finished the share

seems, the crisis helped to consolidate and strengthen the finished specialist mining and metallurgical complex of Ukraine on the world market. Ukrainian experts say the following: the domestic steel industry is a prerequisite to be competitive only in segments with low and medium value-added, because of the existence of the country's natural resources, as well as physically and morally obsolete iron assets. Ukrainian metallurgists confirm this thesis into practice.

For January - May 2009 the share of products (billets and slabs) in Ukrainian exports of steel products rose to 55%, while during the same period of 2008 it was 46%. Accordingly, for the same period the proportion of flat-rolled products in the export of Ukrainian metal products declined from 31% to 25%, and long - from 23% to 20%. Where to look dismal data on volume of Ukrainian metallurgical exports. If the export products during the five months of 2009 decreased by only 12% (up to 5.1 million tons), the flat-rolled products - 40% (up to 2.3 million tonnes), as long - 39% (up to 2, 3 million tons). And it is really funny is the situation with export of steel products of the lowest conversion - iron (experts even believe he was not metproduktsiey and raw materials for its production). In January - April 2009, the export of iron recycling increased by 14.6% over the same period in 2008, up to 405.561 tons However, in May, the crisis has its, and as a result of five months of 2009, compared to the same period in 2008, exports of iron have shown negative dynamics.

However, blaming the crisis exclusively in the commodity orientation of Ukraine's steel industry is not quite correct: in an extremely favorable for the steel industry during the country gradually to fall into the role of raw materials appendage metallorynka world. For five months, already mentioned in 2008 the proportion of semis in the structure of the Ukrainian metalloeksporta was 46%, while for the whole 2007, it would not exceed 43%, and in 2008 had risen to 48%.

specialists still believe that it is not necessary to downplay the role of global economic негараздіÐ². A significant shift in export structure occurred in the second half of 2008, during a catastrophic reduction in demand for domestic metproduktsiyu. Then the Ukrainian metallurgists have been pleased by any orders, which helped to keep capacity utilization. As expected, demand for products of Ukrainian origin is not dropped as rapidly as in the finished product. And given the extremely limited domestic market, finished the capacity of the Ukrainian steel industry faces a crisis helps metalloproizvoditelyam with relatively small losses , - said Yury Ryzhkov, a senior financial analyst company Astrum Investment Management.

For comparison, the analyst brings the results of the steel industry of the States, where the steel industry is aimed at vysokoperedelnoe production. It is through semi-finished - said Rizhkov - the decline in domestic steel production for the five months of 2009 was lower (-39%) than in the larger countries - producers of the metal as the United States (-53%), Japan (-42 %) and Germany (-44%). However, analysts do not risk to make predictions about what will happen in the world market, when the crisis ends and the demand for vysokoperedelnuyu metproduktsiyu increase. Then Ukraine invested in rolling power of a few pennies, even before it began (in the crisis almost freezing in the high re-attachment), will generally form the export of the full slab, billet and pig iron …

finished market

Meanwhile, metallurgists and analysts are happy that the Ukrainian steel industry has been able to stabilize production volumes of metal and even to enter new markets. For January - May 2009 delivery of Ukrainian steel products in Asia grew by 58% (up to 1.517 million tonnes), Africa - 49% (up to 737 tons), the Middle East - 35% (up to 1.594 million tonnes ). However, EU exports of semi-fallen by 53% (up to 705 tons), while in the CIS - 77% (up to 600 tons), - said Sergey Gajda, an analyst company, Dragon Capital. The new key buyers of Ukrainian steel products in 2009 were China, Lebanon and Egypt. In the face of shortages of working capital from consumers question the quality, which in Ukrainian products is slightly lower than the average of the competitors, it becomes less relevant. Due to the low price Ukraine has been able to enter new markets, - comments on competitive advantage of Ukrainian steel, Alexander Makarov, the acting Head of investment consulting department of JSC Altana Capital.

domestic production remains one of the most competitive in world markets, allowing it to partially potesnit Turkish billet market in the Middle East. A seizure of the markets in the Far East was made possible by yet another positive factor - more than twofold reduction in the cost of freight, - explains the Makarov.

As for the Chinese market, in connection with the massive entry of new capacity in this state, he was lost to Ukrainian goods in 2003-2004. and over the next four years it was almost impossible to deliver products in China. Moreover, the metallurgists of the Chinese driven Zhovta-Blue and the competition from other East Asian markets. But now, Ukrainian metal, even with the delivery, cheaper than the Chinese, - says Alexander Makarov. In addition, the Chinese government measures to stimulate the economy boost demand and steel production in the current year. And while all the major steel production countries metproduktsii falls in China, it remains at last year's level.

Causes and Prospects

competitive Ukrainian steel products in the world market, according to the Guide, have been due to a sharp devaluation of the currency, which occurred in the IV quarter of 2008. Moreover, the largest Chinese metkompanii at the end of last year and early this buying iron ore is more expensive than their Ukrainian counterparts. Remember: domestic metallurgists at the end of 2008 were able to negotiate lower prices for iron raw materials, whose share in the cost of steel is 15-25%. The cost of ore for September 2008 - May 2009 the dollar fell almost 3 times (up to $ 50 per 1 ton of concentrate), and together with the reduction in the cost of coking coal, scrap and ferroalloy production costs Ukrainian steel has reduced to a level (and even lower ) production costs of foreign competitors.

However, experts are sure: the Chinese manufacturers will sooner or later replace the Ukrainian metallurgists from the market. This poizoydet after lowering the base price of the ore in the 2009 fiscal year to Asian buyers. Until a new agreement on the price of raw iron made with a number of major Japanese and South Korean consumers and the company Rio Tinto (agreed to reduce prices of 33-44%), but Chinese demand greater concessions (45-50%) and, according to some analysts achieved its goal.

Reorientation of Ukraine on the finished products - said Makarov - is forced measure. While the cost of the Ukrainian metal is low, you can find a buyer.

However, it seems, the Chinese market alone edit the list of suppliers without having to wait for the new prices for the ore, which would have reduced production costs. In recent months, an increase in the cost of imported products. Square billet in the ports of the Black Sea due to the resumption of demand went from March to June at 30% (up to $ 390-400 per 1 tonne). And it has already significantly reduces the competitiveness of Ukrainian semi (which, as mentioned above, is only in the price).

    

Analyst - about the causes and projections

Alexander Makarov, the acting Head of investment consulting department of JSC Altana Capital

- The trend towards an increase in exports was due to a number of semi-objective reasons. First, the Ukrainian factories reconstructed the most problematic areas of production - blast furnace and steel, resulting in a backlog of rolling capacity from the capacity to produce products. Secondly, a situation exacerbated the poor condition of rolling mills, many of whom are already unable to reach a passport productivity. And thirdly, the high demand allowed the harvest to sell at virtually unlimited quantities.

While we can not speak about complete overcoming the crisis and sustained price stability. The economy of China, it seems, creates a new bubble and, in our pessimistic scenario, the fall-winter push down the prices of raw materials, including metal. This, in turn, lead to a second cycle of the crisis - expected to overproduction, falling prices and a reduction in the level of stock within a few months. Such a scenario would lead to negative consequences for the Ukrainian metallurgists.
   
    

Natalia Shevchenko

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