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M&M Digest

Kirill Chuyko, kchuyko@bcsgm.com Oleg Petropavlovskiy, opetropavlovskiy@bcsgm.com Artem Bagdasaryan, abagdasaryan@bcsgm.com

3 June 2020 Steel prices drift higher, but stocks too expensive

Disclaimer: This research report, prepared by the Research Department of BrokerCreditService Ltd [Registered Name: BrokerCreditService Ltd, Registered Number: 1025402459334, Registered Office: 37 Sovetskaya str., Novosibirsk 630099, Russia, BrokerCreditService Ltd is regulated by the Central Bank of Russia and holds FFMS licenses No. 154-04434-100000 of 10.01.2001 for brokerage services, No. 154-04449-010000 of 10.01.2001 for dealing on own account, No. 154-04462-001000 of 10.01.2001 for managing securities portfolios and No. 154-12397-000100 of 23.07.2009 for safekeeping and administration of financial instruments], is ‘non independent research’ and is for information purposes only. Neither the information nor any opinion is intended to be or should be construed as an offer, a recommendation or an invitation to make an offer to buy or sell any financial instrument. No representation or warranty (including future performance), expressed or implied, is made as to its accuracy and reliability. This research constitutes neither investment, legal, tax advice nor other advice and it does not take into account the specific investment objectives, risk appetite and financial situation of anyone who may receive this report and the latter shall not rely on it in making an investment or other decision. Investors should seek their own advice regarding the appropriateness of investing in any financial instrument and suitability of the financial instruments or strategy discussed in this report. In accordance with US SEC Regulation AC, important US regulatory disclosures and analyst certifications can be found on the last page of this report. BrokerCreditService Ltd and/or an affiliate has or expects to receive fees for the provision of investment/corporate banking service for TMK. BrokerCreditService Ltd or an affiliate company may own one percent or more of equity securities of TMK, but does not hold more than five percent of the share capital of TMK. Neither BrokerCreditService Ltd, nor any affiliate has managed or co-managed any public or private offering or acted as a market maker or corporate broker for TMK. BrokerCreditService Ltd acts independently when producing research and does not share draft of research reports or communicate changes in rating or targets to the issuer ahead of publication. © 2020 BrokerCreditService Ltd. All rights protected and reserved.

i

Key M2M valuation metrics M2M Company EV/EBITDA P/E FCFY DY

Steel Severstal 6.2 9.4 3% 6% NLMK 7.0 11.5 7% 7% MMK 4.5 7.7 7% 7% EVRAZ 6.7 15.3 3% 6% Mechel 28.7 neg. neg. 0% Raspadskaya 1.6 4.6 23% 4% TMK 2.4 2.2 46% 11% Ferrexpo 2.2 3.5 27% 6% Base metals Norilsk 6.4 8.7 10% 10% Rusal 8.1 14.6 neg. 3% KAZ Minerals 5.0 6.0 neg. 0% Precious metals Polyus Gold 7.2 9.1 8% 4% Polymetal 6.5 8.8 9% 6% HGM 4.2 6.0 18% 5% Petropavlovsk 2.5 4.9 31% 0% Diamonds Alrosa 7.2 12.5 8% 8%

Source: BCS GM

Key M&M price indicators Spot d/d, % w/w, % m/m, % CNYUSD 7.11 -0.2% 0% 1% RUBUSD 68.9 -0.2% -3% -8% Iron ore CH, $/t 100.5 -0.4% 4% 20% HCC AU, $/t 108 - -7% -1% SSCC AU, $/t 60 -0.3% -4% -3% HRC FOB CH, $/t 431 0.5% 2% 9% HRC Dom CH, $/t 523 1.9% 3% 9% HRC B. Sea, $/t 368 - 2.2% 4% Billet F.East, $/t 380 - - 6% HRC, Dom Rb/t 32,745 - -4.4% -9% Rebar RU, Rb/t 25,349 - -1.5% -2% Nickel, $/t 12,420 2.4% 1% 5% Copper , $/t 5,372 0.7% 6% -6% Aluminum, $/t 1,514 -0.0% 2% 5% Zinc, $/t 1,986 -0.2% 0% 4% Gold , $/oz 1,740 0.4% 1% 2% Platinum, $/oz 831 0.7% 0% 9% Palladium, $/oz 1,925 0.3% -1% -21% Silver $/oz, 18.3 2.7% 7% 22% Diamonds, $/ct 107 - - 0%

