In 1999, Southeast Asia and Middle East consumed nearly 60% of the total metal exports from Ukraine.

FERROUS METALS

FERROUS METALS

Alexander SHEIKO, expert with DerzhZovnishInform

NAME="_Toc446072203">In 1999, Southeast Asia and Middle East
consumed nearly 60% of the total metal exports from Ukraine.Global output

According to the latest information with the International
Iron & Steel Institute, in 1999 global production of steel amounted to some 770.65
mln. metric tons of steel, 1.4% up against the respective 1998 figure of 759.89 mln.
metric tons.

During this period, 15 EU member-countries reported a 2.9%
decrease in steel production (the total output was 155.36 mln. metric tons). Reduction
mainly occurred due to narrowed steel production in Belgium – down by 4% to 10.97 mln.
metric tons, France – by 0.4% to 20.211 mln. metric tons, Germany – by 4.5% to 42.05 mln.
metric tons, Italy – by 3.2% to 27.96 mln. metric tons and Spain – by 1.4% to 14.82 mln.
metric tons.

Eastern and Central European countries faced certain
difficulties that arose from unfavorable situation on the global market for rolled metal
and therefore had to step the steel output down. In total, this region manufactured 41.56
mln. metric tons of steel in 1999, 10.7% down from the 1998 figures.

Steel production in North America slightly increased
against the year of 1998. In 1999 this region manufactured some 128.75 mln. metric tons,
which is 0.1% up against 1998. While the USA reported a 1.3% decrease in steel production
(to 96.05 mln. metric tons), Mexico and Canada increased steel output by 7.6% (to 15.29
mln. metric tons) and 2.1% (to 16.3 mln. metric tons) respectively.

Similar situation was traced in South America. Due to
decrease in steel output in Brazil (by 3% to 24.9 mln. metric tons) and Argentina (by
10.7% to 3.76 mln. metric tons), on the whole the region manufactured some 34.513 mln.
metric tons of steel (i.e. 4.8% lower than in 1998).

As well, steel output narrowed in Africa and Oceania by
5.9% (to 10.94 mln. metric tons) and 8% (to 8.9 mln. metric tons) respectively.

In 1999 Asian countries manufactured 298.174 mln. metric
tons of steel. This is 3.5% up from the 1998 level. Increase in production occurred due to
stepped up output in China (by 8% to 123.31 mln. metric tons) and South Korea (by 2.9% to
41.04 mln. metric tons).

The largest increase in steel production was registered in
CIS countries – up by 17.6% to 83.117 mln. metric tons. Production volumes increased in
Russia (by 19.1% to 49.75 mln. metric tons), Kazakhstan (by 33.2% to 4.116 mln. metric
tons) and Moldova (by 10.9% to 0.796 mln. metric tons).

Global production of steel in January-August 1999 is shown
in table 1.

Table 1. Global output of steel

Production of steel in Ukraine

According to the data with Metallurgprom, in 1999 Ukraine
manufactured 21,837 ths. metric tons of iron, 26,994 ths. metric tons of steel and 19,242
ths. metric tons of rolled metal. Production of iron added 9%, steel – 12% and rolled
metal – 8%.

Data on output of iron, steel and rolled metal are
presented in tables 2 and 3.

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

Table 3. Production by Ukrainian metallurgic mills
in 1999, ths. metric tons

Exports

The year expired was not too successful for exporters of
Ukrainian metal products. This was supported by a weighty decrease in export revenues
yielded by Ukrainian metal products.

According to statistics, in 1999 Ukraine exported some
26,280 ths. metric tons of metal products worth USD 3,626,550 ths. Thus, physical exports
exceeded the respective 1998 indicator by 24.47%, though export revenues were 11.5% lower.

There were no significant changes in distribution of
Ukrainian physical exports compared to 1998. Traditionally, the major articles were (in
percent to the total metal exports and in ths. metric tons under CN code 72): semis
including slabs – 30% or 7,900 ths. metric tons; ferrous scrap and waste – 17.8% or 4,690
ths. metric tons; HR flat metal – 16.9% or 4,440 ths. metric tons; as well as rebars – 10%
or 2,739 ths. metric tons and iron – 7.14% or 1,975 ths. metric tons.

