Ukraine railway product exports dropped 7% m/m in September

13 October 2021

Ukraine’s exports of railway products amounted to 13.0 kt in September, 7% less m/m and 16% below the average 2020 level, according to Concorde Capital’s analysis of State customs service’s goods exports data.

 

Exports amounted to 13.4 kt per month in 9M21 (120.2 kt for the period), 14% less than the 2020 average of 15.6 kt per month.

 

Exports to Russia amounted to 0.4 kt in September, 36% more m/m but 91% less than the 2020 average of 5.0 kt per month.

 

Exports to Belarus amounted to 4.8 kt in September, 15% less m/m but 59% higher than the 2020 average of 3.0 kt per month.

 

The average export price for the railway products added 4% m/m in September to USD 1,477/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: Ukraine’s railway product monthly export volumes have been mostly stable recently, which is positive considering Russia’s ban. The export-dependent Interpipe might therefore be able to maintain in the coming months its railway product total monthly sales at about 15 kt, or 6% below the average 2020 level.

 

However, the stability of prices for Ukraine’s railway product exports during the last year or so causes mixed feelings. The prices are 10-20% below their abnormally-high levels for 2019 and 2020, and Interpipe’s costs have likely increased in the recent months due to the jumps in prices for natural gas and electricity. Furthermore, steel scrap prices in Ukraine also remain elevated, about 90% higher yoy. Therefore, Interpipe’s railway product margins will likely been squeezed even further in 3Q21 and 4Q21.

 

On the other hand, the railway product export prices are still relatively high, 20-50% more than on average in 2015-2018, and Interpipe’s railway product segment should remain profitable on a pass-through EBITDA basis in 2H21.

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