Source: Bloomberg, Metal Expert, BCS GM

Coronavirus outbreak

Source: Coronavirus-monitor, BCS GM

HRC about to break $400/t, pushing the speculative steel story. The growth in HRC is driven by strong demand for steel in Asia, as billets in Far Eastern ports are now more expensive than higher value added HRC prices in European ports. On a global scale, we note that HRC prices in China are only 6% away from 12m highs, which makes little sense to us – while iron ore prices are driving the increase, steel margins also remain high in China. We stick to our negative view on the sector, as equities remain far too expensive and RUB appreciation is a negative factor for steel stocks.

Steel Vale confirms 2020 production plan Russian export steel pricing improves on higher Turkish scrap, Asian activity Ukraine’s May rolled steel output down 18% y/y, given flat pig iron

Diamonds

De Beers allows remote viewing of sight goods Hong Kong’s jewelry and luxury sales collapse in April

0

25

50

75

0

500

1,000

Jan 20 Feb 20 Mar 20 Apr 20 May 20

New cases in RoW over last 5 days w/w(thousands, lhs)New cases in China over last 5 days w/w(thousands, lhs)Recovered/deceased over the week (rhs)

M&M Digest

3 June 2020

2

Change Swaps assessment Global (daily data) Spot d/d, % w/w, % m/m, % 3mo, % Jun20 3Q20 4Q20 1Q21 Iron ore, China CFR 100.5 -0.4% 4% 20% 13% 99.8 94.9 88.5 83.9 Hard coking coal, Australia FOB 108 - -7% -1% -34% 105 107 114 130 Hard coking coal, China CFR 118 - -7% 2% -32% Semi-soft coking coal, Australia FOB 60 -0.3% -4% -3% -29% Fut price, Sep 2020, CFR China Semi-soft coking coal, China CFR 69 - -3% -1% -27% US$/t CNY/t d/d,% Scrap, CFR Turkey 254 -0.6% 2% 6% -7% HCC 146 1,042 0.6% HRC - China FOB 431 0.5% 2% 9% -4% Iron ore 94.2 670 0.6% HRC - China domestic 523 1.9% 3% 9% 5% HRC 447 3,177 0.6% HRC - Europe ex-works 459 0.3% 0% -4% -15% Rebar 459 3,264 0.8% Russian, export (wkly, updated Monday) US$/t w/w, % m/m, % 3mo, % Fut price v fwds (Sep20/3Q) HRC - FOB Black Sea 368 2.2% 4% -23% Ch. CFR Fut/fwd Fut/spot Fwd/spot Slab - FOB Black Sea 348 1.5% 6% -17% HCC Not Comparable -1% Billet - FOB Far East 380 - 6% -7% Iron ore -1% -6% -6% Russian local, ex-VAT (wkly, updated Monday) US$/t Rb/t w/w, % m/m, % 3mo, % Prem/(disc) to import parity HRC - domestic ex-works average 475 32,745 -4.4% -9% -6% HRC 28% Rebar 4% HRC - retail prices, Moscow 493 33,958 -1.2% -4% -3% Prem/(disc) to export parity Rebar - domestic ex-works average 368 25,349 -0.5% -6% -1% Coal 31% Iron ore 4% Rebar - retail prices, Moscow 390 26,875 -1.5% -2% 3% China HRC (BOF) gross profit margin Sections (mix) - domestic ex-works average 508 34,957 - -5% 3% Spot 2019 av 2018 av 2017 av Sections (mix) - retail prices, Moscow 538 37,056 - 0% -1% 15% 15% 28% 23% Coking coal blended mix, ex-works 103 7,114 - -2% 5% China rebar (EAF) gross profit margin Iron ore concentrate, ex-works 69.7 4,800 - 0% 0% Spot 2019 av 2018 av 2017 av Scrap, Urals region 196 13,500 1.5% -9% -13% 28% 29% 26% 27%

