GLOBAL OUTPUT

According to the latest information with the International Iron and Steel Institute, in the first month of the year 2000 global production of steel amounted to some 68,688,000 tonnes, 13% up from the respective figure of 1999 (60,803,000 tonnes).

During this period production of steel in 15 EU member-countries gained 10.5% increasing to 13,505,000 tonnes. Expansion of the overall regional output was supported by intensified steel output in Belgium (up 18.6% to 1,002,000 tonnes), Germany (up 18.4% to 3,661,000 tonnes), Italy (up 10.4% to 2,148,000 tonnes) and Spain (up 13.9% to 1,300,000 tonnes).

Non-EU European countries also reported an increase in January steel production up by 15.1% to 3,653,000 tonnes. Recovered output was brought about by Turkey (up 12.7% to 1,200,000 tonnes), Czech Republic (up 5.9% to 435,100 tonnes) and Poland (up 41.7% up to 860,000 tonnes). At the same time, steel production in Romania fell by 20.7% to 340,000 tonnes.

CIS metallurgic mills kicked off this year with a 27.7% upturn in output (up to 7,771,000 tonnes). Steel output in Russia added 29.4% (to 4,685,000 tonnes) and in Kazakhstan – 68.4% (to 453,000 tonnes). Besides, steel production in Moldova and Uzbekistan skyrocketed more than 2.0-2.5 times.

Certain stabilization of the global market for rolled metal triggered expansion of steel output in North American countries. On the whole, growth tempos indicated 13.1% (with the total output of 11,679,000 tonnes of steel). Canada increased steelmaking operations by 11.9% (to 1,410,000 tonnes), Mexico – by 3.9% (to 1,300,000 tonnes) and the USA – by 14.7% (to 8,870,000 tonnes).

January 2000 saw upward tendencies in steel production in South American countries. During this month the two largest regional steel producers, that is Brazil and Argentina, boosted their outputs by 6.3% (to 2,187,000 tonnes) and 19.3% (to 302,000 tonnes) respectively.

In January 2000 Asian countries manufactured 26,512,000 tonnes of steel, which is 11.2% up against the last year’s respective figure. Increase in output was registered in China (up by 11.5% to 10,590,000 tonnes), India (up by 6.2% to 2,203,000 tonnes), Japan (up by 8,588,000 tonnes) and South Korea (up by 11% to 3,571,000 tonnes). At the same time, steel production in Taiwan plunged by 14.2% to 1,200,000 tonnes.

In the first month of 2000 Middle Eastern and African countries also slightly increased steel-smelting activities. In January these regions respectively manufactured 873,000 tonnes (a 6.8% increase) and 972,000 tonnes (a 9.4% increase).

The countries of Oceania were the only region in the world to report lowered steel output in January (down by 4.9% to 711,000 tonnes). Yet, this did not influence substantially the global output volumes.

Recovery of metal-consuming markets that started back in December 1999 kept progressing on in January 2000. Intensified demand for rolled metal pushed metallurgic mills to step up the output. If these business trends are maintained, supposedly, the year 2000 will witness record-high steel output at some 790-800 million tonnes.

Global production of steel in January 1999 and 2000 is shown in table 1.

STEEL OUTPUT IN UKRAINE

According to the data with Metallurgprom association, in the first 2 months of 2000 Ukraine manufactured 3,761,000 tonnes of iron (13% up), 4,647,000 tonnes of steel (17% up) and 3,026,000 tonnes of rolled metal (15% up).

The data on production of iron, steel and rolled metal in the first 2 months of 1999 and 2000 are presented in tables 2 and 3 respectively.

Table 1. Global output of steel

EXPORTS

According to statistical data of the State Statistics Committee, in January 2000 Ukraine exported some 2,019,000 tonnes of metal products worth USD 309,006,000. This exceeds the respective figures of January 1999 by 29.28% in terms of physical volume and by 48.85% in terms of export revenues. Increase in physical exports mainly sprang from supplies of semis (up by 51.4% to 683,700 tonnes), HR flat metal (up by 38.5% to 396,000 tonnes), CR flat metal (up by 51.09% to 124,000 tonnes), bars (up by 30.3% to 26,450 tonnes) and metal scrap and wastes (up by 16.3% to 260,000 tonnes). Exports of wire rod had a notable performance increasing as high as 2.3 times (to 116,400 tonnes) in January 2000.

