Ukraine railway product exports dropped 18% m/m in May

Ukraine’s exports of railway products amounted to 11.4
kt per month in May, a 18% m/m drop and 27% below the average 2020 level,
according to Concorde Capital’s analysis of State customs service’s goods
exports data.

 

Exports amounted to 13.1 kt per month in 5M21 (65.6 kt
for the period), 16% less than the 2020 average of 15.6 kt per month.

 

Exports to Russia amounted to 0.2 kt in May, 14% less
m/m and 97% less than the 2020 average of 5.0 kt per month.

 

Exports to Belarus amounted to 4.3 kt in May, a 44%
m/m plunge but 43% more than the 2020 average of 3.0 kt per month.

 

The average export price for the railway products rose
4% m/m in May to USD 1,446/t.

 

Ukraine’s largest railway wheel producer is Interpipe
(INTHOL), 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 EBITDA
(before reallocation from the steel segment) of Interpipe’s railway product
segment will drop substantially yoy in 2021, possibly by as much as 40-50%, we
continue to expect.

 

This drop will mostly be due to a 33% drop in prices for exports
of railway products during 2020. Regarding volumes, Interpipe has likely been
able to redirect some of its railway product exports from Russia to Belarus,
but its total monthly export volumes might still drop yoy in 2021.

 

Interpipe’s overall profitability will also be
squeezed in 2021 by the cost increases for inputs such as steel scrap and
energy.