27 November 2016
On the last week good news for Ukraine came from the East – Chinese authorities confirmed their intention to further cut steel mills output after fulfilling the aim to reduce capacities by 45M tons at the end of October, ahead of schedule. The statement led to another surge of steel, coal and iron ore prices.
Largest Ukrainian companies share prices weekly dynamics
Weekly change, %
Monthly change, %
Growth of WIG-Ukraine index on the last week (+1.3% up to 516 points) lagged general index of Warsaw Stock Exchange increase (WIG-30 grew by more than 4%). Except for Astarta, which slided by 3.2% right before market close on Friday (resulting in weekly decrease of 1.5%), share prices of other Ukrainian companies traded on WSE demonstrated good dynamics. Kernel, which is to report its financials for the last quarter on next Wednesday, grew vs. previous week’s close by 3.8%, while Ovostar and Industrial Milk Company demonstrated more modest growth figures.
In London MHP share price showed only slight change vs. previous week, while, supported by good news from China about another rally of iron ore market (please see below), Ferrexpo surged by more than 18% (up to GBP 133.5 per share) until Thursday, before some investors decided to fix their profits on Friday, which led to 6.5% price correction. Recently shareholders of Poltava Mining provided their approval for new bonds issue by Ferrexpo Plc. Amount of issue is to be not higher than USD 750M, tenor – up to 10 years, coupon rate – not higher than 11%. In case of successful bonds placement for amount of at least USD 250M, the company will remove main part of its liquidity risk related to scheduled debt repayments in coming years (close to USD 200M in Y2017 and USD 300M in Y2018).
Main news for Ukrainian markets came from China, where local authorities confirmed their commitment to further cut steel producing capacities. Program for current year (cut of 45M tons of capacities) was fulfilled at the end of October, ahead of schedule. Chinese government will push to cut additional capacities shutting down small and inefficient enterprises in both steel and coal sectors.
Under such positive background, steel prices in China surged by another 10% during last week, extending monthly gains to 25-30% (to the highest levels during last two years, prices grew by two times since lows of Y2015 end). Iron ore benchmark index pared previous week’s loss and rallied again towards USD 80/ton level. Additional positive for iron ore news came from Australia, as second-largest iron ore exporter in the world – Rio Tinto - said that it is willing to cut production to support margins, which is first such move from major world iron ore producer after extended period of attitude towards expansion.
Switching to agri-commodities, wheat prices in Ukrainian ports added USD 2-3/ton in the beginning of last weak, having reached the highest levels since the start of new season in July. Current wheat prices are in range USD 154-165 per 1 ton (depending on quality). CPT corn price during last weak has been at about USD 151-152/ton, soybeans – about USD 370/ton (CBOT price for both corn and soybeans grew by close to 6% during last week, at the moment corn is by 5% lower y-o-y in Chicago, while soybeans – 20% higher). Sunflower Oil, after sizable fall a week ago (to USD 730-735/ton), on the last one rebounded to about USD 750-755/ton level.