Metinvest steel product prices stabilize

Ukraine FOB prices for the types of steel products
exported by Metinvest (METINV), Ukraine’s largest producer, were stable during
June 12-19, according to Metal Expert, an industry consultancy.

 

Billet prices slid 1% w/w to USD 368/t on June 19, 5%
above their 2019 low of USD 350/t on Oct. 4 and 10% below their 1Q20 high of
USD 410/t on Jan. 10.

 

Slab prices inched up 1% w/w to USD 370/t on June 19,
10% above their 2019 low of USD 335/t on Nov. 1 and 12% below their 1Q20 high
of USD 420/t on Jan. 17.

 

HRC were unchanged at USD 408/t on June 19, 12% above
their 2019 low of USD 365/t on Oct. 25 and 15% below their 1Q20 high of USD
478/t on Feb. 21.

 

Metal Expert did not provide a price assessment for
pig iron for June 19. Metal Expert’s pig iron prices (FOB Black Sea for a group
of countries that includes Ukraine) were at USD 300/t on June 5, 5% above their
2019 low of USD 285/t on Nov. 1 and 10% 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.

 

Meantime, during a June 18 virtual press tour of
Ilyich Steel, Metinvest’s CEO Yuriy Ryzhenkov said that during the 4Q19 price
slump, steel prices were lower than during the 2Q20 slump. Ryzhenkov said that
in 1Q20, prices rebounded 10-15% qoq and then dropped 5-7% in 2Q20. Yet prices
have recently stabilized and a rebound is expected in part because of stimulus
packages in China, the U.S. and Europe, according to the CEO.

 

Also, Metinvest is not planning a restructuring, Ryzhenkov
said, adding that the company is in constant dialogue with its investors and
that refinancing existing debt with new debt of longer maturity and a lower
interest rate is possible this year.

 

Metinvest is keeping its target steel production volumes
at the level announced in the beginning of 2020 and has not revised its CapEx
program, he also said. Recall, in the beginning of March Metinvest announced plans to increase
crude steel production to 7.9-8.2 mmt in 2020, or 5-8% more yoy, and to lower
its CapEx to USD 650 mln, 38% less yoy.

 

Dmytro Khoroshun: Ukraine’s
FOB iron and steel prices have rebounded 12-16% from their recent April-May
lows, according to Metal Expert, and have the potential to rise further on
strong demand from China and the reopening of European economies.

 

We expect the monthly EBITDA of Metinvest’s
metallurgical segment in May-July to be lower than March’s USD 108 mln
(including JVs), even possibly going negative as it did in June-December 2019.
We also expect it to rebound m/m in August-September, but to remain subdued
because of strong iron ore prices.

 

We maintain our negative view on METINV bonds.