Recovery of the world metal markets at the end of 1999 – beginning of 2000 fostered greater metal exports from Ukraine. During this period, some 6,308,000 t (+16.7% against the last year’s figure) of metal worth the total of USD 981,500,000 were exported (+35.5%).

Increase in exports became possible owing to the rise in supplies of semi-finished steel (+31.7% to 2,088,000 t), hot-rolled flat metal (+18.9% to 1,131,000 t), cold-rolled flat metal (+19% up to 318,000 t), wire rod (+44.6% to 336,000 t), and bars (+24.4% to 118,000 t).

Rebar supplies stood virtually unchanged compared to the first quarter of 1999 featuring an insignificant growth by 0.5% up to 616,000 t.

Along with that, iron exports reduced in January-March 2000 and amounted to 444,400 t, 9.4% below the last year’s figure.

The following articles held the first lane in Ukrainian physical metal exports: semi-finished steel including billets and slabs with 33% of the total, HR flat metal with 17.9%, ferrous scrap and wastes with 14.1%, rebars with 9.7%, wire rod with 5.34%, and CR flat metal with 5.05%.

Table 4 presents the data on metal exports from Ukraine in January-March 1999 and 2000.

Regional pattern

Geographical pattern of Ukrainian exports of metals and metal products underwent certain changes compared to the first quarter of 1999.

The main physical markets still embraced Southeast Asian countries with 30.1% of the total Ukrainian metal exports or 1,902,000 t, and Middle Eastern countries with 24.6% or 1,553,600 t. Along with a 10% reduction in supplies to Southeast Asia in the first quarter of 2000, exports to the Middle East keep on growing (+10%). Consequently, the share of the Middle Eastern economies in Ukrainian metal exports kept on increasing as well.

Ukrainian metal exports to the Eastern European market almost doubled. In the first quarter of 2000, 648,000 t of metal products worth approximately USD 105,160,000 were exported to this market.

North American countries imported 789,000 t (+2.4 times compared to the previous year) of Ukrainian metal worth USD 117,468,000 (+3.7 times in terms of export revenues).

In the first quarter of 2000 Ukrainian metal exports to the European Union member-states continued getting volume and exports bound to this region increased to 566,000 t (+24.3%) and yielded USD 91,452,000 (+35.4%).

Physical Ukrainian exports to CIS countries gained 40% reaching 369,000 t with export revenues increasing 32% to USD 99,925,000.

Regional distribution of Ukrainian metal exports is displayed in table 5.

The statistics on Ukrainian exports in the first quarter of 2000 drive to the following conclusions.

Though physical exports of Ukrainian metal grew 16.7%, export revenues gained 35.5%, thus illustrating the mark-up in prices for metal articles exported.

Table 2. Production of iron, steel, and rolled steel in Ukraine

Table 3. Production by Ukrainian metallurgical mills in January-March 2000 (‘000 tonnes)

Ukraine is still one of the largest global suppliers of semis and raw materials.

These commodities, e.g. scrap, semi-finished steel, iron, and ferroalloys, accounted for 56.92% of the total physical metal exports from Ukraine and for 46.81% of export revenues in the first quarter of 2000.

Boosting export turnovers reflect poor demand for Ukrainian rolled steel on the domestic market, thus forcing metallurgical mills to fully rely on exports. This situation is evidently traced on the example of flat-rolled steel.

As usual, the major markets were the countries of Middle East and Southeast Asia consuming 24.6% and 30.16% respectively of the total physical exports from Ukraine. However, portions of these two markets reduced by 1.4% and 8.95% respectively compared to the first quarter of 1999.

Exports to North American countries, notably the USA, grew as high as 2 times against the first 3 months of 1999. Export turnover increased on account of greater supplies of iron and semis.

Ukrainian exporters have managed to double exports to Central and East Europe (non-EU).

Finished rolled steel supplied at quite acceptable prices was the major export article dispatched in this direction.

