Headline news

Major Ukrainian producers of long-length rolled steel – Arcelor Mittal KR (PFTS: KSTL), Enakievo Steel (PFTS: ENMZ), and CJSC Makeevka Steel intend to increase prices for the products on the local market. The prices will grow by 15%-20% in 2009. According to Metinvest Ukraine CEO Oleh Olshansky, the companies aim to keep profitability for these grades of rolled steel. Depreciating hryvna pushes row materials prices upward making current prices comparable with constantly growing costs. The growth will concern only to long-length rolled steel.

At the UICE’s monthly energy auction held on December 23, 2008, average crude oil price declined by 28% compared with November 25, 2008 auction to $25 bbl (incl. VAT), while the 2008 average price increased by 22% y/y to $87 bbl. A total of 1.44 MMbbl of oil was auctioned off. Ukrnafta (PFTS:UNAF) put up for sale 3.0 MMbbl.

In 2007, share of the company’s crude oil sales in total gross revenue amounted 50%, while sales of light oil – 34%. According to the Ukrainian legislature, all domestically produced oil is to be sold at the UICE’s monthly auctions.

The Ukrainian parliament imposed an additional 13% duty on imported goods apart from so-called critical imports. The duty will stay in force for at least six months. This measure is aimed to support Ukraine’s balance of payments. At the same time, it may lend support to domestic car producers including Bohdan Automobile plant (PFTS: LUAZ). There is a big chance, though, that President will not sign the bill as it contradicts to the WTO norms and IMF loan agreement.

Meanwhile, the spokesman of Bohdan Corporation said it may slash around 2,000 workers, or 20% of employees, starting from January. He noted that it is the only option for the company in rapidly deteriorating macroeconomic environment. At the same time, Bohdan welcomes the parliament’s decision to shore up domestic manufacturers including car producers and awaits further anti-crisis steps by the government and the parliament to support domestic car industry.

Raiffeisen Bank Aval (PFTS: BAVL) received a $75 mln subordinated loan from European Bank of Reconstruction and Development (EBRD). The loan will be accounted as the 2nd tire capital. The deal was signed for 10 year term.

At the EGM held on December 17, Zaporizhstal (PFTS: ZPST) shareholders decided to reverse its decision from July 30 to direct all profits earned in 2007 for dividends and spent the money for technical reequipment, filling up the reserve fund, and corporate investments. According to the company’s press-service, the global crunch on the steel markets forced Zaporizhstal to this decision.

Ukraine pipe producers are forecasted to slash pipe production by 30% y/y in 4Q2008 and by 10% y/y in 1H2009. Ukrtruboprom, Ukraine’s association of pipe producers, blamed Ukraine government for not fulfilling their part of the deal for antichrists measures aimed at helping the Steel and Mining industry out.

Oranta Insurance (PFTS: SORN) announced it has set up the Regulation S Global Depository Receipt (Res S GDR) program through Euroclear Bank SA and Clearstream Banking Luxembourg. The program will provide easier access for foreign investors to Oranta shares and increase stock liquidity.

The GDRs will be traded on the over-the-counter market outside USA. The conversion ratio of GDR to ordinary share is 1:1. In total, up to 7.48 mln shares, or 25% of the stock outstanding, could be converted into GDRs.  

Despite the current financial turmoil, Sumy Frunze Engineering (PFTS: SMASH) expects to finish 2008 year with outstanding results. Output and sales are expected to reach $370 mln (+ 40% y/y) and $425.4 mln (+50% y/y), accordingly. Moreover, the company order book grew by 50% from $385 mln a year ago to $546 mln now. According to the company CEO Ihor Ivanov, the company benefits from rapidly expanding market for gas pumping units and reorganization. Sumy Frunze Engineering intends to ramp up production with emphasis on the gas processing equipment.