No menacing factors that could fundamentally disturb nonferrous exports are registered at the moment. Aluminum and copper semis account for a huge portion of nonferrous exports, while the share of finished commodities still remains way too small.

NONFERROUS METALS

Vyacheslav POPOV, expert with DerzhZovnishInform

No menacing factors that could fundamentally disturb nonferrous exports are registered at the moment. Aluminum and copper semis account for a huge portion of nonferrous exports, while the share of finished commodities still remains way too small.

GLOBAL MARKET

Aluminum

A trend for further rise of aluminum prices, which had appeared in late 1999, was also intrinsic to the beginning of 2000. January 26, when aluminum price rose to USD 1,745 per tonne (thus making the average monthly price in January 2000 equal to USD 1,680.7 per tonne, that is USD/tonne 130 up from the average price in December 1999), set the new record price for the past 2.5 years.

Aluminum prices in January ranged from USD 1,608 to USD 1,745 per tonne.

London Metal Exchange also witnessed an increase in prices for A380.1 aluminum alloy. Average monthly price for this commodity in January amounted to USD 1,389.13 per tonne making it a new record-high, just like in case of aluminum. In January 2000 prices for A380.1 aluminum alloy ranged within USD 1,350-1,438 per tonne. The greatest price of USD 1,438 per tonne was registered on January 20.

The major factors that contributed a lot to further growth of aluminum market prices were as follows:

the Year 2000 problem, together with auspicious economic situation, caused intensive purchases of aluminum at the year-end, which resulted in dishoarding of aluminum stocks stored at the LME;

Chinese smelters lowered their output volumes because of increase in alumina prices up to USD 400 per tonne, which disabled smelting at competitive prices.

At the end of January representatives of Alcoa company announced their plans to recommence production at laid-up capacities, which would give a 209,000 tonne increase to Alcoa’s annual output (the Australian alumina, which was once destined to Chinese manufacturers, is rumored to have been supplied to Alcoa instead). Nevertheless, curtailment of aluminum output in China will make this situation less painful for the market.

As of December-end, premiums for CIS-made aluminum in Rotterdam increased and ranged within the following limits:

USD 20-25 per tonne of A5 aluminum;

USD 30-35 per tonne of A6 aluminum;

USD 35-40 per tonne of A7 aluminum.

Outlooks for aluminum market

The leading global analysts continue to be optimistic in their forecasts predicting further growth in aluminum prices throughout the year. However, a number of market players warn about a possible upswing of productive capacities, which, together with idle capacities being put into operation, can negatively affect the market prices.

Average aluminum prices are predicted to stay around USD 1,542.8-1,800 per tonne.

Table 1. LME aluminum quotations in 1998-2000 (USD per tonne)

* — hereinafter prices in futures contracts stipulate for supplies in three months.

Table 2. Average LME aluminum prices in 1995-2000

(USD per tonne)

Table 3. Average LME prices for A380.1 aluminum alloy

in 1995-2000 (USD per tonne)

* — hereinafter prices in futures contracts stipulate for supplies in three months.

Table 4. LME quotations of A380.1 aluminum alloy in 1998-2000 (USD per tonne)

Table 5. Dynamics of LME aluminum prices in 1998-2000 (USD per tonne)

Table 6. Dynamics of LME prices for A380.1 aluminum alloy in 1998-2000 (USD per tonne)

* — hereinafter prices in futures contracts stipulate for supplies in three months.

Copper

In January 2000 copper prices reached their new peak level for the past few years, en route also setting a record of price-gaining speed. In December 1999 average copper price was USD 1,473.55 per tonne, while in January 2000 this figure was subject to a USD 400 upturn and amounted to USD 1,843.98 per tonne. The low and the high copper prices in January equaled to USD 1,812 per tonne and USD 1,898 per tonne respectively. January witnessed a simultaneous rise in copper and aluminum prices. Consumers’ anxiety over the possible market implications of the Year 2000 problem, together with auspicious economic situation in Southeast Asia and the USA, caused booming business activity of copper buyers in December 1999, which resulted in the mentioned lowering of the LME stocks. Thus, many buyers tried to purchase copper in advance to prevent downtime of their production processes. Besides, investment funds were also notable for their activity on the copper market. They endeavored to purchase copper stocks to obtain resale dividends in future.

