Metinvest steel product prices stable

Ukraine FOB prices for the types of steel products
exported by Metinvest (METINV), Ukraine’s largest producer, were stable during
June 26 – July 3, according to Metal Expert, an industry consultancy.

Prices for billets, slabs and HRC were flat w/w.

Pig iron prices (Metal Expert’s FOB Black Sea
assessment for a group of countries that includes Ukraine) slid 1% w/w to USD
313/t on July 3, 10% above their 2019 low of USD 285/t on Nov. 1 and 6% 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 rebounded 12-17% in May-June after dropping 20-25%
from late March to early May. Therefore, we expect the monthly EBITDA of
Metinvest’s metallurgical segment (including JVs) to drop in May-July from
March’s USD 108 mln and likely below April’s USD 64 mln, but then to stabilize
and possibly rebound in August-September.

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 3Q20.

We maintain our negative view on METINV bonds.