Source: Metal-Expert, Bloomberg, BCS GM Base and precious metals prices (daily data) LME d/d, % w/w, % m/m, % ShFE d/d, % w/w, % m/m, % LME/ShFE LME Copper, $/t 5,372 0.7% 6% -6% 5,537 1.6% 2% 3% 97% LME Nickel, $/t 12,420 2.4% 1% 5% 12,751 3.1% 2% 3% 97% LME Zinc, $/t 1,986 -0.2% 0% 4% 2,061 0.4% 1% 0% 96% LME Aluminum, $/t 1,514 -0.0% 2% 5% 1,634 -0.3% 0% 3% 93% Inventories base metals (daily data) LME d/d, % w/w, % m/m, % ShFE d/d, % w/w, % m/m, % Total d/d % Copper, kt 256 -2.3% -6% 2% 199 - -17% -37% -1% Nickel, kt 233 0.1% 0% 1% 53 - 1% -2% 0% Zinc, kt 100 -1.8% -7% -1% 151 -0.1% -4% -15% -1% Aluminum, kt 1,496 -0.3% 3% 10% 407 -0.3% -8% -35% 0% Precious metals prices (daily data) LME d/d, % w/w, % m/m, % ShFE d/d, % w/w, % m/m, % LME/ShFE Gold ($/oz), LME 1,740 0.4% 1% 2% 1,726 1.2% 1% 3% 101% Silver ($/oz), LME 18.3 2.7% 7% 22% 17.8 5.1% 5% 19% 103% PGM (daily data) LME d/d, % w/w, % m/m, % NYMEX d/d, % w/w, % m/m, % LME/NYMEX Platinum ($/oz), LBMA/NYMEX 831 0.7% 0% 9% 900 3.0% 3% 16% 92% Palladium ($/oz), LBMA/NYMEX 1,925 0.3% -1% -21% 1,954 2.8% -1% 4% 99% Metal holdings ETFs d/d, % w/w, % m/m, % 3M 6M 9M 12M 24M Gold holdings, mn oz 100.4 0.2% 1% 4% 15% 22% 24% 41% 40% Silver holdings, mn oz 735 0.2% 1% 9% 20% 20% 15% 42% 36% Palladium holdings, mn oz 0.44 0.1% 0% 1% -23% -29% -24% -29% -55% Platinum holding, mn oz 3.16 -0.1% 0% 5% -9% -5% -2% 6% 25% Diamonds BBG w/w, % m/m, % 3mo, % Latest sales results, $ mn Rough diamonds, $/ct 107 - 0% -2% Company Revenue m/m y/y Polished diamonds, $/ct 5,717 - 0% -7% Alrosa 16 -90% -95% Cutters margin -6.9% -0.0% 0% -5% De Beers 355 -36% -28%

Source: Bloomberg, SMM, BCS GM

US-China trade war timeline US tariffs China tariffs Date Description Duties Imposed % of 2017 imports Duties Imposed % of 2017 Imports 23.08.2018 US and China impose second phase of $50 bn tariffs $50 bn 10% $50 bn 38% 24.09.2018 US imposed 10% tariff on $200 bn of Chinese exports. $250 bn 50% $110 bn 85%

09.05.2019 US imposed 25% tariffs on $200bn of China’s imports, threaten tariffs on another c$300bn goods $250 bn 50% $110 bn 85%

23.08.2019 Tariffs on $200bn of Chinese goods may be raised to 30% $250 bn 50% $110 bn 85% 01.09.2019 China imposed 10% tariffs on $75bn of US goods $360 bn 72% $110+ bn 85%+ 01.09.2019 US imposed 15% tariffs on $110bn of China’s goods from 1 Sept $360 bn 72% $110+ bn 85%+ 13.12.2019 US to lower tariffs on $120bn of Chinese goods to 7.5% $360 bn 72% $110+ bn 85%+ 14.02.2019 China halved tariffs on $75bn of US goods $360 bn 72% $110+ bn 85%+ 18.02.2019 China to grant tariff exemptions on additional US goods $360 bn 72% $110+ bn 85%+

30.04.2020 US formulating L-T plan to punish China for the C-virus epidemic, potential measures include sanctions and cancelling US debt $360 bn 72% $110+ bn 85%+

Source: Media, BCS GM

M&M Digest

3 June 2020

3

Steel Vale confirms 2020 production plan – Platts. Concerns regarding the level of volumes again spiked after reports of an increase in C-Virus cases at Vale’s Itabira complex, though management confirmed that production guidance is unchanged.

