Metinvest steel prices rise strongly

Ukraine FOB prices for the types of steel products
exported by Metinvest (METINV), Ukraine’s largest producer, rose strongly
during July 31 – Aug. 7, 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 5% w/w to USD
340/t on Aug. 7, 19% above their 2019 low of USD 285/t on Nov. 1 and 2% above
their 1Q20 high of USD 333/t on Mar. 20.

 

Billet prices rose 3% w/w to USD 400/t on Aug. 7, 14%
above their 2019 low of USD 350/t on Oct. 4 and 2% below their 1Q20 high of USD
410/t on Jan. 10.

 

Slab prices jumped 5% w/w to USD 415/t on Aug. 7, 24%
above their 2019 low of USD 335/t on Nov. 1 and 1% below their 1Q20 high of USD
420/t on Jan. 17.

 

HRC prices surged 8% w/w to USD 465/t on Aug. 7, 27%
above their 2019 low of USD 365/t on Oct. 25 and 3% 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.

 

The surge in HRC prices was attributable to the strengthening
of the Turkish market and increases in raw material costs, Metal Expert said,
adding that overall positive trends in hot-rolled product markets, including in
the Asia and MENA regions, were also contributors. The pig iron prices
benefited from the booming Chinese demand, according to Metal Expert.

 

Dmytro Khoroshun: Ukraine’s
FOB iron and steel prices have rebounded strongly in May-August and are now not
more than 3% below their 1Q20 highs. 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 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.