Prices of rolled steel, iron ore, scrap metal, coking coal to continue falling in 2013
Kyiv, December 20 (Interfax-Ukraine) – The prices of metal products and iron ore, scrap metal and coking coal used for their production will continue falling in 2013.
The forecast was presented by the director of state-run Ukrpromzovnishekspertyza, Volodymyr Vlasiuk, Head of the DELPHICA Project Oleksandr Krainikov and DELPHICA Project Development Director Pavlo Perkonos said at the press conference entitled "Steel and Raw Materials: What Should Ukraine's Metallurgists Expect in 2013?" at Interfax-Ukraine on Wednesday.
Krainikov said that in 2013 the downward trend for prices will be seen on all of the raw materials markets.
"The trend will be seen during the whole 2013 and it could touch 2014," he said, reminding that expenses on iron ore and coking coal are the key expenses during production of metal products.
He said that the average price of iron ore in 2012 was $131 per tonne and in 2013 it is expected to be $105 per tonne. The price of coking coal in 2011 was $289 per tonne, in 2012 - $210 per tonne and in 2013 it is predicted to be $165 per tonne. The prices of scrap metal next year will fall less compared to iron ore and coal due to the restricted recourse in the world and it will decline by $15-20 per tonne.
"The fall in the prices of raw materials should be considered as the improvement of the situation," the expert said.
Perkonos said that over the past 18 months the prices of rolled steel fell.
"There are no preconditions for the trend to develop, and the fall in the prices will slow," the expert said.
He said that in 2013 the prices of blank will fall to $530 per tonne compared to $560 tonnes in 2012. The prices of hot-rolled coil in 2012 will total $535 per tonne compared to $586 per tonne this year.
"Looking over the fall in the prices of raw materials compared to the finished products, metal companies in 2013 will slightly improve their financial results," Perkonos said.
Commenting on the situation at Ukrainian metal companies, the expert said that at present, they are operating at a zero EBITDA margin. He added that as for net profit, all of the companies post losses, with some exceptions.
"The profit margin in 2013 will be the same as in 2012. The profit margin will be re-distributed in production segments – the profit margin of raw materials will fall, the prices will decline and the profit margin of metal companies will retain," the director of Ukrpromzovnishekspertyza said. He said that Ukraine has the lowest profit margins, which is evidence of deterioration of fixed assets.
Commenting on exports, Vlasiuk said that it will not change a lot.
"Blank is still of demand on foreign markets – in 10 months of 2012 blank exports grew by 36% year-over-year, to 5.3 million tonnes [3.9 million tonnes in 10 months of 2011]. We believe that in 2013 blank will be also sold. The situation is more complicated with rolled steel – sales of the whole range of rolled steel fell, hot-rolled thin coil sales fell by 12.6% and thick coil by 20.1%," the expert said.
He said that the structure of imports of metal products to Ukraine could change: pipe companies could stop importing pipe shells thanks to the launch of Interpipe Stal (Dniprostal) electric furnace steelmaking complex in the second half of 2012.