Iron ore prices are high now in part due to concerns that there will be C-Virus related shortage of steel, thanks to negative supply dynamics.

Russian export steel pricing improves on higher Turkish scrap and Asian activity – Metal-Expert. HRC prices (FOB Black Sea) gained $20-25/t w/w to $390/t, while billet prices (FOB Black Sea) gained $10/t w/w to $360-370/t, given the higher price for Turkish scrap and better markets in Asia, though the market remains thin. Slab prices are also on the rise – up $10/t to $355-365/t.

The rise is a reflection of the recent growth in China’s steel pricing and we expect HRC prices to reach $400/t soon. However, such a price would still be insufficient to justify the current valuations of steel companies, especially given risks to Russia’s economy and the stronger ruble.

Ukraine’s May rolled steel output down 18% y/y, given flat pig iron – Interfax. Crude steel output is down 12% y/y. The 5M figures are also negative with a fall of 7% in rolled steel production, 11% fall in crude steel output, and 7% in pig iron production.

Interestingly, the fall in steel output was on the back of generally flat pig iron production in May, suggesting healthier Blast Furnace output levels (steelmaking from iron ore vs from scrap), which is very difficult to downsize, forcing higher exports – a risk for Russian steel as well.

Diamonds

De Beers allows remote viewing of sight goods – Rapaport. The decision, following Botswana’s travel limitations in March due to the spread of COVID, will widen buyers’ access to the company’s products at the 15-19 June sight.

The flexibility is largely minor for the diamond industry’s investment case and is a reasonable business reaction to the market environment. However, we see other indicators that the diamond industry is slowly recovering and we are cautiously positive on the market, expecting a material recovery by year-end.

Hong Kong’s jewelry and luxury sales collapse in April – Rapaport. The size of the market fell 77% y/y to HK$1.4bn ($176mn), including sales of jewelry, watches and clocks. The fall is due to a halt of tourist activity, which is a key driver for the region’s economy. The number of tourists fell 99.9% y/y to 4,125 people in April.

The news is now historic and does not reflect the market’s potential recovery.

M&M Digest

3 June 2020

4

Recent M&M reports Under Review: KAZ Minerals – COVID headwinds cloud future (20 May) Downgrade: Gold – Shine fades as rally loses steam (13 May) Upgrade: TMK – On the way to ‘non-public’ (9 Apr) Trade Idea Closed: Long PLZL/POLY basket (50-50%) – Closing on Stop Loss (17

March) Trade Idea Opened: Long PLZL/POLY (50-50%) – A perfect risk-off Basket (13

March) Under Review: Steel Sector – S-T, ruble helps; L-T, potentially a ticking bomb

(12 March) BCS / ICEF Insight: Metal Scrap – Revolution is Now! (30 Jan) Trade Ideas Closed: Short SVST, NLMK, MMK – Bounce in export prices

removes domestic downside; L-T view intact (5 Dec) Marketing Feedback: M&M – Sell Steel call fully confirmed and clear (1 Nov) Insight: National Projects – Overstated steel myth (24 Oct) Downgrade: Steel prices collapse – All Sells again (23 Oct) Preview: Steel 3Q19 IFRS – Mixed numbers (15 Oct) Update: Ferrexpo – TP cut on legal risks, Sell affirmed (8 Oct) Site Visit: Polymetal – Albazino-Amursk ... More value to come (7 Oct) Downgrade: TMK – ZTZ hits again, seamless pipes at risk now (4 Oct) Trade Idea Opened: Short MMK – Another Short on highest exposure to local

steel collapse (3 Oct) Trade Ideas Reiterated: Short SVST & NLMK – HRC FOB slumps 5% w/w, local

price collapse is around the corner (30 Sep) Trade Ideas Opened: Short SVST & NLMK – Domestic prices to slump 15%+ ...

