Kryukiv Railcar may suspend March production

Kryukiv Railcar (KVBZ UK) might suspend its freight car production in March owing to a severe shortage in bogie castings, its key component, CEO Evgeniy Khvorost said on Feb. 28. The company manufactured only 1,000 freight cars in January-February 2013 and exhausted its bogie castings inventory after its only supplier, Kremenchuk Steel Casting, postponed its production on Feb. 13 due to certification problems in Russia.

Roman Dmytrenko: Though the current castings shortage will hurt Kryukiv’s production in March, we see a strong chance that the situation will be resolved shortly. On Feb. 19, Kremenchuk Steel Casting reported that Cyprus-based Devisal Limited acquired a 19.6% stake in the company, while Ukrainian TECO-Dniprometiz sold its holdings. We believe the Cyprus-based company could have Russian partners who could help Kremenchuk Steel Casting resolve its certification problems in Russia and renew its supplies to Kryukiv Wagon.