Fitch: Mergers could benefit Ukraine steel

Fitch Ratings said the rising raw material prices and VAT tax refund-related liquidity concerns are exposing some longstanding structural weaknesses in the Ukrainian steel industry and could, ultimately, lead to a consolidation among producers.

Given the current challenges facing the Ukrainian industry, mergers and acquisitions transactions can represent an attractive way-out for smaller or weaker producers facing either substantial debts, the need to modernize their plant and those lacking in raw material self-sufficiency, Fitch said.

While a much-needed consolidation would benefit the Ukrainian steel industry, concentrated ownership structures mean that any merger or acquisition would be a less than straightforward process, the agency said.

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