Practice of unstable utilization of productive capacities at the main metallurgic technological units causes excessive power consumption

FERROALLOYS

Vitaliy GNATUSH, expert with DerzhZovnishInform

The third quarter witnessed shortage of
ferrosilicomanganese, along with overproduction of ferromanganese

Output

According to the MetallurgProm data, over the eight months
of 1999, Nikopol, Zaporozhje, and Stakhanov Ferroalloy Plants manufactured 641 ths. tons
of ferroalloys, which corresponds to 101.7% of the figure in the respective period of 1998
(see table 1). In 1999, average monthly output of electric-furnace ferroalloys accounts
for 80.1 ths. tons (some 7.7% up from the 1998 average monthly output, which amounted to
74.4 ths. tons).

Given such growth tempos, the present year may well result
in the output of 950-968 ths. tons of electric-furnace ferroalloys, thus surpassing the
results of 1998.

Exports

In January-August 1999, some 356.9 ths. tons of
Ukrainian-made ferroalloys worth approximately USD 133.3 mln. were exported. In 1999,
average monthly exports of ferroalloys account for 44.6 ths. tons as against the figure of
47.2 ths. tons registered in July-December 1998 and 54.6 ths. tons in January-June 1998
(see the figure below). The overall exports of ferroalloys featured a slight upward
tendency in July-August 1999.

We believe that the situation with Ukrainian ferroalloys
will not alter considerably until the end of 1999. For the upcoming months of 1999,
average monthly exports are estimated at 45-55 ths. tons.

It is worth mentioning that, in the eight months of 1999,
export supplies of ferrosilicomanganese corresponded to 87.9%, of ferromanganese – to
55.3%, and of ferrosilicon – to 107.5% of the respective figures in the eight months of
1998.

This year rather evident changes are taking place in the
pattern of ferroalloy exports. According to generalized data, during the eight months of
1999, the portion of ferrosilicomanganese exports reduced as low as 1.1 times and the
portion of ferrosilicon exports increased as high as 1.2 times compared to the results of
the first quarter of 1999 (see table 2). Meanwhile, the portion of ferromanganese exports
was fluctuating in between 18.8-19.2%. Compared to the year before, the portion of
ferrosilicon has experienced considerable growth, while the portion of ferromanganese
exports has undergone a substantial reduction.

The current situation on the world market for ferroalloys
is the main cause for changes in the pattern of Ukrainian exports. On the one hand, in
January-August 1999, the European market reported a 12% reduction in average monthly
prices for ferromanganese. On the other hand, during the same time period, European prices
for ferrosilicomanganese ranged between DM/MT 744-824 and indicated the average of DM/MT
788. The latter evidences certain equilibrium of the European market for
ferrosilicomanganese, while the US market for this commodity reported a 12% increase in
prices (from USD/MT 441 up to USD/MT 502) in January-August 1999. At the same time,
ferrosilicon prices increased by 12% on the European market and overran the average annual
price of 1998.

In 1999, Ukrainian ferroalloys were supplied to almost all
the regions worldwide (see table 3). However, exports of Ukrainian-made ferroalloys
feature an extremely uneven distribution by regions of the world. The largest export
supplies were bound to the CIS member-states (consuming 38.1% of the total Ukrainian
exports of ferroalloys), Asian countries (30.3%), and Eastern European states (15.2%). The
other regions of the world received much fewer quantities of Ukrainian ferroalloys; thus,
North American countries obtained 6.7% of the total exports of Ukrainian ferroalloys,
African countries – 4.1%, EU member-states – 2.9%, and Baltic States – 2.6%.

Traditionally, Russia is the largest importer of Ukrainian
ferroalloys. In the eight months of 1999, Russian companies purchased approximately 102.9
ths. tons of Ukrainian ferroalloys, thus consuming 28.2% of the total Ukrainian ferroalloy
exports. In exports to Russia, ferrosilicomanganese accounted for 61.8% of the total
supplies, ferromanganese – 34.9%, and ferrosilicon – 1.8%.

