Metinvest steel product prices prolong depression

Ukraine FOB prices for the types of steel products
exported by Metinvest (METINV), Ukraine’s largest producer, remained depressed
during May 1 – 8, according to Metal Expert, an industry consultancy.

 

Billet prices inched up 1% w/w to USD 340/t on May 8,
3% below their 2019 low of USD 350/t on Oct. 4 and 17% below their 1Q20 high of
USD 410/t on Jan. 10.

 

Slab prices slid 1% w/w to USD 325/t on May 8, 3%
below their 2019 low of USD 335/t on Nov. 1 and 23% below their 1Q20 high of
USD 420/t on Jan. 17.

 

HRC prices dropped 3% w/w to USD 350/t on May 8, 4%
below their 2019 low of USD 365/t on Oct. 25 and 27% below their 1Q20 high of
USD 478/t on Feb. 21.

 

Metal Expert’s pig iron prices (FOB Black Sea for a
group of countries that includes Ukraine) inched up 2% w/w to USD 283/t on May
8, 1% below their 2019 low of USD 285/t on Nov. 1 and 15% 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: The current
deep slump in iron and steel prices (down 15-25% from their 1Q20 highs) has
extended well into its second month, with no clear reason for a rebound on the
horizon, except for the possible pickup in economic activity due to the
reopening of some sectors worldwide. Therefore, Metinvest’s profitability
during May-June will likely be depressed.

 

Furthermore, when discussing its assessment of HRC
prices, Metal Expert noted that the deals are currently being made for
July-August, which means the effects of the present price slump will depress
Metinvest’s profitability well into 3Q20.

 

We maintain our negative view on METINV bonds.