Table 4. Export of metal products from Ukraine

Table 5. Distribution of Ukrainian metal exports by regions of the world

Stabilization of the CIS market for rolled steel after the Russian crisis is step-by-step returning Ukrainian exporters back to their lost positions. In the first quarter of 2000 export supplies to this region gained 39% in terms of physical shipments and 32% in terms of export revenues.

CHINA

In recent years China has been one of the major importers of Ukrainian metal products. Nonetheless, certain tendencies that appeared on the market in the first quarter of 2000 reveal that in the nearest future the situation on the Chinese market will change for the worse for Ukrainian exporters.

The statistics on the first quarter of 2000 show significant diminishment of exports from Ukraine to China. Some 776,000 t (46% less than in the respective period of 1999) of metal products worth USD 126,233,000 (29% less) were exported to this country.

Exports of all the commodities suffered reduction. Iron exports to China practically ceased (there were no supplies registered), and rebar exports plummeted by 92% to 8,900 t. Wire rod supplies halved to 37,400 t, with export of bars lowering by 58% to 3,650 t, HR flat metal by 52% to 160,000 t, and semi-finished steel by 37% to 413,000 t. CR flat metal was the only export item that retained the last year’s export volumes with supplies increasing 1.9% to 152,600 t.

As regards prices charged for commodities, the situation on the Chinese market is a kind of indefinite. Prices for rebars and wire rods are at the nom low level with virtually no supplies made. Along with that, billets are in hot demand. In March 2000 prices for billets featured an increase up to USD/t 173-175 CIF.

It is totally different when it comes to the situation with rolled steel that is not produced in China or produced in insufficient volumes, e.g. as in case with flat-rolled steel. Prices for this commodities continue to gradually go up, e.g. prices for HR coils reached USD/t 250-270 CIF and prices for CR coils climbed to USD/t 345-350 CIF. Metal prices on the Chinese market are shown in table 6.

The State Bureau for Metallurgical Industry of China has worked out a program for development of ferrous metallurgy in the year 2000. According to this act, it is planned to slash excessive capacities in the country and concentrate production in the most cost-efficient mills.

The program has fixed the maximal steel output for the current year at 110 million t, some 12 million t less than in 1999. It is also planned to reduce output of finished rolled steel down to 100 million t with estimated consumption amounting to some 120-125 million t. According to representatives of the Bureau, this will stabilize prices on the market. Chinese imports of rolled steel are estimated at some 10-12 million t, while exports should not exceed 4.5-5 million t.

Besides to that, there has been elaborated a program of technical reorganization of metalmaking. It is scheduled to increase percentage of continuous-cast steel in 2000, largely reduce steel manufacture in open-hearth furnaces, and shut down roughly 10-million-tpy blast furnaces.

Furthermore, obsolete rolling mills with capacity for some 5 million t per year will be phased out and dismantled. Some 1,100 small-size mills producing bars with the total capacity for 2 million t per year will be closed.

During the first quarter of 1999 China used to be the largest importer of Ukrainian rolled steel consuming 1,376,000 t or 25.4% of the total physical exports of metal products. These figures amounted to 776,000 t or 12.4% of the total in the respective period of 2000.

In other words, the Chinese market is slowly but distinctly drifting away from the majority of Ukrainian-made rolled steel articles. This especially relates to long steel, such as rebars, wire rods, and structural shapes. Surplus of productive capacities for these products in Ukraine and severe anti-import measures of the Chinese government virtually keep Ukraine away from this market.

On the other hand, grandiose construction programs, announced by the Chinese authorities back in 1999, will cause greater demands for rolled steel, which will be impossible to cover by Chinese metallurgical mills alone without import supplies.

European Union

The favorable situation on this market, notably as regards prices and demand, has always attracted exporters from all over the world, with the Ukrainians being no exception.

