Interpipe railway product exports dropped around 14% in 1Q21

Ukraine’s exports of railway products amounted to 13.4
kt per month in 1Q21 (40.2 kt for the period), a 14% drop from the average 2020
level, according to Concorde Capital’s analysis of Ukrstat’s 4-digit goods
export data (code 8607, parts of railway or tramway locomotives or
rolling-stock).

 

Exports amounted to 11.4 kt in March (-27% from the
2020 average of 15.6 kt per month), down from 12.7 kt in February (-18%) and
16.1 kt in January (+3%).

 

Exports to Russia amounted to 0.2 kt in March (-96% from
the 2020 average of 5.0 kt per month), down from 0.9 kt in February (-83%) and
4.1 kt in January (-18%).

 

Exports to Belarus amounted to 4.7 kt in March (+59%
from the 2020 average of 3.0 kt per month), 6.1 kt in February (+103%) and 5.5
kt in January (+85%).

 

Ukraine’s largest railway wheel producer is Interpipe
(INPIP), which in 2020 exported 165 kt of railway products (13.8 kt per month).

 

Recall, Russia banned imports of railway
products from Ukraine from early February.

 

Dmytro Khoroshun: The Ukrstat
data confirms that Interpipe’s sales of railway products to Russia have likely
dried up almost completely starting from February-March as a result of Russia’s
ban, as we expected.

 

The Ukrstat data also suggests that in 1Q21 Interpipe
has increased, in comparison with 2020, its railway product sales volumes to
Belarus, a market that is linked to that of Russia (both countries are members
of the Eurasian Economic Union).

 

The Ukrstat data for the 8607 4-digit code comprises
both Interpipe’s railway products and other goods, making inferences imperfect.
For example, Interpipe’s export volume of railway products was 165 kt in 2020,
11% less than the 187 kt reported by Ukrstat for the 8607 code. In 2019,
Interpipe exported 158 kt of railway products (21% less than the Ukrstat data
for the 4-digit code), including 60.4 kt to Russia (27% less) and 22.6 kt to
Belarus (37% less).

 

Nevertheless, the Ukrstat data should serve well as
an upper bound on Interpipe’s export volumes, we think. Therefore, our
conclusion about Interpipe’s sales to Russia dropping dramatically starting
from February is likely to be valid.