Ukrainian steel output could drop 19% in 2009 – ministry
Kyiv, March 11 (Interfax) - Steel production in Ukraine could fall 19.1% in 2009, to 30 million tonnes from 37.1 million tonnes in 2008, Deputy Industrial Policy Minister Serhiy Hryschenko said Tuesday.
The country's steel output could even fall below 30 million tonnes due to weak demand, Hryschenko said at a press club meeting at Interfax offices on the situation in Ukraine's mining and metals sector. "Everything is determined by orders," he said.
Steelmakers are currently operating at about 75% of last year's figures, he said. Average daily steel production has risen from 68,500 tonnes in January to 82,800 tonnes in February and 81,900 tonnes in the first nine days of March.
The steel industry has been hit harder by the crisis than other sectors because of its heavy reliance on foreign markets, with over 70% of production exported, Hryschenko said.
"One would like to hope that the crisis is already behind us," he said.
The chief executive of the Ilyich Iron & Steel Works of Mariupol, Volodymyr Boiko said the crisis is not over yet, and the situation in the sector is not stabilizing.
"I'm sure that in March many will reduce production, and in April I don't know what to do. The market is crashing, prices are falling. We are working at 60-65%. The main issue is domestic demand," Boiko said, adding that political will was needed to stabilize the situation in the sector and the economy as a whole.
The president of the Ukrainian Association of Metals Traders, Andriy Fedoseyev confirmed that there has been a steep drop in solvent demand on the domestic steel market. He also said domestic prices for steel products were high compared to prices on world markets.
Traders are importing metal products because domestic prices are too high, he said, adding that steel companies have virtually lost the domestic market and need to make an effort to win it back.
The level of a country's development is determined by the level of per capita steel consumption, Fedoseyev said.
The head of state company Ukrpromzovnishekspertyza, Volodymyr Vlasiuk forecast that the country would reduce steel production by 27.2% in 2009 to 27 million tonnes due to falling exports. Ukrainian steelmakers are expected to export 19 million-19.5 million tonnes of steel this year and sell 8 million-8.5 million tonnes on the domestic market, compared to respectively 26.8 million tonnes and 6.5 million tonnes in 2008.
Utilization of capacity at steel plants is expected to drop to 59% from 62% at present.
Ukraine chief competitors on foreign markets are Turkey, Russia and China. Ukraine's main export markets are countries in the Middle East.
The senior analyst at the Sokrat investment group, Dmytro Khoroshun forecasts that steel production will plunge 35% to 24 million tonnes this year, averaging 2 million tonnes a month.