European Railcar Lessors: Exposure to Russia Limited But Sustained Surge in Steel Prices Could Affect Capex
This commentary discusses the implications of Russia’s invasion of Ukraine and the subsequent economic sanctions for the leading railcar lessors in Europe.Key highlights include:
• A limited share of top European railcar lessors’ fleets is based in Russia and Ukraine and the direct impact of Russia’s invasion of Ukraine and the ensuing economic sanctions should be manageable.
• However, in a scenario of an extended conflict, steel prices sustained at high levels would increase the cost of new orders and capex spend for lessors.
• Any potential changes in the demand for leases from some European industries as a result of the conflict should be mitigated by lessors’ business diversification.
“Given the limited railcar oversupply in Europe, we view railcar lessors as well positioned to adjust lease rates in response to higher capex” said Tomasz Walkowicz, Vice President, Global FIG.
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