Metinvest steel prices slide last week

Ukraine FOB prices for the types of iron and steel
products exported by Metinvest (METINV), Ukraine’s largest producer, slid
during Sept. 18 – 25, 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
365/t on Sept. 25, 10% above their 1Q20 high of USD 333/t on Mar. 20.

 

Billet prices retreated 1% w/w to USD 408/t on Sept.
25, 1% below their 1Q20 high of USD 410/t on Jan. 10.

 

Metal Expert did not provide its Sept. 25 assessment for
slab prices, which stood at USD 460/t on Sept. 18, 10% above their 1Q20 high of
USD 420/t on Jan. 17.

 

HRC prices lost 2% w/w to USD 490/t on Sept. 25, 3%
above their 1Q20 high of USD 478/t on Feb. 21.

 

The downward movements in scrap prices in Turkey and
the slowdown ahead of a national holiday in China drove the billet prices down,
Metal Expert said.

 

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 strongly in May-September. Therefore, we
expect the monthly EBITDA of Metinvest’s metallurgical segment (including JVs)
to remain depressed in July, in line with May’s USD 39 mln and June’s USD 24
mln (adjusted for one-offs). But then we expect EBITDA to stabilize and
possibly rebound strongly in August-October.

 

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.