However, at the end of January copper prices went down due to recovery of copper stocks at the LME warehouses called forth by additional copper procurements from Chile and sale of copper stocks by investment funds. Apart from this, a number of customers stockpiled copper in late 1999, which also contributed to the price reduction.

Copper market is predicted to have a slight oversupply in the first decade of 2000. A number of experts mention that further growth of copper prices can encourage selected producers to recommence functioning of their laid-up capacities, thus impacting the market situation.

By the way, Taseco Mines has scheduled to recommence activities at a closed copper mine in the region of Gibraltar.

Outlooks for copper market

According to the forecasts of the leading world companies and analytical agencies, the average copper prices will grow to USD 1,719-1,785 per tonne in 2000. This market is clearly booming.

Table 7. LME copper quotations in 1998-2000 (USD per tonne)

* — hereinafter prices in futures contracts stipulate for supplies in three months.

Table 8. Dynamics of LME copper prices in 1998-2000 (USD per tonne)

* — hereinafter prices in futures contracts stipulate for supplies in three months.

Table 9. Average LME copper prices in 1995-2000

(USD per tonne)

UKRAINE

Foreign trade in nonferrous metals

The beginning of 2000 was marked with increasing exports of nonferrous metals. This tendency has been traced for several years and is not something way too surprising.

The Ukraine’s State Statistics Committee reports that in January 2000 Ukraine exported 41,700 tons of nonferrous metals and nonferrous products, which is 38.07% more than in the respective period of 1999. Export revenues in January amounted to USD 42,900,000. To compare, in January 1999 Ukraine exported 30,190 tonnes of nonferrous metals and earned USD 33,400,000, which is 28.53% less than in January 2000.

Copper and aluminum commodities in January made up 96.05% of the total physical exports of nonferrous metals bringing in 92.05% of export revenues as compared to 97.38% and 95.98% respectively in 1999. Thus, copper and aluminum continue to prevail in the total export turnover. Over the reported period, physical exports of aluminum and copper gained 36.17% against January 1999, while export revenues rose by 23.27%. In January 2000 Ukraine exported some 202 tonnes of nickel, lead and zinc worth USD 244,000, which corresponds to 0.49% of the total physical exports and 0.57% of the total export revenues respectively. To compare, in January 1999 Ukrainian export of these metals amounted to 349 tonnes yielding USD 180,000 worth of export revenues.

At the beginning of 2000 exports of other nonferrous metals, cermets and their products increased by 519.59% against January 1999, while export revenues from these commodities rose by 491.41%. These materials made up 1.58% of the total physical exports and brought in 4.42% of export revenues (in other words, 658 tonnes worth USD 1,900,000).

Copper group

In January 2000 Ukraine exported 9,500 tonnes of copper and copper products worth USD 8,600,000. This is 40.28% greater than physical exports of copper and its products in January 1999 and 3.66% greater than the respective export revenues.

Over the same period exports of refined and unrefined copper and copper alloy ingots increased as well. In January 1999 Ukraine exported 140 tonnes of unrefined copper worth USD 239,000 and 347 tonnes of refined copper and copper alloys worth USD 308,000.

In January 2000 exports of unrefined copper increased to 1,334 tonnes worth the total of USD 1,230,000, while export supplies of refined copper and copper alloys grew to 3,739 tonnes worth USD 3,600,000.

However, copper scrap exports in January 2000 lowered by 25% as compared to January 1999, while export revenues were twice as low as back in January 1999. Ukraine exported 4,277 tonnes of copper scrap with the total value of USD 3,480,000.

This export phenomenon sprang from the law "On scrap metal", prior to which exports of nonferrous scrap had been unlimited and scrap exporters could avoid remelting copper scrap into finished or semi-finished products. Now, when export of nonferrous scrap is banned, surplus copper scrap is remelted into copper-based semis. Despite this, copper scrap remains the largest export article in the total copper exports.

Table 10. Export dynamics of nonferrous metals and nonferrous products in January 1999 and January 2000

Table 11. Main articles of Ukrainian exports of copper and copper products in January 1999 and January 2000

Table 12. Geographical distribution of Ukrainian exports of copper and copper products in January 2000

Aluminum group

Aluminum and aluminum commodities account for the largest portion of Ukrainian nonferrous exports. These commodities contributed 73.23% to the overall nonferrous exports and brought in 72% of the total revenues from nonferrous exports.