P/Es to reach highly unattractive levels (18 Sep)

M&M Digest

3 June 2020

5

Export prices, FOB Black Sea, $/ton Domestic prices, $/ton

HRC prices, $/t Rebar prices, $/t

Coking coal prices, $/t Iron ore prices, $/t

Scrap prices, $/t China steel margins, $/t

Flat steel monthly consumption in Russia, mt Long steel monthly consumption in Russia, mt

Source: Metal Expert, Metal Bulletin, BCS GM

200

300

400

500

600

700

Jan-

13Ap

r-13

Jul-1

3O

ct-1

3Ja

n-14

Apr-

14Ju

l-14

Oct

-14

Jan-

15Ap

r-15

Jul-1

5O

ct-1

5Ja

n-16

Apr-

16Ju

l-16

Oct

-16

Jan-

17Ap

r-17

Jul-1

7O

ct-1

7Ja

n-18

Apr-

18Ju

l-18

Oct

-18

Jan-

19Ap

r-19

Jul-1

9O

ct-1

9Ja

n-20

Apr-

20

Rebar HRC

200

300

400

500

600

700

Jan-

13Ap

r-13

Jul-1

3O

ct-1

3Ja

n-14

Apr-

14Ju

l-14

Oct

-14

Jan-

15Ap

r-15

Jul-1

5O

ct-1

5Ja

n-16

Apr-

16Ju

l-16

Oct

-16

Jan-

17Ap

r-17

Jul-1

7O

ct-1

7Ja

n-18

Apr-

18Ju

l-18

Oct

-18

Jan-

19Ap

r-19

Jul-1

9O

ct-1

9Ja

n-20

Apr-

20

Rebar HRC

200

400

600

800

1000

Jan-

13Ap

r-13

Jul-1

3O

ct-1

3Ja

n-14

Apr-

14Ju

l-14

Oct

-14

Jan-

15Ap

r-15

Jul-1

5O

ct-1

5Ja

n-16

Apr-

16Ju

l-16

Oct

-16

Jan-

17Ap

r-17

Jul-1

7O

ct-1

7Ja

n-18

Apr-

18Ju

l-18

Oct

-18

Jan-

19Ap

r-19

Jul-1

9O

ct-1

9Ja

n-20

Apr-

20Domestic Export Global average

200

300

400

500

600

700

800

Jan-

13Ap

r-13

Jul-1

3O

ct-1

3Ja

n-14

Apr-

14Ju

l-14

Oct

-14

Jan-

15Ap

r-15

Jul-1

5O

ct-1

5Ja

n-16

Apr-

16Ju

l-16

Oct

-16

Jan-

17Ap

r-17

Jul-1

7O

ct-1

7Ja

n-18

Apr-

18Ju

l-18

Oct

-18

Jan-

19Ap

r-19

Jul-1

9O

ct-1

9Ja

n-20

Apr-

20

Domestic Export Global average

507090110130150170190

50

100

150

200

250

300

350

Jan-

13Ap

r-13

Jul-1

3O

ct-1

3Ja

n-14

Apr-

14Ju

l-14

Oct

-14

Jan-

15Ap

r-15

Jul-1

5O

ct-1

5Ja

n-16

Apr-

16Ju

l-16

Oct

-16

Jan-

17Ap

r-17

Jul-1

7O

ct-1

7Ja

n-18

Apr-

18Ju

l-18

Oct

-18

Jan-

19Ap

r-19

Jul-1

9O

ct-1

9Ja

n-20

Apr-

20

Australian FOB Russia ex-works

20

40

60

80

100

120

30507090

110130150170

Jan-

13Ap

r-13

Jul-1

3O

ct-1

3Ja

n-14

Apr-

14Ju

l-14

Oct

-14

Jan-

15Ap

r-15

Jul-1

5O

ct-1

5Ja

n-16

Apr-

16Ju

l-16

Oct

-16

Jan-

17Ap

r-17

Jul-1

7O

ct-1

7Ja

n-18

Apr-

18Ju

l-18

Oct

-18

Jan-

19Ap

r-19

Jul-1

9O

ct-1

9Ja

n-20

Apr-

20

China CFR Russia ex-works

100

200

300

400

500

Jan-

13Ap

r-13

Jul-1

3O

ct-1

3Ja

n-14

Apr-

14Ju

l-14

Oct

-14

Jan-

15Ap

r-15

Jul-1

5O

ct-1

5Ja

n-16

Apr-

16Ju

l-16

Oct

-16

Jan-

17Ap

r-17

Jul-1

7O

ct-1

7Ja

n-18

Apr-

18Ju

l-18

Oct

-18

Jan-

19Ap

r-19

Jul-1

9O

ct-1

9Ja

n-20

Apr-

20

Domestic Turkey (US imports)