Along with that, in January 2000 export supplies of rebars and iron lowered by 4.2% to 152,400 tonnes and by 27.7% to 141,400 tonnes respectively. January saw the following pattern of Ukrainian physical export of metal products: semis made up 33.85% of the total, HR flat metals – 19.62%, ferrous scrap and wastes – 12.9%, rebars – 7.55%, iron – 7.01% and CR flat metal – 6.14%. Improved conjuncture on the main markets for domestic metal, that is in Russia, Turkey, Middle Eastern countries, etc., along with greater demands and prices became the main factors influencing Ukrainian metal exports in January. Reduction in rebar supplies originated from poor demand for this type of rolled metals on the S.E. Asian markets, specifically in China, the largest importer of Ukrainian long metal. Table 4 shows the detailed data on Ukraine’s export of metal products in January 1999 and 2000.

Regional pattern

Comparing the statistics on regional distribution of Ukrainian exports of metal products in January 1999 and 2000, one can notice the following notable trends. Firstly, in January 2000 the main markets were S.E. Asia (consuming 33.03% of the total physical metal exported from Ukraine and yielding 32.48% of the total export revenues to Ukraine) and Middle Eastern countries (24.13% and 20.46% respectively). Supplies of Ukrainian metal products to these regions increased by 16.9% (to 664,400 tonnes) and by 17.18% (to 485,320 tonnes) respectively.

Along with the recovered physical exports, revenues from export business with these countries also went up.

Secondly, severe restrictions on the EU market disallowed Ukrainian exporters to step up supplies to this region. In January 2000, 15 EU member-countries consumed 161,240 tonnes of Ukrainian metal products (1.86% up against the respective 1999 figure), while export earnings soared by 12.5%.

Thirdly, in January Ukraine boosted metal exports to Central and Eastern European countries nearly as high as 3.5 times (to 231,300 tonnes as compared to 65,620 tonnes in the year 1999).

Fourthly, the CIS market, significant and large consumer of metal products of Ukrainian origin, starts showing signs of recovery after the crisis. In January 2000 this market consumed some 107,400 tonnes of Ukrainian metal products worth USD 27,411,200. This exceeds the respective figures of January 1999 by 44.9% in terms of physical supplies and by 16.35% in terms of export earnings.

Fifthly, it is worth outlining an unfavorable trend. Ukrainian export of metal products to South American countries and countries of South Asia and Southwest Asia plummeted (by 67% to 3,411 tonnes and by 79.4% to 7,618 tonnes respectively).

Finally, Ukrainian metal exports to African countries keep on increasing, though this destination is not traditional for Ukrainian exporters. In January 2000 Ukraine shipped some 112,400 tonnes of metal products worth USD 18,458,600 to African markets. This exceeds last year’s figures by 15% and 17% respectively. Basing on the analysis of facts and figures, supposedly, Middle East and S.E. Asia in 2000 will remain the key metal markets for Ukraine in 2000. Supplies of Ukrainian rolled metal to Eastern European countries and the CIS will surge further on. It is most likely that South America, the EU and USA will close and tightly lock their markets away from Ukrainian exporters.

The data on the regional distribution of Ukrainian export of metal products are shown in table 5.

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

Table 3. Production by Ukrainian metallurgic mills in January-February 2000 (‘000 metric tons)

MARKET SITUATION

Iron

In February 2000 the world market for iron did not undergo substantial changes: sufficient supply of iron on the market, along with moderate demand, became the reason for slowdown in price recovery, which had started back at the end of 1999.

Besides, accumulated the accumulated inventories of iron at metallurgic mills and low prices for scrap also impacted the pace of iron prices.

Conversion iron manufactured by Ukrainian and Russian mills was offered on the world markets at USD/tonne 115-120 FOB. However, selected supplies were made at higher rates.