Ukraine exported 566,600 t of metal (+24.3% against the previous year) worth some USD 91,452,420 (+35.4%) to this market in the first quarter of 2000 to the EU. Notable as it is, exports gained volume mainly owing to the increase in supplies of ferrous scrap and waste that gained 62.4% and equaled 144,500 t; semi-finished steel, +42.2% and 271,900 t; and HR flat steel, +6.9% and 33,600 t. As well, Ukraine boosted exports of bars to 11,600 t and exports of HR flat steel to 4,220 t. At the same time, EU-bound export supplies of iron lost 53% and amounted to 42,190 t, while exports of rebars descended 43% down to 6,380 t.

Table 6. Import prices on the Chinese metal market (USD per tonne, CIF major Chinese ports)

Stable demands on the domestic and foreign markets brought about a mark-up in prices for rolled steel coming from Western Europe.

Coiled steel is the best example in this case. As early as at the beginning of 2000, most manufacturers voiced the future increase in prices for coils owing to a number of weighty reasons. Order books are stuffed till the end of 2000 due to high demands of automotive and machine building companies for coiled steel, while the EURO’s slump against the US dollar has made imports to the EU a less lucrative business, thus lowering the market supply

Throughout April 2000 domestic European prices for HR coils were at some USD/t 300-335 FOB, while CR coils cost USD/t 380-410 FOB.

The kick-off of the seasonal construction projects and the customers’ desire to build up enough stocks prior to the summer vacation season have driven up the European prices for construction types of steel. Prices for long metal, namely rebars and wire rods, gained an average of USD/t 10-20 coming to USD/t 220-240 FOB, while prices for structural shapes increased USD/t 30-40 to USD/t 260-280 FOB.

European prices are listed in table 7.

The European market is a pretty piece for Ukrainian exporters of metal. Yet, this piece is hard to bite because the severe protectionism measures keep the Ukrainian exporters off from getting a worthy spot on the market.

During the course of the first quarter, Ukrainian companies covered 79.1% of the imposed quota on metals (the whole quota equals 275,200 t). At the same time, almost the complete amounts of the 32,830-tonne quota on coils, 113,300-tonne quota on plates, and 14,850-tonne quota on other flat-rolled articles are nearly fulfilled

The rest of the quota limit relates to wire rod (81.9% of the 24,260-tonne quota have been covered), beams (47.2% of the 9,220-tonne quota used), and other bars (48.5% of the 62,730-tonne quota used).

It looks like in the coming year Ukrainian exporters will have nothing else to export to this lucrative market but scrap and semi-finished steel.

USA

The US market with its high prices and large demands has always been a mesmerizing good place for exporters.

Ukraine doubled metal exports to the USA to 672,000 t in the first quarter of 2000, while export revenues coming from this region gained 3.5 times and amounted to USD 96,512,000.

The main articles of Ukrainian metal exports to the USA were iron with 289,000 t or 43% of the total; semis, mainly slabs, 168,000 t or 25.1%; HR flat metal, 74,800 t or 11.1%; wire rods, 77,600 t or 11.5%; and reinforcing bars, 46,600 t or 6.9%.

Most American manufacturers of long products announced a price increase for rebars and low-carbon wire rod in April 2000. Experts mention that this decision has been caused by hot demands for these products and smaller import supplies from the third countries that faced the threat of antidumping procedures.

As of late April 2000, wire rod cost USD/t 265-275 CIF and rebars cost USD/t 250-260 CIF on the US market.

The USA features strong demands for plates. Metal Bulletin has reported that yet another US company suspended production of plates. This caused the state of panic on the market and immediately heated the prices up USD/t 10 to USD/t 395-415 CIF at the end of April.

Following the increase in the first quarter of 2000, prices for HR coils were kept at a high level of USD/t 360-370 CIF and for CR coils at USD 470-490 CIF in April. According to forecasts, prices for coils are likely to increase once again in the near future.

Table 8 quotes the US prices for metals.

The latest AIIS forecasts mention that imports to the US market will shrink to 33-34 million t in 2000. While imports of finished rolled steel will go down, imports of semi-finished steel will increase. Some 10 to 12 million t of semis are anticipated to be imported to the USA, while the year 1999 saw imports of only some 7 million t of semis to the USA.

