Ukraine freight railcar producers might suspend production until May

Kremenchuk Steel Casting, the largest bogie castings producer in the CIS, will not reinstate its production until May, Interfax reported on March 29, citing its sources inside the company. Ukraine-based KSC halted its production in February after the Russian government suspended its quality certificate, freezing its sales in the country.

Roman Dmytrenko: KSC’s extension of its production outage is bad news for local freight cars producers Kryukiv Railcar (KVBZ UK) and Dniprovahonmash (DNVM UK), which are totally dependent on bogie casting parts from KSC. With no other available sources of supplies, we expect both companies will be forced to suspend their freight car output until KSC’s quality certificate is reinstated. A company that stands to benefit from the situation is Stakhanov Railcar (SVGZ UK), which receives its casting parts from a related party based in the EU and will likely snap up orders from its competitors and outperform in the Ukrainian rail machinery sector.