OREANDA-NEWS. February 24, 2011. Vladimir Putin, Prime-Minister of Russia, intends to introduce anti-dumping measures against railcar imports in order to defend Russian railcar producers, as he announced visiting Uralvagonzavod, a major Russian railcar producer. Mr. Putin added that he had already issued an instruction to the Ministry of economic development of Russia to develop and submit proposals to that effect.

Millennium Capital considers the news as NEGATIVE for railcar producers SVGZ, KVBZ, and MZVM, as the huge Russian market is of great importance for all Ukrainian railcar producers since their export sales traditionally account for most of the Ukrainian producers’ revenues. In total, Ukraine increased export of freight railcars by 4.7x yoy for 11m2010 up to 32,828 units, 87% of total exports having been imported by Russia. The current price of Ukrainian fright railcars is 8% lower than the average price of those produced by Russia in spite of the fact that Russian manufactures have less expensive car casting and energy resources. Export duties may affect the Ukrainian producers only in the short run, as a growing demand for freight railcars in Russia will push the prices up. Moreover, the current production facilities of Russian producers are insufficient to satisfy this increasing demand without Ukrainian railcars. Therefore, we believe the Russian market will remain open for Ukrainian producers.