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 Oct. 16 – 23, 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) slid 1% w/w to USD
353/t on Oct. 23, 5% below their 3Q20 high of USD 370/t on Sept. 18.

 

Billet prices were unchanged w/w at USD 405/t on Oct.
23, 2% below their 3Q20 high of USD 415/t on Sept. 11.

 

Slab prices retreated 1% w/w to USD 445/t on Oct. 23,
4% below their 3Q20 high of USD 465/t on Sept. 11.

 

HRC prices rose 2% w/w to USD 485/t on Oct. 23, 3% below
their 3Q20 high of USD 503/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: Ukrainian
steel prices are unlikely to climb much from their current levels because of
the rising risks of the second-wave coronavirus slowdowns in European
economies.

 

Chinese demand, which has been driving prices during
the last few months, is also unlikely to provide an additional boost to global
steel prices.

 

In any case, Ukraine’s FOB iron and steel prices had
rebounded strongly in May-September, and have so far dropped only slightly
since mid-September. Therefore, we expect the monthly EBITDA of Metinvest’s
metallurgical segment (including JVs) in August-October to be at least at its
July level of USD 57 mln. We also expect it to remain above the USD 40-60 mln
per month level in 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.