EU may apply duties on Metinvest hot-rolled steel in October, media says

The European Commission is planning to apply
anti-dumping duties of up to 19.4% on hot-rolled steel supplied by Metinvest’s
(METINV) Ukrainian plants, the Reuters news agency reported on July 18, citing
documents. The anti-dumping investigation – involving Ukraine, Brazil, Iran,
Serbia and Russia – is in the final stages and the measures may be applied by
an October 6 deadline. The EU has yet to report on the amount of the possible duties
to be imposed.

Andriy Perederey: The EU
began defending its domestic steel market last year when initiating an
anti-dumping investigation in February 2016 against China and in July 2016
against Ukraine, Brazil, Iran, Serbia and Russia. In 2016, Ukraine supplied to
the EU about 2.0 mmt of hot-rolled steel products (subject to investigation),
or 28% of total Ukrainian exports of steel products. Almost all the volumes
were shipped by Metinvest’s (METINV) subsidiary Ilyich Steel (MMKI UK) and
Zaporizhstal (whose 49.9% stake is controlled by the holding).

We estimate the Ukrainian steel under investigation
amounts to about 14% of Metinvest’s total 2016 revenue. In case the duty is
applied (the likelihood of which is hard to estimate) this may lead to rising
hot-rolled steel prices in EU countries, thereby easing the hit to steel
suppliers from Ukraine. Also, to minimize possible negative effects, the
holding could decide to shift export flows to MENA countries or increase
rerolling at subsidiaries located in the EU. That way, the total effect of
possible anti-dumping measures won’t be material for the holding’s
fundamentals.