2014-03-30 13:19:56 - New Materials market report from Business Monitor International: "Ukraine Metals Report Q2 2014"
Ukraine's metals sector will see modest growth over the forecast period, with a handful of new projects to increase production growth. Production will not return to pre-crisis highs, however, due to global overcapacity and steel prices not making substantive gains over 2013. There are no major expansions on the cards, and no major players in either the aluminium or steel industries have announced substantial investment plans.
Figures recorded at the start of 2013 were disappointing. During the first four months of the year, Ukraine registered a 2.5% increase in its finished steel production output, to 9.280mn tonnes, a 0.6% fall in its crude steel output, to 11.058mn tonnes, and a 0.7% rise in its pig iron production to 9.760mn tonnes, according
to data issued by Ukraine's Cabinet of Ministers. This does not bode well for the country's near-term outlook and for Ukraine's attempts to hit production targets.
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According to Metinvest, overall domestic steel consumption by industrial companies were expected to fall by 3.08% year-on-year (y-o-y) over 2013, to 6.3mn tonnes. Steel consumption among small domestic consumers is expected to remain stable, at 2.6mn tonnes. Metinvest forecasts that Ukrainian industrial steel consumption will increase in 2014, reaching 6.6mn tonnes by year-end. This is below BMI's forecast of a 3.1% y-o-y increase in consumption to 7,966mnt by the 2014 year-end. We are also forecasting production to rise by 3.5% y-o-y to 34,948mnt as of the same date.
BMI notes that Ukraine has the added disadvantage of an overvalued hryvnia, which has made Ukrainian steel exports uncompetitive, and currency weakening may not be sufficient to ameliorate the situation. The most recent example of the ongoing decline in Ukrainian steelmaking is the November 2013 closure of Mechel's 1mn tonnes per annum electric arc furnace in Donetsk; this occurred due to weak markets and poor export demand. Mechel is trying to sell the loss-making plant to drive down its own debt, but has failed to attract interest.
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