Metinvest to continue supplying Ukrzaliznytsia with rails, joints
24 May 2018
Ukraine’s largest steelmaker Metinvest (METINV) won
two tenders and signed contracts for supplies of rails and rail joints to
Ukrzaliznytsia (RAILUA), according to the May 23 disclosure in the ProZorro
e-procurement system. The company will provide 52.5 kt of rails at a price of
USD 928/t and 4.8 kt of rail joints at a price of USD 1,073/t for a total of
USD 53.9 mln of revenue, according to our analysis of the contracts. The
products must be supplied by the end of 2018.
Recall, in November 2017 Metinvest won a tender to supply 26
kt of rails at a price of USD 814/t.
Dmytro Khoroshun: Domestic rail sales reap high margins, and therefore are positive for
Metinvest’s profit and cash flows. The 14% increase in rail prices from
November 2017 demonstrates that Metinvest continues to wield substantial
pricing power at Ukrzaliznytsia tenders. Ukrzaliznytsia’s annual rail
consumption volumes might reach 100-150 kt if its railway modernization and
capital repair programs are fully implemented.
