Metinvest steel prices mixed last week

Ukraine FOB prices for the types of iron and steel
products exported by Metinvest (METINV), Ukraine’s largest producer, showed
mixed dynamics during May 14 – 21, 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) inched up 0.3% w/w
to USD 635/t on May 21, 72% above their 3Q20 high of USD 370/t on Sept. 18.

 

Billet prices plunged 6% w/w to USD 690/t on May 21,
66% above their 3Q20 high of USD 415/t on Sept. 11.

 

HRC prices were flat w/w at USD 1,095/t on May 21,
118% above their 3Q20 high of USD 503/t on Sept. 11.

 

Metal Expert did not provide an update for slab
prices, which stood at USD 950/t on May 14, 104% above their 3Q20 high of USD
465/t on Sept. 11.

 

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 steel
prices might show further volatility in the coming weeks.

 

At least two factors seem to be in play and working in
opposite directions. First, the Chinese government tries to limit the volumes
of steel production in the country, which is positive for steel prices. Second,
concerns about the likely government and central bank response to commodity
price inflation, particularly in China, are depressing the prices, including
for steel.

 

We expect steel price levels to remain exceptionally
elevated in the short term, but to correct later in 2021.

 

Metinvest’s monthly EBITDA will likely stay close to
the USD 400-500 mln range in 1H21 because of strong steel and iron ore prices.

 

We maintain our neutral view on METINV bonds.