Exports of virtually all the commodity articles went up.
Export of semis gained 57%, ferrous scrap and waste – 42%, wire rod – 49%, HR flat metal
– 26.7% and rebars – 10%.

Along with this, export of iron dropped by 11% (down to
1,875 ths. metric tons), bars – by 9.5% (to 519 ths. metric tons) and ferroalloys – by
6.8% (to 593 ths. metric tons).

Table 4 presents the data on export of metal products from
Ukraine in 1998 and 1999.

Table 4. Export of metal products from Ukraine

In 1999 distribution of Ukrainian metal exports by regions
underwent no significant changes against the year of 1998.

Like in 1998, the main markets for domestic metal products
were (in percent to the total metal exports and in ths. metric tons under CN code 72):
Southeast Asian countries – 34% or 8,952 ths. metric tons; Middle Eastern countries -
26.2% or 6,901 ths. metric tons; Eastern European countries – 9.3% or 2,461 ths. metric
tons; as well as EU member-countries – 7.7% or 2,038 ths. metric tons and North American
countries – 7.13% or 1,874 ths. metric tons. CIS countries consumed 6.5% of Ukrainian
metal exports (to compare, this ratio was 10.4% in 1998).

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

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

China

For a couple successive years, China has been one of the
largest importers of Ukrainian and Russian metal. Percentage of this country in the total
physical export of metal products from Ukraine comes to 17%, while revenues from metal
exports to China amount to 17.6% of the total.

In 1999 the Chinese market consumed some 4,672 ths. metric
tons of Ukrainian metal products worth USD 641,407 ths. This exceeds the 1998’ physical
turnover figures by 25.1%, while export revenues are 2.1% down.

Active demand for rolled metal (domestic production of this
commodity in China is insufficient), backed with various government construction programs,
facilitated a recovery of export supplies of CR flat metal to this country (supplies
increased about as high as 2.5 times to 568 ths. metric tons) and of HR flat metal (up by
18% to 1,126 ths. metric tons).

Semis supplies also expanded, especially those of square
billets and slabs – up by 35.6% to 2,372 ths. metric tons. It should be emphasized that
semis make up over a half of the total physical exports of metal products to China.

However, due to limited issuance of import licenses by the
Chinese government in 1999, supplies of rebars and wire rod to this country did plunge. In
1999 China imported 206.7 ths. metric tons of rebars (37.7% down against 1998) and 192
ths. metric tons of wire rod (16.8% less than in 1998).

EU

In 1999 the EU market was one of the most attractive places
for Ukrainian-made metal products. This originated from steady strong demand for metal on
this market and from the respective high prices.

In 1999 Ukraine exported 2,038 ths. metric tons of metal
products worth USD 274,553 ths. to the EU. This exceeds the 1998’ physical exports by
2.1% and is 26% lower in terms of export revenues.

Quotas imposed back in 1995 impeded the growth in metal
(rolled metal) supplies to this market. It should be mentioned that almost 95% of the 1999
quotas on EU-bound metal supplies were utilized, although the quotas themselves were
distributed in May 1999. Export supplies of HR flat metal amounted to 135 ths. metric
tons, including plates and coils (1.72% up against 1998).

It is also worth mentioning that in 1999 demand for bars
recovered on this market, namely supplies of these metal commodities gained nearly 86%
coming to 17.71 ths. metric tons (85% of the quota limits were used).

In 1999, main articles of Ukrainian exports to this market
were semis (36.2% of the total Ukrainian metal exports to this region or 739 ths. metric
tons), ferrous scrap and waste (31% or 630 ths. metric tons) and iron (15% or 308 ths.
metric tons). Export of iron plummeted by 43%, while supplies of semis and scrap metal
increased by 58.27% and 2.35% respectively.