-10%

0%

10%

20%

30%

40%

Jan 14 Sep 14 May 15 Jan 16 Sep 16 May 17 Jan 18 Sep 18 May 19 Jan 20

HRC - BOF Rebar - EAF

1.4

1.6

1.8

2.0

2.2

2.4

2.6

Jan 14 Mar 14 May 14 Jul 14 Sep 14 Nov 14

2016 2017 2018 2019 2020

0.9

1.0

1.1

1.2

1.3

1.4

1.5

1.6

1.7

1.8

1.9

Jan 14 Mar 14 May 14 Jul 14 Sep 14 Nov 14

2016 2017 2018 2019 2020

M&M Digest

3 June 2020

6

Apparent steel consumption in China vs. Yuan appreciation, y/y Monthly steel net exports in China, mt

Chinese FDI, y/y change % Chinese fixed asset investment growth, y/y

Chinese Manufacturing PMI China: Housing under construction vs. investments in real estate

Iron ore inventory at ports, mt Steel inventory at Chinese warehouses, mt

China air quality index (wgt’d avg 5 major steelmaking cities,

c50% of steel output) Estimated share of EAF steelmaking in China

Source: Bloomberg, BCS GM

-20%-15%-10%-5%0%5%10%15%20%25%

-10%

-5%

0%

5%

10%

Jan 12 Jan 13 Jan 14 Jan 15 Jan 16 Jan 17 Jan 18 Jan 19 Jan 20

Yuan, y/y Consumption, y/y

0

2

4

6

8

10

12

Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 Jan-19 Jan-20

-20%

-10%

0%

10%

20%

30%

40%

Jan

10

Jul 1

0

Jan

11

Jul 1

1

Jan

12

Jul 1

2

Jan

13

Jul 1

3

Jan

14

Jul 1

4

Jan

15

Jul 1

5

Jan

16

Jul 1

6

Jan

17

Jul 1

7

Jan

18

Jul 1

8

Jan

19

Jul 1

9

Jan

20

-30%

-20%

-10%

0%

10%

20%

30%

40%

Feb06

Nov06

Aug07

May08

Feb09

Nov09

Aug10

May11

Feb12

Nov12

Aug13

May14

Feb15

Nov15

Aug16

May17

Feb18

Nov18

Aug19

30

35

40

45

50

55

Nov 15 May 16 Nov 16 May 17 Nov 17 May 18 Nov 18 May 19 Nov 19 -20%

0%

20%

Jan 14 Jul 14 Jan 15 Jul 15 Jan 16 Jul 16 Jan 17 Jul 17 Jan 18 Jul 18 Jan 19 Jul 19 Jan 20

Space under construction, ytd y/y

Total investments in real estate, y/y

60

80

100

120

140

160

Mar 10 Mar 11 Mar 12 Mar 13 Mar 14 Mar 15 Mar 16 Mar 17 Mar 18 Mar 19 Mar 20 -10%

-5%

0%

5%

10%

15%

20%

25%

30%

35%

0

5

10

15

20

25

30

Jan 17 May 17 Sep 17 Jan 18 May 18 Sep 18 Jan 19 May 19 Sep 19 Jan 20

Long Flat Total change w/w

0

50

100

150

200

250

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

2016 2017 2018

2019 2020

0%

2%

4%

6%

8%

10%

12%

14%

16%

Feb14

Jun14

Oct14

Feb15

Jun15

Oct15

Feb16

Jun16

Oct16

Feb17

Jun17

Oct17

Feb18

Jun18

Oct18

Feb19

Jun19

Oct19

Feb20

M&M Digest

3 June 2020

7

Copper LME price vs inventories (kt) Nickel LME price vs inventories (kt)

Zinc LME prices vs inventories % Aluminum LME prices vs inventories

Gold price vs gold-silver ratio % Platinum & Palladium prices vs Palladium-Platinum ratio

Gold price vs SPDR gold holdings, mn oz Gold price vs LT real average interest rate