Asia comes second by the volume of consumed Ukrainian-made
ferroalloys. Over January-August 1999, seven Asian countries imported 108.1 ths. tons of
Ukrainian ferroalloys, of which ferrosilicomanganese supplies accounted for 73.0%,
ferrosilicon – 25.4%, and ferromanganese – just some 1.6%. Turkey was the most dynamic
importer, consuming 44.1 ths. tons of ferrosilicomanganese and 18.0 ths. tons of
ferrosilicon. Japan and Saudi Arabia ranked the second and the third by the amount of
imports.

In the eight months of 1999, exports of Ukrainian
ferroalloys featured the following distribution by commodity groups:

Ferrosilicomanganese was predominantly supplied to the
Asian countries (37.1% of the total), CIS member-states (35.2%), and North American
countries (10.2%). The largest consumers of this commodity were Russia (63.7 ths. tons);
Turkey (44.1 ths. tons); Japan (16.7 ths. tons); South Korea (14.7 ths. tons); Egypt (14.2
ths. tons); and USA (8.2 ths. tons).

The largest ferromanganese supplies were bound to the CIS
countries (73.6%) and Eastern European states (19.3%). Russia (approximately 36.0 ths.
tons), Kazakhstan (10.6 ths. tons), and Romania (10.3 ths. tons) were the biggest
importers of Ukrainian ferromanganese.

Principal importers of Ukrainian-made ferrosilicon were the
Asian countries (consuming 38.0% of the total), Eastern European states (37.2%), and the
CIS countries (13.2%). During the period under review, portion of Ukrainian ferrosilicon
bound to the Asian countries increased, while the portions destined to the CIS and Eastern
European states went down. Constantly large importers of Ukrainian ferrosilicon are Russia
(18.9 ths. tons); Turkey (18.0 ths. tons); Romania (6.9 ths. tons); Latvia (6.3 ths.
tons); Slovakia (5.9 ths. tons); and Belarus (5.2 ths. tons).

Besides to base ferroalloys, Ukrainian companies also
exported lightweight ferroalloys, such as ferronickel (1.2 ths. tons), ferrotitanium (0.4
ths. tons), ferromolybdenum (0.2 ths. tons), and ferrotungsten (0.1 ths. tons).

Conclusions and outlooks

The situation with Ukrainian ferroalloys seems rather
ambiguous as of the mid-third quarter of 1999.

In the first half-year of 1999, average monthly output of
electric-furnace ferroalloys amounted to 79.0 ths. tons as compared to 74.4 ths. tons
reported as an average monthly in 1998. Under the results of the eight months of 1999,
this figure increased some more and reached 80.1 ths. tons per month.

Average monthly exports of ferroalloys were on the level of
40.7 ths. tons in the first half-year of 1999 and on the level of 44.6 ths. tons in the
eight months of this year, which corresponds to approximately 82% of the 1998′ figure.

Given such performance figures, one should expect exports
of 530-550 ths. tons of ferroalloys, which is roughly 82-85% of the 1998 exports. Exports
are anticipated to yield some USD 200-210 mln. of revenues in 1999.

In the third quarter, the global market for manganese
ferroalloys featured an auspicious tendency. There was a shortage of ferrosilicomanganese,
along with overproduction of ferromanganese. Reduced supplies of ferrosilicomanganese
impacted the prices on the European and US markets, while the Japanese market showed all
the signs of stability.

In August-September 1999, European prices for
ferrosilicomanganese reached DM/MT 800-820, while prices for ferromanganese settled at
DM/MT 650-700.

Over this period, prices for ferrosilicon-75% increased up
to DM/MT 1,200-1,240. Shortage of this commodity on the market causes the stable tendency
for increase in ferrosilicon prices.

• DerzhZovnishInform