Iron has always been one of the major metal commodities in import supplies to the USA. Bid prices of American customers settled at the January level of USD/tonne 135-140 CIF. Stable US prices were supported with intensified imports from Brazil and selected Asian countries.

Brazilian-made iron was purchased at USD/tonne 125-127 FOB, while iron of Indian and Chinese origin – at USD/tonne 123-125 FOB.

Analyzing the market situation, one can reckon that recovery of iron prices will continue in the future. However, this will be possible only if prices for ferrous scrap remain unaltered and prices for finished rolled metal keep on going up, which seems quite likely at this point of time. Otherwise, the prices will keep stable.

Dynamics of global prices for iron is presented in table 6.

Table 4. Export of metal products from Ukraine

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

Slabs

In February 2000 demand for this type of semis kept up the high level, which favorably influenced the prices at various global markets.

After a mark-up of prices for USA-bound supplies initiated by European manufacturers in December, Brazilian exporters made a decision to take the same steps. According to the market monitors, the Brazilians succeeded because strong demand on the North American market and low transportation costs were decisive despite fierce competition. Slabs of Brazilian origin were offered at USD/tonne 200-210 FOB.

At the same time, increase in prices did not drive European manufacturers to the desired effect. In January-February 2000 the third countries, which are among the main consumers of European slabs, somewhat reduced purchases of this commodity.

Besides, it is real hard to compete with similar products made in Ukraine and Russia, as far as the latter are much cheaper than European slab products – USD/tonne 160-180 FOB. In February slabs made in Europe were offered at USD/tonne 210-230 FOB.

Supposedly, in the first and the second quarters of 2000 the prices for slabs will not change significantly. Having reached the desired price level, Brazilian exporters will do their best to keep it up.

Regardless small exports of slabs, European exporters have no intention to slash the prices. Besides, rather strong domestic market will facilitate an increase in prices or at least stabilization.

CIS exporters can hope for the better, in particular, in supplies to China, where demand for flat-rolled metals keeps on recovering (consequently, demands are on the rise for semis as well).

Table 7 shows the behavior of slab prices on the global market in recent period.

Billets

In the two opening months of 2000 the situation on the world market for billets was ambiguous. On the one hand, billets enjoy strong demand on a number of regional markets, while, on the other hand, oversupply and adverse situation on the market for long rolled metal discourage the increase in prices.

A good example is S.E. Asia, the main market for billets manufactured in Ukraine and Russia. Owing to problems with sales of rebars and wire rod, Asian rolling mills fail to accumulate substantial stocks of billets, while strong competition opens opportunities for large-scale bargaining. In February 2000 prices for billets in this region kept at USD/tonne 165-167 CIF.

The high in regional prices was registered in Taiwan at USD/tonne 167-170. This can be explained by strong demand for long metal in the country, called forth by reconstruction after the recent disastrous earthquake. Rolling billets are in strong demand in Turkey. In February Ukrainian-made billets were offered at USD/tonne 135-140 FOB on this market.

Experts insist that one should not expect recovery of prices in the nearest future because the billet market strongly responds to the situation on the market for long metal, which suffers hard times at the moment. Dynamics of world prices for square billets is given in table 8.

Long metal (rebars and wire rod)

February brought no significant changes to the world market of rebars and wire rod. As a result, prices did not change considerably.

Like in January, the US market for long metal saw a recovery: good demand for long rolled metal, along with measures aimed at protecting the market from cheap imports, has become the reason for increase in sale prices by American manufacturers. In February rebars on the US market were offered at USD/tonne 245-265 CIF, while wire rod – at USD/tonne 275-285 CIF.

Table 6. World prices for iron (USD per tonne)

Table 7. World prices for steel slabs (USD per tonne

The situation on the world market for rebars and wire rod is favorable for Latin American exporters as well. Brazilian manufacturers report expansion of rebar and wire rod exports to Asia, Middle East and Africa, though they are not quite satisfied with the current level of prices. In February Brazilian rebars were offered at USD/tonne 220-245 FOB and wire rod – at USD/tonne 240-250 FOB.