Rough vs polished diamonds prices, $/ct

Cutters margin vs rough diamonds price index

$4,000

$5,000

$6,000

$7,000

$8,000

$9,000

$10,000

0100200300400500600700800900

Jan 10 Jan 11 Jan 12 Jan 13 Jan 14 Jan 15 Jan 16 Jan 17 Jan 18 Jan 19 Jan 20

Shanghai stocks (kt) LME stocks (kt) Copper $/t

$7,500

$9,500

$11,500

$13,500

$15,500

$17,500

0100,000200,000300,000400,000500,000600,000700,000800,000900,000

Apr 15Oct 15Apr 16Oct 16Apr 17Oct 17Apr 18Oct 18Apr 19Oct 19Apr 20

Shanghai stocks (kt)

LME Stocks (kt)

LME nickel $/t

$4,000

$5,000

$6,000

$7,000

$8,000

$9,000

$10,000

0100200300400500600700800900

Jan 10 Jan 11 Jan 12 Jan 13 Jan 14 Jan 15 Jan 16 Jan 17 Jan 18 Jan 19 Jan 20

Shanghai stocks (kt) LME stocks (kt) Copper $/t

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

Jan 10 Jan 11 Jan 12 Jan 13 Jan 14 Jan 15 Jan 16 Jan 17 Jan 18 Jan 19 Jan 20

Shanghai stocks (kt) LME stocks (kt) Aluminum ($/t)

65

75

85

95

105

115

125

135

1,100

1,200

1,300

1,400

1,500

1,600

1,700

1,800

Jan 17 May 17 Sep 17 Jan 18 May 18 Sep 18 Jan 19 May 19 Sep 19 Jan 20 May 20

Gold ($/oz) Gold/Silver

0%

100%

200%

300%

400%

200

700

1,200

1,700

2,200

2,700

3,200

Jan 10 Jan 11 Jan 12 Jan 13 Jan 14 Jan 15 Jan 16 Jan 17 Jan 18 Jan 19 Jan 20

Platinum Palladium Palladium/Platinum

15

20

25

30

35

1,0001,1001,2001,3001,4001,5001,6001,7001,800

Jan 14 Jan 15 Jan 16 Jan 17 Jan 18 Jan 19 Jan 20

SPDR gold holdings, mn oz (rhs) Gold, $/oz (lhs)

-1.00%

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

0200400600800

1,0001,2001,4001,6001,8002,000

Jan 00 Jan 03 Jan 06 Jan 09 Jan 12 Jan 15 Jan 18

Gold, $/oz LT Real Average (>10Y)

5,500

6,500

7,500

8,500

9,500

10,500

11,500

100

120

140

160

180

Nov 12 Nov 13 Nov 14 Nov 15 Nov 16 Nov 17 Nov 18 Nov 19

Rough (lhs) Polished (rhs)

60708090100110120130140150160

-15%

-10%

-5%

0%

5%

10%

15%

20%

25%

Jan

06

Jan

07

Jan

08

Jan

09

Jan

10

Jan

11

Jan

12

Jan

13

Jan

14

Jan

15

Jan

16

Jan

17

Jan

18

Jan

19

Jan

20

Cutters' margin (lhs) Rough price index (rhs)

M&M Digest

3 June 2020

8

Extended steel and related products pricing summary Actual prices, $/t Change, %

29-May 1 week 1 month 6 months 1 year YTD 1 week 1 month 6 months 1 year YTD Steel section Russia – domestic retail prices (Moscow traders)

HRC 495 491 477 515 572 583 0.8% 4% -4% -13% -15%

CRC 552 547 539 622 643 652 1.0% 2% -11% -14% -15%

Rebar 407 402 384 422 544 533 1.3% 6% -3% -25% -24%

Sections 528 518 494 561 554 667 2.0% 7% -6% -5% -21% Russia – domestic producers prices (ex-works average)

HRC 467 479 478 505 560 548 -2.5% -2% -8% -17% -15%

CRC 530 534 549 597 639 613 -0.9% -4% -11% -17% -14%

Rebar 373 368 370 415 491 468 1.2% 1% -10% -24% -20%

Sections 498 488 486 535 549 642 2.0% 2% -7% -9% -22% Russia/Ukraine – export prices (FOB Black Sea)

HRC (Rus) 368 360 355 415 495 568 2.2% 4% -11% -26% -35%

CRC (Rus) 423 423 425 468 550 625 0.0% 0% -10% -23% -32%

Rebar (Ukr) 380 380 375 400 468 555 0.0% 1% -5% -19% -32% Global – key markets benchmarks