Table 7. European export prices for rolled steel (USD per tonne, FOB European ports)

Turkey

Ukraine supplied roughly 670,000 t of metal (+16% against 1999) worth USD 109,470,000 (+93%) to the Turkish market in the first quarter of 2000 to Turkey.

Notably, the pattern of metal exports to this country changed somewhat. Exports of ferrous scrap and waste, the dominating export articles, lost 42% and reached 333,200 t, thus accounting for 38.2% of the total metal exports from Ukraine to Turkey compared to 76.5% of the total in the first quarter of 1999.

Besides, Ukraine exported 190,600 t of HR flat metal (21% of the total), 155,400 t of semi-finished steel (17.8% of the total), 88,500 t of iron (10.1% of the total), and 69,900 t of CR flats (8% of the total metal exports to Turkey from Ukraine).

Exports of almost all the metal commodities increased against the respective period of 1999, e.g. export supplies of HR flat metal and wire rods gained an average of 2.5 times, exports of semis, such as billets, slabs, and iron, increased threefold to fourfold, and exports of CR flats increased sixfold.

At the same time, Ukrainian exports of rebars to Turkey dramatically plummeted by 88% down to 2,300 t, while there have been no exports of structural shapes to this country in 2000 so far.

The Turkish market was on the rise in terms of prices in the four months of 2000 with commencement of the construction season and continuing reconstruction after the ruinous earthquake being the main reasons for greater prices for most types of metal products.

Rolled steel for construction purposes, namely rebars and wire rods, were in red-hot demand on the Turkish market. Prices for rebars increased to USD/t 205-210 FOB, while prices for wire rods came to USD/t 240-250 FOB. This called forth an increase in prices for billets to USD/t 178-185 FOB.

After the increase at the beginning of the year, for several consecutive months the Turkish prices for coils have been steadily high at USD/t 315 for HR coils and USD/t 415 for CR coils. However, the stirring construction activities are forecast to drive the prices USD/t 5-10 up in the near future.

Table 9 presents the Turkish prices.

Turkey is expected to increase manufacturing outputs by 5 to 6% in 2000. The forecast figures are validated by the performance results in the first quarter of 2000. The post-earthquake reconstruction makes greater demands for rolled steel.

This partially explains a 2.9% growth in steel output in Turkey compared to the first quarter of 1999 with steel production coming to 3,186,000 t.

Russia

In the first quarter of 2000 Ukraine exported 236,000 t (+50.2% against the respective figures of 1999) of metal worth USD 76,668,000 (+37.5%) to Russia.

The greatest contributors to growth in exports were exports of bars that increased 24.1% to 35,700 t; rebars, +47.3% to 32,500 t; and other flat-rolled products including galvanized flat-rolled steel, +10.7% to 15,300 t.

Besides, exports of HR flats increased threefold to 39,800 t and exports of CR flat steel grew to 17,300 t.

Russian regions feature very different demands for rolled steel. While the markets in the central regions are balanced or oversupplied, the southern regions suffer somewhat of a shortage of rolled metal.

Merchant bars, such as angles and channels, and galvanized sheets are the only metal commodities in shortage on the markets of Moscow and St Petersburg.

The situation is vice versa in the southern regions of Russia, namely in Rostov and Krasnodar regions, where the market has abundant supply of bars and merchant bars, namely angles, rebars, and wire rods, and faces shortage of average HR plates and galvanized sheets.

Despite high demand for metal, sufficient supply, and nearby location of metallurgical mills, the Ural region has stable prices.

Galvanized flat-rolled products are in acute shortage on this market, thus the prices for these commodities tend to go up.

Table 10 shows the domestic Russian prices for metal.

Table 8. US import prices for rolled steel (USD per tonne, CIF main ports)

Table 9. Turkish export prices for rolled steel (USD per tonne, FOB Turkish ports)

Table 10. Domestic Russian prices (USD per tonne, EXW)

DerzhZovnishInform