Some 40% of the total CIS capacities for ferroalloy manufacturing are concentrated in Ukraine.
Some 40% of the total CIS capacities for ferroalloy manufacturing are
concentrated in Ukraine.
In 1991, Ukrainian plants manufactured approximately 45.6% of the total
electric-furnace ferroalloys in the CIS, including 83.4% of manganese ferroalloys, 31.9%
of silicon ferroalloys, and 19.8% of the total alloys and modifiers. In most CIS
member-countries, the years from 1992 till 1998 witnessed a grave crisis impacting almost
all the economic sectors. In such a situation, the metal industry and ferroalloy
sub-sector are especially sensitive to condition of the adjacent industrial sectors. On
the one hand, due to high consumption of resources and power, ferroalloy enterprises
strongly depend on supplies of electric power, coke, manganese ore, as well as oil
products, natural gas, and coking coal. On the other hand, since ferroalloys are
repartition commodities, their consumption is severely influenced by the general condition
of the metallurgic complex, which in its turn relates to the metal-consuming sectors.
Analyzing condition of the adjacent sub-industries, it should be mentioned
that output of main metal products in Ukraine was continuously going down in 1991-1995.
Output by the Ukraine’s metallurgic complex was as follows (in % compared to the
previous year’s figure): 91.9% in 1991; 87.4% in 1992; 80.2% in 1993; 71.9% in 1994; and
93.3% in 1995. To much extent, the recession in metal output was held up in the year of
1996. Yet, even in 1996, manufacturing of pig iron was 48.9%; steel – a 53.2%; rolled
metal – a 52.9%; tubes – a 30.2%; hardware – a 24.5%; coke – a 52.4%; iron ore –
a 55.1%; and manganese ore – a 46.5% (all compared to the respective 1991 figures).
Unfortunately, since Ukrainian economy is considerably dependent on power supplies from
other CIS countries, metal manufacturing plunged the most in Ukraine compared to the other
CIS member-states and to Russia in particular. By the way, in 1995, Russia’s output of
metal products amounted to 107% as against the 1994 level.
It is wide known that the Russian market is the principal consumer for
exports of Ukrainian-made ferroalloys. Thus, in 1995, when Russia increased output of coke
by 7%, pig iron – by 9%, steel – by 7%, and finished rolled metal – by 6%, the
Ukrainian ferroalloy industry, which is closely related to the Russian metallurgy, gained
encouraging prospects. Unfortunately, the positive trend in the Russian metal industry did
not keep for long and, in 1996, Russia’s steel output equaled to 96.3% of the 1995 level,
while in 1997 it was 97.9% as against the year of 1996. Thus, manufacturing volumes kept
on sinking.
Following the five-year recession, output of metal products in Ukraine
recovered considerably in 1997, when there were manufactured 25.16 mln. tons of steel (a
114.8% compared to the 1996 figure), 20.6 mln. tons of pig iron (a 115.5%), 19.53 mln.
tons of finished rolled metal (a 114.4%), and 16.37 mln. tons of coke (a 108.8%). Yet, in
1998, owing to a number of reasons outlined below, manufacturing of metal products dropped
down again in almost all the metallurgic sub-sectors. Thus, in 1998, output of steel fell
to 95.4% as compared to the 1997 level, of pig iron – to 97.4%, of finished rolled metal
– to 91.5%, and of coke – down to 99.6%.
In the Ukraine’s ferroalloy sub-industry, reduction in output was
influenced by limitations imposed on supplies of electric power and skyrocketed cost of
the latter, as well as by recession in manufacturing of manganese raw and coke. Besides,
inauspicious macroeconomic factors, deep recession in demand for ferroalloys, along with
shrinking domestic and foreign markets, negatively affected ferroalloy output. Thus,
ferroalloy manufacturing volumes plummeted down from 2.09 mln. tons in 1991 to 1.247 mln.
tons in 1994 (including 1.157 mln. tons of electric-furnace ferroalloys and 0.090 mln.
tons of blast-furnace ferromanganese). Hence, in 1994, ferroalloy output was 59.7% as
compared to the 1991 figure. To compare, the respective index amounted to 55.6% in Russia,
to 47.9% in Kazakhstan, to 13.3% in Georgia, and to 52.5% for the CIS on the whole.
