Railway product prices rose 1% m/m in December for Ukraine exports

Ukraine’s export prices for railway products sold mostly
by the largest producer Interpipe (INTHOL) were USD 1,426/t in December, up 1%
m/m and 33% less yoy, according to Concorde Capital’s analysis of State
Statistics data released on Feb. 19.

The December prices are 4% above their 3Q20 average,
Concorde Capital’s calculations show. The 4Q20 average is up 1% qoq.

Dmytro Khoroshun: Looking
ahead, Interpipe’s railway product segment will likely experience a qoq
downturn in 1Q21. This is because Russia’s ban on railway product
imports from Ukraine (in place since Feb. 9)
is likely to decrease Interpipe’s sales volumes by up to 30% to as low as 11 kt
per month starting from February-March. Interpipe’s prices for its railway
products will also likely come under pressure in 1Q21 as a result of Russia’s
ban.

Looking back at 4Q20, the stabilization of the prices
together with the steady railway product sales volumes (15.1 kt per month in
4Q20, 6% more than in 3Q20), might result in Interpipe’s railway product
segment 4Q20 revenue similar to that in 3Q20, USD 64 mln.

The EBITDA of this segment (save for year-end one-off
adjustments) before reallocation from its steel segment in 4Q20 might decrease
from its 3Q20 value, USD 29 mln, because of the increase in steel prices
worldwide since November.

After EBITDA reallocation from its steel segment,
the EBITDA of Interpipe’s railway product segment in 4Q20 might also drop qoq
from USD 37 mln in 3Q20 because of the increase in Ukrainian steel scrap prices
in December.