Metinvest semi-finished product prices rise further

Ukraine FOB prices for the types of steel products
exported by Metinvest (METINV), Ukraine’s largest producer, increased in the
semi-finished segment during May 15-22, building further on their smaller rise
a week ago, according to Metal Expert, an industry consultancy.

 

Billet prices rose 3% w/w to USD 355/t on May 22, 1%
above their 2019 low of USD 350/t on Oct. 4 and 13% below their 1Q20 high of
USD 410/t on Jan. 10.

 

Slab prices added 4% w/w to USD 343/t on May 22, 2%
above their 2019 low of USD 335/t on Nov. 1 and 18% below their 1Q20 high of
USD 420/t on Jan. 17.

 

HRC prices were unchanged at USD 355/t on May 22, 3%
below their 2019 low of USD 365/t on Oct. 25 and 26% 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) climbed 4% w/w to
USD 295/t on May 22, 4% above their 2019 low of USD 285/t on Nov. 1 and 11%
below their 1Q20 high of USD 333/t on Mar. 20.

 

Metal Expert noted that Chinese demand was the main
positive factor for the prices of Ukraine’s semi-finished products (pig iron,
billets and slabs).

 

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 seem to have bottomed out and will be supported in
the near-term by Chinese demand and possibly from the gradual opening of
European economies after the quarantine. But the climb out of the current price
slump will likely be slow, depressing the profitability of Metinvest’s
metallurgical segment in both 2Q20 and 3Q20.

 

Metinvest’s overall profitability will be supported by
its mining business because iron ore prices have been, so far, remarkably
stable at high levels. In recent weeks, the drops in iron ore shipments from
Brazil because of the pandemic squeezed China’s port inventories of the
material and lifted iron ore prices close to USD 100/t (62% fines CFR China),
levels last seen in September.

 

We maintain our negative view on METINV bonds.