Metinvest steel product prices continue rising

The rise in Ukraine FOB prices for the types of steel
products exported by Metinvest (METINV), Ukraine’s largest producer,
accelerated during May 29-June 5, according to Metal Expert, an industry
consultancy.

 

Billet prices advanced 4% w/w to USD 363/t on June 5,
4% above their 2019 low of USD 350/t on Oct. 4 and 12% below their 1Q20 high of
USD 410/t on Jan. 10.

 

Slab prices inched up 1% w/w to USD 353/t on June 5,
5% above their 2019 low of USD 335/t on Nov. 1 and 16% below their 1Q20 high of
USD 420/t on Jan. 17.

 

HRC prices jumped 7% w/w to USD 393/t on June 5, 8%
above their 2019 low of USD 365/t on Oct. 25 and 18% below their 1Q20 high of
USD 478/t on Feb. 21.

 

Pig iron prices (Metal Expert’s FOB Black Sea
assessment for a group of countries that includes Ukraine) added 2% w/w to USD
300/t on June 5, 5% above their 2019 low of USD 285/t on Nov. 1 and 10% below
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: Ukraine’s
FOB iron and steel prices have rebounded 10-12% from their recent April-May
lows, and have the potential to rise further on strong demand from China and
growing iron ore prices on the global market. European demand for Ukrainian
steel might also be boosted because of the reopening of the region’s economies
after quarantines.

 

The steel price dynamics suggest that the
profitability of Metinvest’s metallurgical segment might bottom out in
June-July and rise in August-September. However, this rebound will be limited
by the recent rise in iron ore prices, which will shift profits to Metinvest’s
mining segment.

 

We maintain our negative view on METINV bonds.