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years, the decision said.​ ​The tenders in question (for a total of almost UAH700mn) happened in 2018, were all won by Interpipe Ukraine LLC, and the buyers were branches of Ukrainian Railways (RAILUA), according to the decision. The AMCU concluded that the four seller companies had common interests and mutual agreements, and that their competition at the tenders was fictitious, the decision said.
Interpipe​ might face Russian embargo on railway product sales. ​Russia’s transport ministry is considering prohibiting imports of railway wheels from Ukraine, the rbc.ru news site reported on Oct. 6, citing its anonymous sources. The prohibition could be introduced by the end of 2020, according to the sources.
Recall, Russia reinstated a 34.22% duty on imports of railway products from Ukraine starting June 2. The duty was temporarily suspended in August 2019.
Analysts don't rule out Russia adding railway products to its list of goods under embargo for imports from Ukraine. If this happens, it will be substantially negative for Interpipe, which sold 60.4 kt of its railway products, or 30% of its total sales volume, to Russia in 2019.
Following the recent plunge in railway product prices, the EBITDA of Interpipe’s railway product segment (before reallocation of steel segment EBITDA) dropped to USD 900 per ton of railway products sold in 2Q20 from USD 1,200/t in 1Q20. We expect it to fall further, possibly to as low as USD 500-700/t in 2H20, and possibly for some time in 2021, noting that this will be still substantially above the USD 170-200/t EBITDA range demonstrated by Interpipe in 2016-2018.
Using the USD 500-700/t range for EBITDA, we estimate that the complete loss of 60 kt of railway product sales will result in a loss of USD 30-42 mln of EBITDA for Interpipe. However, in this scenario the company should be able to offset some of the volumes it sells to Russia by expanding at other markets, particularly in Europe.
Interpipe​ pipe and railway product sales surge in September. ​Railway product sales volume at Ukraine’s largest producer Interpipe (INTHOL) was 16.0 kt in September, a 36.1% m/m jump, according to the company’s monthly operational report released on Oct. 19. Pipe sales surged 40.8% m/m to 49.1 kt, while external billet sales gained 13.4% m/m to 1.9 kt. Total sales volume advanced 38.7% m/m to 66.9 kt. The m/m jump in railway product sales in September was driven by sales of wheels (+43.1% m/m to 14.1 kt). The m/m surge in pipe sales volume was driven by line pipes (+72.5% to 35.8 kt). An increase in Interpipe’s sales to the UAE, as well as growing demand in Europe and Ukraine, drove the dynamics in sales volumes of line pipes in September, according to the report. During 9M20, Interpipe’s pipe sales dropped 24.1% yoy to 359.1 kt, driven mostly by a 54.0% plunge for OCTG pipes to 64.0 kt and a 32.7% drop for welded pipes to 61.0 kt. Railway product sales slid 3.0% yoy to 147.2 kt in 9M20, driven mostly by a 6.0% loss for wheels to 128.1 kt, partially offset by a 29.7% jump for wheelsets to 14.4 kt. Ukraine's share of Interpipe’s pipe sales in 9M20 dropped 6pp from 2019 to 19%, and the share of sales in the Americas plunged 13pp to 11%. At the same time, Europe's share in pipe sales gained 5pp to 29%, and the share of MENA rose 11pp to 26%. The share of CIS countries in 9M20 climbed 2pp to 12%. The share of Interpipe’s railway product sales in Ukraine in 9M20 dropped 8pp from 2019 to
71​ UKRAINE Country Report​ November 2020 ​ ​www.intellinews.com