Russia to introduce anti-dumping duty for coated steel imports from Ukraine

The Eurasian Economic Commission (EEC) recommends introducing
anti-dumping duty on imports of Ukrainian zinc-coated hot-dip galvanized (HDG)
flat steel products, according to an investigation report published on the
EEC’s website on Oct. 7.

 

The Eurasian Economic Union (EAEU) is comprised of
Russia, Belarus, Kazakhstan, Armenia and Kyrgyzstan. The EEC is the executive
body of the EAEU.

 

The EEC’s investigation, initiated in June 2018, found
that Ukrainian and Chinese exporters of HDG use dumping pricing and harm EAEU’s
producers of these products. The EEC recommended imposing a 23.9% duty rate for
imports from Ukraine and 12.7-17% rates (depending on the producer) for imports
from China.

 

Ukraine’s primary HDG exporter is the largest steel
producer Metinvest (METINV), which has annual HDG production capacities of
about 400 kt at Ilyich Steel (2018 production: 320 kt) and 100 kt at Unisteel (35 kt).

 

In 2018, Ukraine exported 86.6 kt of HDG to Russia
(31% less yoy) for a total of USD 56.7 mln (at a price of USD 654/t). In 7M19,
Ukraine’s HDG exports to Russia amounted to 57.8 kt (13% more yoy) for a total
of USD 36.4 mln (USD 630/t).

 

Recall, in June Ukraine slammed a 47.57% anti-dumping duty on
imports of HDG from Russia. Ukraine imported 25 kt of HDG from Russia in 2018
(a 40% yoy increase).

 

Dmytro Khoroshun: The
development was expected, as EAEU (Russia) and Ukraine conducted parallel
mutual HDG import investigations and Ukraine was the first to introduce a duty
on these products.

 

We expect Metinvest not to be harmed, as the holding
should continue supplying small quantities of HDG to Russia and redirect the
remainder to other markets, including Ukraine’s domestic market.

 

Furthermore, Ukraine has a large potential for
increasing its consumption of HDG by increasing its capacities for production
of pre-painted galvanized iron (PPGI) products, which uses HDG as an input
material. Ukraine produces only small quantities of PPGI (less than 25 kt in
2018) but imports a lot of these products (309 kt in 2018). Recall, at the end
of 2017, Metinvest revealed it was considering constructing two PPGI
lines with a
total capacity of 240-300 kt per year.

 

We maintain our bullish view on METINV bonds.