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Interpipe​ railway product sales volume drops 22% m/m in August. Railway product sales volume at Ukraine’s largest producer Interpipe was 11.8 kt in August, a 22.1% m/m drop, according to the company’s monthly operational report released on September 17. Pipe sales dropped 10.1% m/m to 34.9 kt, while external billet sales lost 22.0% m/m to 1.7 kt. Total sales volume decreased 13.8% m/m to 48.3 kt.​ ​The m/m drop in railway product sales in August was driven by sales of wheels (-23.0% m/m to 9.9 kt).​ ​The m/m loss in pipe sales volume in August was driven by the plunge for OCTG pipes (-38.2% m/m to 5.5 kt) and welded pipes (-20.2% m/m to 7.6 kt), partially offset by a gain for line pipes (+9.7% m/m to 20.7 kt). Interpipe’s sales to the MENA region drove the dynamics in sales volumes of both OCTG and line pipes in August, according to the report.​ ​During 8M20, Interpipe’s pipe sales dropped 25.6% y/y to 310.0 kt, driven mostly by a 53.1% plunge for OCTG pipes to 58.8 kt and a 31.5% drop for welded pipes to 54.4 kt. Railway product sales in 8M20 slid 1.3% y/y to 131.4 kt, driven mostly by a 5.1% loss for wheels to 114.1 kt, partially offset by a 40.0% jump for wheelsets to 13.5 kt.​ ​Ukraine's share of pipe sales in 8M20 dropped 6pp from 2019 to 19%, and the share of sales in the Americas plunged 12pp to 12%. At the same time, Europe's share in pipe sales gained 6pp to 30%, and the share of MENA rose 8pp to 23%. The share of CIS countries in 8M20 climbed 3pp to 13%.​ ​The share of Interpipe’s railway product sales in Ukraine in 8M20 dropped 8pp from 2019 to 14%, while the share of sales to Europe gained 10pp to 36% and the share of sales to CIS countries slid 3pp to 42%.​ R​ egarding production volumes, which might be indicative of sales volumes in future months, Interpipe’s pipe production gained 19.9% m/m to 40.7 kt in August, while railway product output remained flat m/m at 14.1 kt. Steel production rose 13.1% m/m in August to 64.2 kt.
● Ferrexport
Ferrexpo daily pellet output rebounds 26% m/m in August.​ ​Ukraine’s largest iron ore pellet exporter Ferrexpo produced 980 kt of pellets in August, which amounts to 31.6 kt per day, or a 25.6% m/m jump, according to Concorde Capital's analysis of data reported by Interfax-Ukraine on Sept. 22. In 8M20, Ferrexpo’s pellet output rose 4.0% yoy to 7.36 mmt, or 30.2 kt per day.
Fitch announced on September 2 that it had affirmed the long-term issuer default rating of iron ore miner and pellet maker​ ​Ferrexpo​ at BB-/Stable. Fitch said that the affirmation reflected Ferrexpo’s robust business profile linked to high iron ore prices supported by steady demand from China. The rating action also considers Ferrexpo’s conservative financial profile and flexibility in capital expenditure and dividend payouts, according to Fitch’s report. However, Fitch also noted limitations in company-specific corporate governance practices. Fitch forecasts Ferrexpo’s 2020 EBITDA at $553mn, and assumes CapEx of $235-240mn in 2020 falling to $150mn in 2021 and $100mn in subsequent years. The agency assumes dividends of around $193mn in 2020 falling to, on average, $60mn per year from 2021. Ferrexpo is currently rated by Fitch two notches above Ukraine’s sovereign level. Fitch’s previous action on Ferrexpo ​was a December 12, 2019 upgrade​ of its credit rating to the current BB-/Stable from B+/Stable. Currently, Ferrexpo is also rated at B-/Negative by S&P​ (one notch below sovereign) and ​B2/Negative by Moody’s​ (one notch above sovereign).
82​ UKRAINE Country Report​ October 2020 ​ ​www.intellinews.com