Ukraine railway product exports inched up 2% m/m in July

Ukraine’s exports of railway products amounted to 14.0
kt in July, a 2% m/m gain but 10% below the average 2020 level, according to
Concorde Capital’s analysis of State customs service’s goods exports data.

 

Exports amounted to 13.3 kt per month in 7M21 (93.3 kt
for the period), 14% less than the 2020 average of 15.6 kt per month.

 

Exports to Russia amounted to 0.3 kt in July, 2.1x
more m/m but 94% less than the 2020 average of 5.0 kt per month.

 

Exports to Belarus amounted to 5.9 kt in July, 18%
more m/m and 98% higher than the 2020 average of 3.0 kt per month.

 

The average export price for the railway products was
flat m/m in July at USD 1,386/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: Interpipe
likely continues maintaining the volumes of its sales to Belarus at high
levels, which might limit the yoy drop in sales driven by Russia’s ban.

 

Nevertheless, 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. Interpipe’ wheel sales volumes will also
likely drop yoy in 2021.

 

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