Ukraine could up steel output 3-3.5% in 2011
Kyiv, December 25 (Interfax-Ukraine) – Ukraine could raise steel production by 3-3.5% in 2011 year-over-year, to 34 million tonnes, Volodomyr Vlasiuk, head of the state enterprise Ukrpromzovnishekspertyza, told a press conference at Interfax-Ukraine on December 24.
Steel production will rise by 9.2% this year, to 32.5 million tonnes.
Vlasiuk said that the 2008-2009 crisis threw the steel industry back ten years. Output peaked at 43 million tonnes in 2007, while in 2008-2009 production fell by over 30%, to 30 million tonnes.
He said that the loading of Ukrainian steel mills would average at 70% this year, compared with 77% in other countries.
Vlasiuk said that the present situation is linked to the fact that in 2010 domestic steel makers had fewer orders than global producers and their portfolio was not so efficiently formed as the portfolios of other international steel makers.
Commenting on the Ukrainian steel sales markets, the head of the analytics department at Ukrpromzovnishekspertyza, Oleksandr Krainikov, said that the sales problem in 2010 was not that the country failed to produce the required volume of steel, but the problem was that the country failed to sell it.
"There are not promising sales markets for us, where we could have had good sales," Krainikov said.
Vlasiuk said that there are some risky factors for the Ukrainian metal sector: dependence on exports, the ordinary range of products, not modern technical equipment and technologies and a high share of operating expenses.
He also said that this year the prices of iron ore on the domestic market jumped by 96%, the price of coking coal soared by 77% and the price of scrap metal grew by 55%.
Vlasiuk said that as a whole the production cost of steel in Ukraine rose by 40% compared to 2009.
He said that demand on the domestic market is small: due to the 2008-2009 crisis consumption of rolled products in the country fell by almost five million tonnes, to 6.2 million tonnes from the pre-crisis indicator.
Commenting the metal fund, he said that the replacement of the depreciated metal fund in the country requires 330 million tonne steel consumption.
He expressed confidence that the current situation on the global steel market dictates the necessity to urgently invest in the upgrade of the Ukrainian sector, and only strategic investors could provide the sector with the investment.
"Thus, the top priority for metal sector development in Ukraine as a whole is the stable development of the domestic market, expansion of the products range and imports replacement, while the top priority for the country on the foreign markets is restoration of competitiveness thanks to the upgrade of production facilities and cut of the production cost," Vlasiuk said.