Therefore, slowdown tempos in ferroalloy output were the lowest in Ukraine compared to the
other CIS member-countries.
It should also be mentioned that certain stabilization in ferroalloy
manufacturing took place a year prior to recovery in the other sub-sectors of Ukraine’s
metal industry.
Under the results of 1995, Ukrainian ferroalloy output did not indicate
downward fluctuations and even somewhat improved with a 101.4% growth rate as against the
1994 level, including 100.7% growth in electric-furnace ferroalloys. Nevertheless, in
1996, ferroalloy manufacturing slightly moved down again, mainly due to the adverse
situation with blast-furnace ferromanganese. In 1997, ferroalloy output was 103.4%
vis-a-vis the 1996 level. Thus, there can definitely be traced a certain stabilization on
a particular level.
In 1998, Ukraine manufactured 1,020.3 ths. tons of ferroalloys, which
corresponded to only 82.7% of the 1997 figure, including 907.9 ths tons (a 82.1%) of
electric-furnace ferroalloys and 112.4 ths. tons (a 86.1%) of blast-furnace ferroalloys.
This can well be considered a new turn in the crises, which this time originated far
beyond the Ukrainian and Russian metal industries and reflect the overall situation on the
world metal market and in metal-consuming sectors.
In 1998, conjuncture of the world metal market changed for the worse for
Ukrainian and Russian manufacturers owing to the following factors:
-
surplus steel output registered in the world over the recent years.
According to the data of the OECD Steel Committee, world manufacturing of steel accounted
for 777.4 mln. tons in 1998 as against 794.1 mln. tons in 1997; -
new metallurgic capacities commissioned in China (thus raising the volume
of liquid steel smelted from 65.4 mln. tons in 1990 up to 107.6 mln. tons in 1997), along
with the financial and economic crisis in Asian-Pacific economies (causing fall in steel
imports from 47.1 mln. tons in 1996 down to 29.5 mln. tons in 1998, i.e. a 1.5-time
reduction); -
quantity and price export restrictions on certain foreign markets, owing
to antidumping inquiries and protectionism employed by metal-importing countries.
If one considers the enormous shrinkage of the domestic metal market due to
stagnation in mechanical engineering, coal industry, capital construction, transport and
other metal-consuming sectors, it becomes obvious that negative factors on the external
market were the determining cause for reduction in output by metal enterprises and, in
particular, by Ukraine’s ferroalloy plants.
Main inauspicious factors for Ukrainian ferroalloy manufacturers comprise
limitations on power consumption and high cost of electric power amounting to USD 0.0347
per 1 KW/h including payment for installed capacity. For comparison, the same wattage of
electric power costs USD 0.026-0.027 in the Republic of South Africa, USD 0.025 in France,
USD 0.014-0.021 in Norway, and USD 0.019-0.020 in Brazil. Besides, our competitors use
high-quality raw materials, which enable consuming 3-3.5 ths. KW/h to manufacture 1 ton of
manganese alloys as against 3.9-4.2 ths. KW/h consumption in our countries. This can be a
reserve for increase in products’ competitiveness.
Since sale opportunities, as well as power resources, are limited, there
are no plans for considerable rises in ferroalloy output or for 100% utilization of the
available capacities. Main efforts will be targeted at increasing quality of products,
expanding the range of ferroalloys made, technical re-equipping and modernizing
production, reducing power consumption, as well as at raising efficiency of raw materials
utilization and protecting the environment.
Ukrainian manufacturers have already mastered and set up production of
certain ferroalloy types, which have never been manufactured before. These include medium-
and low-carbon ferromanganese, ferrotitanium, ferrovanadium, ferromolybdenum, and
silicocalcium. Besides, preparatory works are conducted to manufacture ferrochrome using
Ukraine-based raw deposits. Within the frames of international programs, ecological
problems are being solved jointly with the UNIDO (the corresponding projects have already
been considered and are being implemented now). Owing to Ukraine’s high sci-tech
potential, there are carried out scientific and research works, predominantly aimed at
curtailing power consumption of manufacturing facilities, expanding the list of new
products manufactured, using new sources of raw materials, recycling production wastes,
and improving the ecological situation.
