
below their 3Q20 high of USD 415/t on Sept. 11.

 

Slab prices inched up 1% w/w to USD 448/t on Nov. 6,
4% below their 3Q20 high of USD 465/t on Sept. 11.

 

HRC prices jumped 3% w/w to USD 503/t on Nov. 6, in
line with their 3Q20 high of USD 503/t on Sept. 11.

 

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 353/t on Oct. 30, 5% below their 3Q20
high of USD 370/t on Sept. 18.

 

Improved demand from Turkey drove the prices for HRC,
slabs and billets, while Ukrainian exporters saw signs of improvement in
China’s demand for slabs and billets, 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: The
September-October drop in iron and steel prices proved small and was followed
by a comparable rebound, which is positive for Metinvest.

 

Nevertheless, we continue to expect the prices not to
exceed substantially their 3Q20 highs because of the recent worsening of the
coronavirus situation in Europe and other regions. Notably, China has so far
remained immune to the second wave of coronavirus pandemic, and its demand
remains a crucial support for the global markets for steel and iron ore.
However, we see as slim the chances of China improving its demand even further
from its current level.

 

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-November 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.