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bne July 2018 Companies & Markets I 15
"However, secondary effects from any countermeasures taken by other countries could carry more profound adverse impli- cations for Ukraine by decreasing global commodity prices and slowing global economic growth," the NBU's inflation report reads. "This could be partly offset by an expansion of Ukraine’s share of the agricultural markets of the countries that take countermeasures, such China and the EU states."
The central bank forecasts that prices for ferrous metals will remain high despite a correction triggered by the rise
“Markets of the EU and Turkey are priority for the supply of Ukrainian steel products”
in Chinese production after the expiry of current restrictions, and excess inventories in some markets caused by trade wars.
Eesti Energia buys Nelja Energia in one of Estonia's largest ever deals
Wojciech Kosc in Warsaw
Eesti Energia, the state-owned power utility in Estonia, has acquired renewable energy company Nelja Energia for €289mn, Eesti Energia said on May 29.
Eesti Energia is also taking over Nelja Energia’s debt of €204mn, which pushes the total value of the deal to €493mn. That makes the transaction the third largest Estonian takeover deal ever, after Swedbank’s purchase of Hansa Bank in 2005, worth €1.7bn, and Tallink’s takeover of Silja Line for €550mn in 2006.
The seller is Norwegian company Vardar, which said it is going to focus on its home market and is therefore offloading assets abroad.
The acquisition of Nelja Energia will help the state-owned com- pany carry out its strategy of increasing the share of electricity from renewable and alternative sources to 40% in Eesti Ener- gia’s portfolio by 2022, Eesti Energia said in a statement.
“We see ourselves in the future acting as a producer of
Prices will mainly grow on a further expansion of demand for ferrous metals driven by global economic growth, especially in the construction and engineering industries, as well as by a continued decrease in excess capacity in China.
Over 2016-2017, a Chinese government programme resulted in the elimination of more than 200mn tonnes of excess
steel production capacity, and another 30mn-50mn is to be cut by in 2018. Consequently, steel production in China will grow by only 0.6% y/y in 2018, whereas demand growth will accelerate to 2.1%. Demand from the US, India, and Europe is expected to rise as well.
Despite steady demand for ferrous metals, iron ore prices will decline on robust market supply. This will be primarily due
to the global leaders – Australia and Brazil - increasing their production amid lower production costs. At the same time, China’s demand for iron ore will be flat in 2018, held back by record-high inventories. As in 2017, high-quality iron ore will be especially in demand, the NBU believes.
renewable energy in Estonia, Finland, Latvia, Lithuania,
and also in Poland – in all these countries Eesti Energia also operates as a power seller,” said Aavo Karmas of Enefit Green, an Eesti Energia subsidiary that is the buying entity.
Following the deal – which still has to be approved by the Lith- uanian, Latvian, and Estonian competition authorities – Eesti Energia will produce 1 terawatt hour (TWh) of energy annu- ally, compared to the current figure of just under 0.4 TWh.
Nelja Energia owns 17 wind farms in Estonia and Lithuania, totalling 287 MW in capacity. The company also has a minority share in two biogas power and heat cogeneration plants in Estonia and owns a pellet factory and a co-generation plant
in Latvia.
The Estonian renewable energy output grew 14% in 2017
to total 1,612 gigawatt hours (GWh). The Baltic state’s ener- gy strategy seeks to boost the share of renewable energy in total consumption as well as pushing energy efficiency targets.
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