Customs Union starts anti-dumping investigation of Ukrainian rail wheels

Макроэкономика 21.10.2014 The Russian-led Customs Union has initiated an anti-dumping investigation of rail wheels produced in Ukraine, the Eurasian Economic Commission announced on Oct. 17. The investigation was started following a request from the two Russian producers of rail wheels, the Vyska Steel plant and Evraz. The claimants stated that increasing imports from Ukraine has badly damaged the positions of local producers, and that the dumping margin of supplies from Ukraine has reached 36.3%. Roman Topolyuk: Such investigations usually have a political motive in Russia. Therefore, the announcement is a negative development for the only Ukrainian producer Interpipe, whose wheels segment generates 18% of its revenue and a third of its EBITDA. The company hasn’t provided an exact geographical breakdown of its wheel sales, but Russia is a top destination. The alleged dumping margin of 36.3% can serve the basis for a possible import duty, which would make Ukrainian wheels unprofitable to export to Russia. An anti-dumping investigation can go on for a year and doesn’t always end with a duty being imposed. Given the current Russian aggression against the Ukrainian state, we estimate that the potential for trade barriers to be imposed on wheel imports represents a significant risk for the Eurobonds of Interpipe. Theoretically, it would take much longer than a year for Interpipe to redirect its supplies to a new market.