The situation on the S.E. Asian market for long rolled metal remains vague and uncertain. Demands for wire rod are still rather low with supply far exceeding the available demand. The situation is even more upsetting, since China has practically discontinued imports of wire rod. Prices for this commodity settled at USD/tonne 170-180 CIF, however, even such a level saw no good sales of wire rod. Similar situation was traced on the market for reinforcing bars. In February rebars of Ukrainian and Russian origin were offered at USD/tonne 165-175 CIF. The only exception was Taiwan, where the post-earthquake construction works are under way at present. However, this market is way too small to influence the situation in the whole region.

According the international observers, there will be no increase in prices for rebars and wire rod in the nearest future. Though spring will kick off the construction season in numerous countries worldwide, the market has enough supply to meet any potential demand. Besides, rolled metal for supplies to S.E. Asia will most probably be offered on the other world markets, which will also discourage the mark-up in prices. Dynamics of the world prices for rebars and wire rod is shown in tables 9 and 10.

Plates

In February 2000 the world market for HR plates was quite inert and there were no weighty changes both in prices and in overall situation. Growth of HR plate consumption in S.E. Asia had no effect on prices of Ukrainian and Russian manufacturers. Like in the previous month, plates were offered at USD/tonne 175-185 FOB.

At the beginning of February European manufacturers put up the plate prices. However, this increase was caused more by a lag of plate prices from prices for other rolled metal products, than by influence of market factors. Prices for plates kept at USD/tonne 350-380 FOB.

As well, in February the situation on the US and Latin American markets for plate was steady. Good demand and suitable supply balanced up the market well. The fact that the market for plates will keep passive in the near future is undoubted. Recommencement of consumption of this commodity in Asia does not evidence a complete market recovery. It is also extremely doubtful that European manufacturers will put themselves together to increase prices. The only markets, where insignificant price growth is possible, are the countries of Latin America and the USA. Table 11 presents the dynamics of the world prices for HR plates.

Table 8. World prices for steel billets (USD/tonne)

Table 9. World prices for rebars (USD/tonne)

Table 10. World prices for wire rod (USD/tonne)

Hot-rolled and cold-rolled coils

Starting December 1999, the world market has been gaining strength and stability. All the regional markets indicate strong demand, which for sure fostered the increase in prices.

According to the information provided by traders, the demand on the Chinese market for coils is stable. HR coils enjoy the strongest demand in the southern regions of the country.

HR coils are of somewhat less interest. Since China is the only large importer of coils in the region, to keep export prices up, the Russian and Ukrainian exporters somewhat narrowed export supplies of HR coils in the opening months of the year.

This facilitated recovery of prices and HR coils on the Chinese market were offered at USD/tonne 245-270 CIF, while CR coils – at USD/tonne 310-340 CIF.

In February Ukrainian-made HR coils were offered at USD/tonne 200-220 FOB and CR coils – at USD/tonne 250-280 FOB. Similar coils of Russian origin were offered at USD/tonne 10-12 higher.

Brazilian manufacturers of flat-rolled metal raised the prices. In February prices for HR coils increased by USD/tonne 15-20 to USD/tonne 240-250 FOB. The prices for CR coils practically did not change and stack to USD 310-330 FOB per tonne.

However, there were no large supplies of this rolled metal because Brazil increased consumption of CR coils in automotive industry and machine building, thus most exporters switched to the more profitable domestic market.

The EU market also features stable demand. European traders do not agree to reduce prices in supplies to the third countries, as far as it is more beneficial to supply rolled metal to the domestic market. Export supplies are made at acceptable prices of USD/tonne 300-320 FOB for HR coils and USD/tonne 360-400 FOB for CR coils. Prices on Turkish and US markets are also going upwards.

February 2000 saw unbelievably auspicious situation on the world market for coils. Strong demand for this metal on all the global markets was the reason for global recovery of prices. In the short run prices for HR coils will rise by nearly USD/tonne 10-20, while prices for CR coils will gain some USD 10-15 per tonne.

The dynamics of global prices for HR and CR coils in 1999 and in the first months of 2000 is presented in table 12 and table 13.

Table 11. World prices for HR plates (USD/tonne)

Table 12. World prices for HR coils (USD/tonne)

Table 13. World prices for CR coils (USD/tonne)

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