At the end of March Sergey Grishchenko, deputy chairman of the State Committee for Industrial Policy, and Valentin Kulichenko, president of the Ukrainian Association of Metal Scrap (UAMS) held a press conference. The aim of this press conference was to gi
OPTIMISM MAY RUN OUT
At the end of March Sergey Grishchenko, deputy chairman of the State Committee for Industrial Policy, and Valentin Kulichenko, president of the Ukrainian Association of Metal Scrap (UAMS) held a press conference. The aim of this press conference was to give broader coverage to the problems related to UAMS’s activities and its members.
To start with, here are a few facts and figures on the Association itself, which was established only a year ago. It was founded on a voluntary basis by almost 100 companies that deal with metal scrap and have 75-80% of the Ukraine’s scrap market. It is a non-state-owned, uncommercial, and non-profit-making organization aiming at protection of its members’ interests, promotion of scrap supplies to Ukrainian metallurgical mills, etc.
So what kind of problems involving the UAMS have accumulated in the course of the last year? What prevents the companies that deal with collection and sales of metal scrap from working more effectively?
One of the most acute problems is unlawful interference of local authorities in business activities. This includes banning of free conveyance of metal scrap beyond selected regions of Ukraine, attempts to unlawfully close down individual enterprises (along with promotion of structures friendly to regional state administrations), as well as unjustified red tape in respect of obtaining numerous permits. According to the UAMS’s conclusions, these unfriendly bear hugs of executive authorities are suffered most of all in the industrial regions, namely in Dnepropetrovsk, Donetsk, Zaporozhye, Lugansk, and Nikolaev regions.
Ukrzaliznytsya is also a source of quite a few obstacles, such as bans to provide railway cars without permission of local authorities, sanitary services, and so on. Officers with regional divisions of the Ministry of Interior Affairs are also not too eager to follow the existing uniform rules when it comes to the list of documents accompanying vehicles that carry scrap.
Such illicit initiatives (and sometimes even arbitrary behavior) of the regional executive authorities are not in the least explained by far-not-irreproachable image of scrap suppliers that has recently been formed in the public opinion. However, businessmen doing business in nonferrous scrap and waste are the ones to “thank” for this image, namely the UAMS figures show that almost 99% of criminal offences have happened exactly in this business. Yet, the thing discussed during the press conference was the ferrous scrap. Stocks of ferrous scrap in Ukraine, although significant, are not unlimited, while the skyrocketing volumes of scrap consumption during the past years raise the issue of reduction in potential stocks. To illustrate, let’s quote some figures.
In 1995-1999 the amount of domestic collection and processing of scrap went up from 3.05 million metric tons (mt) to 8.6 million mt, with export supplies growing from 0.2 million mt to 4.7 million mt. In 1999 scrap supplies to domestic steelmaking mills gained 16% and reached 4.0 million mt (compared to 3.45 million mt back in 1998). However, in the same year of 1999 export increased from 3.3 million mt to 4.7 million mt, 42.4% up. Though, the first 2 months of the current year show certain changes in the growth pattern compared with the respective period of 1999, namely scrap supplies to domestic consumers rose 68% and to foreign consumers gained 30%.
Certain liberalization of scrap business had a favorable influence, which is also true with respect to Ukraine’s abidance to international commitments concerning prevention of export restrictions.
Yet, the nearest future is not very optimistic. This is explained by the fact that scrap coming from decommissioned manufacturing facilities has accounted for some 80-85% of the booming scrap export. Naturally, this source has its obvious limits. One may assume that the near future may see an abrupt drop in ferrous scrap collection.
Another fact is not to be ignored. There is, perhaps, no other country in the world with a developed iron and steel industry, where, like in Ukraine, exports of scrap would prevail over domestic consumption of this product, e.g. some 40.5% of the collected scrap were exported in 1997, 48.5% in 1998, and 54.7% in 1999.
It is to be added that the portion of rolled steel exports has grown in recent years from 55-60% to almost 85-90% of the total rolling production. Thus, this source of scrap is also diminishing.
Moreover, the 1997-1999 export of semi-finished steel also increased from 3.77 million mt to 7.9 million mt, which automatically lowers the returns of scrap to Ukrainian metallurgical mills by ca. 250,000 mt.
These problems, which require proactive settlement, can be appended with another one that relates to the quality of scrap remaining on the domestic market. Practically all the high quality scrap goes for export, as it is required by the terms of contracts. As to domestic metallurgists, they may live with a simpler stuff. As such, our metallurgists are already sick and tired of struggling with high level of scrap’s littering, when sometimes railway cars carry some coal, beets, and fodder together with scrap metal. One cannot help thinking that the suppliers are following a simple logic that the Ukrainian clients have nowhere else to go in any case.
And still, the very fact that the Ukrainian Association of Metal Scrap brings attention to the forthcoming problems beforehand may be considered as a positive development, which brings a hope for broader circle of interested persons including public officials.
the Metal