HRC - US 546 540 507 592 642 713 1.1% 8% -8% -15% -23%

HRC - China 513 515 478 538 569 659 -0.4% 7% -5% -10% -22%

HRC - Europe 583 580 580 573 639 715 0.5% 1% 2% -9% -19%

Rebar - US 650 653 664 667 766 617 -0.4% -2% -2% -15% 5%

Rebar - China 545 557 527 609 611 693 -2.2% 3% -11% -11% -21%

Rebar - Europe 405 398 400 424 480 565 1.9% 1% -4% -16% -28% Semi-finished products, Export prices

Slab - Black Sea 348 343 328 370 448 505 1.5% 6% -6% -22% -31%

Slab - Far East 373 358 358 373 448 510 4.2% 4% 0% -17% -27%

Billet - Black Sea 350 355 338 388 433 520 -1.4% 4% -10% -19% -33%

Billet - Far East 380 380 360 405 448 520 0.0% 6% -6% -15% -27% Other non-raw materials, Producer prices (ex-works)

Pig iron 285 279 277 317 428 321 2.0% 3% -10% -33% -11%

Coke (Siberian region) 177 174 165 213 229 279 2.0% 7% -17% -23% -36% Export prices

Pig iron 318 310 317 370 370 363 2.4% 0% -14% -14% -13%

Coke 245 245 245 245 270 345 0.0% 0% 0% -9% -29% Raw materials, Domestic prices

Iron ore concentrate 68 67 64 71 86 48 2.0% 7% -4% -20% 42%

Iron ore pellets 80 78 74 81 112 66 2.0% 7% -1% -28% 21%

Coking coal concentrate (mix) 101 99 97 110 144 144 2.0% 5% -8% -29% -30%

Thermal coal (TR grade, 6k/t) 30 29 28 35 35 36 2.0% 7% -16% -14% -18%

Scrap (Urals region) 192 186 198 193 215 232 3.6% -3% 0% -10% -17% Russian export prices

Coking coal concentrate (CFR China) 153 153 153 153 153 153 0.0% 0% 0% 0% 0%

Thermal coal (FOB Far East, 6K Kcal) 58 57 63 69 79 103 1.8% -8% -16% -27% -44%

Thermal coal (Riga, 6K Kcal) 34 34 35 43 42 76 0.0% -2% -21% -18% -55%

Scrap (FOB Novorossiysk) 226 225 215 235 276 332 0.4% 5% -4% -18% -32% Global benchmarks

Iron ore - CFR China 101 97 84 87 100 74 4.2% 20% 16% 1% 36%

Hard coking coal - FOB Australia 108 116 109 138 204 262 -6.9% -1% -22% -47% -59%

Semi-soft coking coal – China CFR 69 71 70 88 103 138 -3.2% -1% -22% -33% -50%

Thermal coal (ARA CIF) 43 42 42 58 54 97 2.4% 2% -26% -20% -56%

Thermal coal (Newcastle FOB) 54 54 52 69 81 103 0.0% 4% -22% -33% -48% Ferro-Vanadium – US free market, 70-80% spot 11 10 10 11 11 21 21 -0.5% -8% -11% -51%

Source: Metal-Expert, BCS GM

Traders steel margin, $/t

HRC / CRC Rebar/Sections

2016-now (weekly) 2009-now (monthly) 2016-now (weekly) 2009-now (monthly)

Source: Metal-Expert, BCS GM

-100

-50

0

50

100

150

Jan-

16

Jul-1

6

Jan-

17

Jul-1

7

Jan-

18

Jul-1

8

Jan-

19

Jul-1

9

Jan-

20

HRC

CRC

-100

-50

0

50

100

150

Jan-

09

Jan-

11

Jan-

13

Jan-

15

Jan-

17

Jan-

19

HRC

CRC

-100

-50

0

50

100

150

Jan-

16

Jul-1

6

Jan-

17

Jul-1

7

Jan-

18

Jul-1

8

Jan-

19

Jul-1

9

Jan-

20

Rebar

Sections

-100

-50

0

50

100

150

Jan-

09

Jan-

11

Jan-

13

Jan-

15

Jan-

17

Jan-

19

Rebar

Sections

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