In 2009, Ukraine may reduce its steel output by 19.1 percent year on year to 30 million mt from 37.1 million mt in 2008, Ukraine's Deputy Industrial Policy Minister Serhiy Hryschenko said at a press club meeting at Interfax's office on the situation in Ukraine's mining and metals sector. "Everything is determined by orders," the minister said, adding that the country's steel output could even fall below 30 million mt due to weak demand.
According to Minister Hryschenko, currently Ukrainian steel producers are working at 75 percent of the previous year's levels, while the average daily steel output in January 2009 amounted to 68,500 mt, in February it stood at 82,800 mt, while in the first nine days of March it amounted to 81,900 mt. In addition, the minister stated that the Ukrainian mining and metals sector was affected by the crisis much more than other industrial sectors, as more than 70 percent of its output is directed to the export markets.
Meanwhile, CEO of Ukrainian steel producer Ilyich Iron and Steel Works of Mariupol (Ilyich), Vladimir Boyko, believes that the crisis is not over yet by any means. "We cannot talk about stabilization in the sector. I am sure that in March most steelmakers will reduce output; meanwhile, as for April I do not know what we will do, since the market is now falling, and the prices are decreasing. We are working at 60-65 percent capacity; and the main issue is domestic consumption"
On the other hand, director of Ukrainian state enterprise Ukrpromzovnishekspertyza, Vladimir Vlasyuk, forecasts that in 2009 Ukrainian steel producers will decrease their steel output by 27.1 percent year on year to 27 million mt, due to the decline in exports. In 2009, the Ukrainian steelmakers are expected to ship 19-19.5 million mt of steel for export - down from 26.8 million mt in 2008, while 8-8.5 million mt will be delivered to the domestic market - up from 6.5 million mt in 2008. In addition, according to Vladimir Vlasyuk, the Ukrainian mills are currently operating at 62 percent of their capacities, while in 2009 they will operate at an average of 59 percent of their capacities.
Ukraine's main competitors in the external steel markets are Turkey, Russia and China. The domestic steel producers must decrease their production costs to $300/mt, added Mr. Vladimir Vlasyuk.
Meanwhile, in the opinion of Dmitriy Khoroshun, analyst of investment and financial group Sokrat, Ukrainian steel output in 2009 will amount to 2 million mt per month, i.e. 24 million mt per year - down 35 percent year on year, while steel prices in 2009 will not sizeably increase. Thus, according to Mr. Khoroshun, in 2009 prices of square billet and slabs will be at the level of $400-450/mt, HRC and rebar prices will be in the range of $450-500/mt, while iron ore and concentrate prices will be at $55-65/mt.