So far, over 1991-1998, there were no fundamental changes in the assortment
of ferroalloys manufactured, save for decrease in ratio of manufactured
ferrosilicomangenese by 8.3% and increase in ratio of ferromanganese by 6.8%. At the same
time, the portion of smelted ferrosilicon and refined manganese alloys practically did not
alter.
The most noteworthy large-scale implemented projects, aimed at
reconstruction and technical re-equipping, included gas-purification works in smelting
furnaces of "Nikopol Ferroalloy Plant", commissioning of a furnace unit to make
refined alloys in workshop No.3 and of casting equipment in workshop No.1 at
"Zaporozhje Ferroalloy Plant".
The Ukraine’s ferroalloy industry has traditionally been aiming at export
to the CIS (mainly to Russia, which consumes some 92% of the total CIS-bound ferroalloy
exports from Ukraine) and non-CIS countries. After getting over illusions of limitless
capacity of the external market, recently, Ukraine has stabilized and even slightly
decreased export of ferroalloys especially to the non-CIS countries. Under the 1998
results, Ukraine’s metallurgic mills consumed 42.2% of the ferroalloy output, other CIS
countries – a 18.0%, and non-CIS countries – a 39.8%.
One should also keep in mind that Ukraine exports metal products even with
antidumping restrictions imposed by the USA and EU member-countries in 1993-1994.
In 1994, the Ukraine’s Government signed a treaty with the US Trade
Ministry to discontinue antidumping inquiry on ferrosilicomanganese. Ukraine strictly
complies with this treaty in respect to exports of Ukrainian-made products to the USA. In
June 1995, two Ukrainian ferrosilicomanganese manufacturers – Nikopol and Zaporozhje
Ferroalloy Plants – directly signed agreements with the European Commission. For the
first time ever, the European Commission sealed such an agreement with manufacturers from
countries with non-market economy (previously, agreements were concluded directly with the
government bodies of such countries). To a certain extent, this reflects that our plants
have acquired a right to participate in the European economic integration processes. The
Decrees of the Ukraine’s President confirmed the agreements signed, which are rigorously
adhered to. In late 1998, the respective foreign agencies commenced revision of decisions
made by the US Trade Ministry and European Commission, which back in 1993 introduced
antidumping sanctions against imports of Ukrainian-made ferrosilicon.
Ukrainian ferroalloy manufacturers substantially expand their international
relations, above all, with such an authoritative institution as the European Ferroalloy
Manufacturers Association. By the way, since 1994, delegations from the latter visited
Ukraine a number of times.
Since 1995, Ukrainian delegations have visited the head office of
“Euroaliage” European Ferroalloy Manufacturers Association; the Chief Directorate for
Industry with the European Commission in Brussels; ferroalloy plant belonging to “DEM”
company in Dunkerque, France; as well as “Ferroatlantica” plant in Spain.
“Euroaliage” and the Ukrainian Association for Manufacturers of Ferroalloys have
signed a long-term cooperation agreement. It has become customary to regularly discuss
issues of mutual interest and match future cooperation prospects, including an opportunity
for the Ukrainian Association for Manufacturers of Ferroalloys to become an associate
member with “Euroaliage”.
To familiarize with the world market for ferroalloys, over the past few
years, Ukrainian specialists have participated in such international events as annual
Congresses of Ferroalloy Manufacturers, meetings of the International Manganese Institute,
conferences held by “Metal Bulletin”. The Ministry for Industrial Policy, Ministry of
Foreign Economic Relations and Trade, jointly with the corresponding factory departments,
conduct comprehensive marketing research on the ferroalloy situation on the traditional
markets for Ukraine, as well as seek for new sale markets in Western and Eastern
countries.
There are hopes that, provided close collaboration with the world
ferroalloy manufacturers, Ukraine’s ferroalloy industry will overcome the crisis after
familiarizing with the domestic and world markets for ferroalloys and after solving the
problems of technical re-equipment and quality improvement.