USA

For long the US market has attracted exporters from all
over the world, foremost owing to strong demands and high level of prices. Naturally,
Ukrainian traders and producers are no exception. While Japanese and Korean exporters
supply finished rolled metal to the USA, Ukrainian and Russian suppliers are mainly forced
to export semis and other raw materials due to antidumping restrictions and poor quality
of their metal.

In total, Ukraine exported some 1,749 ths. metric tons of
metal products worth USD 197,428 ths. to the US market in 1999. This exceeds the 1998
physical exports by 17.47% and the 1998 export revenues by 96%, which is definitely a fine
performance.

Iron was the main export item in supplies to this country
making up 60% of the total metal exports (1,065 ths. metric tons). Semis ranked the second
with 19% of the total (334 ths. metric tons). Moreover, export supplies of iron gained 19%
and of semis – 20% compared to the 1998 figures.

Due to favorable market situation and certification of
products in compliance with the American standards, Ukrainian exporters of long rolled
metal secured their positions on this market and expanded export supplies in 1999. Export
supplies of rebars increased from 5.14 ths. metric tons in 1998 to 64.24 ths. metric tons
in 1999, while supplies of wire rod grew from 60 ths. metric tons to 162.7 ths. metric
tons respectively. This is undoubtedly a nice achievement of Ukrainian exporters in the
year expired.

Turkey

Turkey is one of the largest markets for Ukrainian
commodities including metal products.

In 1999 this market consumed 4,117 ths. metric tons of
Ukrainian metal products worth USD 360,155 ths. While physical supplies from Ukraine to
Turkey added 18.5%, export revenues plunged by 23.2% against the 1998 figures.

Turkey is one of Middle Eastern countries with rather
developed iron & steel industry. This is likely to be the reason why the main items of
Ukrainian exports to Turkey are ferrous scrap and waste (68% of the total Ukrainian metal
exports to this country or 2,817 ths. metric tons) and iron (4.65% of the total or 191
ths. metric tons).

As well, Turkey imported slabs and semis for manufacturing
of long rolled products in 1999. While in 1998 Turkey consumed some 115 ths. metric tons
of this rolled metal, in 1999 this volume increased nearly threefold all the way to 375
ths. metric tons.

HR metal was in hot demand on this market. Last year
Ukraine exported about 457 ths. metric tons of HR metal products to Turkey. This is 18.5%
down against 1998. Nevertheless, facing fierce competition on the market and inauspicious
market situation, domestic exporters have managed to retain their positions on this
market.

In mid-1999 unfavorable global conjuncture made Turkish
rebar and wire rod manufacturers reduce export supplies and switch to the interior market.
In turn, this elbowed a number of traditional importers of this rolled metal (including
Ukrainian traders and suppliers) from the Turkish market.

This explains a decrease in Turkey-bound exports of rebars
(down by 74.5% to 24.6 ths. metric tons) and wire rods (down by 92.3% to 8.79 ths. metric
tons).

However, in 1999 Ukrainian exporters managed to gain some
advantages. Turkey is currently engaging in extensive reconstruction after the disastrous
earthquake. Thus, Turkey-bound supplies of structural metal commodities, such as angles,
channels and various bars, gained some 18.3%.

Russia

The Russian Federation is one of crucial markets for
Ukrainian rolled metal.

In 1999 Ukraine exported some 1,073 ths. metric tons of
metal products worth USD 308,247 ths. to Russia. At the beginning and in the middle of
1999, the situation on the Russian market was rather unfavorable. Owing to devaluation of
Russian ruble against US dollar, USD prices for all the commodities were way below the
export prices, which made exports to Russia economically unjustified. However, starting
October the situation stabilized somewhat.

The main items of Ukrainian metal exports to Russia were HR
flat metal (constituting 18.6% of the total Ukrainian metal exports to this country or 200
ths. metric tons), rebars (18.7% or 201 ths. metric tons), bars (18.4% or 198 ths. metric
tons) and CR rolled metal (4.8% or 51.7 ths. metric tons).

It is worth mentioning that the increase in export supplies
was traced only for HR flat metal (adding 21%) and CR flat metal (43.2% up). All the
Russia-bound export items yielded less export revenues to Ukraine than in 1998.