In January 2000 Ukraine exported 30,520 tonnes of aluminum and aluminum products worth USD 30,900,000, while in January 1999 this figure amounted to 22,600 tonnes for the total of USD 23,800,000. In other words, physical exports of aluminum in January 2000 were 34.94% greater and export revenues were 30.13% higher than in January 1999.

Primary aluminum ingots and crude aluminum alloys made up the bulk of the total aluminum exports accounting for 81.64% of the total physical exports of aluminum commodities and yielding 83.46% of export revenues.

In January 2000 Ukraine exported 24,900 tonnes of these commodities worth USD 25,800,000.

This is 22.34% greater than physical exports of primary aluminum ingots and crude aluminum alloys in January 1999 and 18.81% higher than the respective export revenues.

In January 2000 Ukraine exported 4,700 tonnes (140.7% as compared to January 1999) of aluminum scrap worth USD 3,400,000 (122.41% compared to January 1999).

Ukrainian law "On scrap metal" doesn’t prohibit aluminum scrap exports under tolling contracts, which resulted in augmentation of aluminum scrap exports from Ukraine.

Regional distribution of export supplies

Regional distribution of Ukrainian exports of copper, aluminum and their products in January 2000 was as follows:

Just like in 1999 Germany ranks the first in imports of copper commodities from Ukraine with consumption of 6,880 tonnes of copper and copper commodities (accounting for some 72% of the total Ukrainian copper exports) worth USD 6,430,000 (74.71% of the total). Belgium remains the second largest importer consuming 970 tonnes of copper commodities (10.16%) worth USD 990,000 (11.52%). Italy came the third with imports of 420 metric tons (4.43% of the total Ukrainian copper exports) for the total of USD 380,000 (4.38% of the total).

The Russian Federation and Belarus remain the major importers of Ukrainian copper commodities among CIS member-states. In January 2000 Russia imported 130 tonnes of copper commodities from Ukraine (1.33% of the total) worth USD 180,000 (2.09%), while Belarus imported 50 tonnes (0.51%) for the total of USD 90,000 (1.06%).

Russia turned out to be the largest importer of Ukrainian-made aluminum commodities in January 2000 consuming 4,620 tonnes (15.15% of the total aluminum exports from Ukraine) worth USD 7,190,000 (23.27% of the total). Italy ranks the second with 4,500 tonnes (14.77%) worth USD 4,400,000 (14.08%). Italy is followed by the USA with 4,470 tonnes worth USD 3,670,000 (making up 14.63% of the total aluminum exports and 11.87% of the exports revenues), Hungary with 3,090 tonnes (10.13%) worth USD 4,120,000 (13.32%) and Germany with 2,880 tonnes (9.43%) for the total of USD 2,730,000 (8.82%). Latvia surprisingly ranked the sixth consuming 2,800 tonnes (9.22%) worth USD 1,150,000 (3.72%) owing to a new policy pursued by this country in the sphere of legislation. In particular, the established offshore zone has attracted a number of traders who now prefer to take advantage of offshore companies in their business transactions.

Table 13. Main articles of Ukrainian exports of aluminum and aluminum products in January 1999 and January 2000

Table 14. Geographical distribution of Ukrainian exports of aluminum and aluminum products in January 2000

Distinctive features of export supplies

January 2000 saw the largest exports of the following nonferrous metals and commodities:

unrefined aluminum and unrefined aluminum alloys – 24,900 metric tons (59.79%) worth USD 25,800,000 (60.09%);

aluminum scrap and waste – 4,740 metric tons (11.38%) worth USD 3,430,000 (8%);

copper scrap and waste – 4,280 metric tons (10.26%) worth USD 3,480,000 (8.11%).

CONCLUSIONS

No menacing factors that could fundamentally disturb Ukrainian exports of nonferrous metals were registered, thus leaving the dominant trends in export business unaltered. Aluminum and copper semis make up a huge portion of nonferrous export, while the share of finished commodities still remains way too small. Yet, we should not dramatize the existing situation. The Ukrainian industry suffers very hard times now. Shortage of current assets, obsolete equipment and outdated technologies, together with scarce investments, hamper the development of nonferrous metallurgy in Ukraine. Under these circumstances, exports of metal scrap, which give additional jobs in semis production and yield significant exports revenues, can be considered as positive.

Moreover, on February 24, 2000, Zaporozhye Aluminum Smelter launched a new aluminum foil production line with capacity for 16,000 tonnes per year. This is a good example of promising changes in the Ukrainian nonferrous metallurgy.

DerzhZovnishInform