Metinvest to supply Ukrzaliznytsia with rails

Ukraine’s largest steel maker Metinvest (METINV) won two tender lots for rail supplies to Ukrzaliznytsia, according to the Internet tender platform of the Center for Production Support, an Ukrzaliznytsia subsidiary. The company will provide 26 kt of rails at a price of USD 814/t for a total of USD 21.2 mln of revenue, according to our analysis of the tender documents. The rails must be supplied by the end of 2017.Dmytro Khoroshun: Domestic rail sales reap high margins, and therefore are positive for Metinvest’s profit and cash flows. Ukrzaliznytsia’s annual rail consumption volumes might reach 100-150 kt if its railway modernization and capital repair programs are fully implemented. We are keeping our neutral view on METINV Eurobonds.