Throughout the 1st quarter of 2000 Ukrainian manufacturers and sellers of ferroalloys showed their best and exceeded the performance figures of the previous year. Vigorous marketing policy, insistent resolution of internal economic problems, as well as co

FERROALLOYS

Vitaly GNATUSH, expert with DerzhZovnishInform

Throughout the 1st quarter of 2000 Ukrainian manufacturers and sellers of ferroalloys showed their best and exceeded the performance figures of the previous year. Vigorous marketing policy, insistent resolution of internal economic problems, as well as coordinated activities on the market, favored this achievement.

According to information of Metallurgprom association, in the 1st quarter of 2000 ferroalloy works of Ukraine, i.e. Nikopol, Zaporozhye, and Stakhanov Ferroalloy Works, manufactured about 273,000 tonnes of ferroalloys, +21% against the respective the period of 1999.

However, in March 2000 output corresponded to only about 87% of the February output volume and to 118% of the January production. Such a dynamics of ferroalloy production has been mainly called forth by rather unstable situation in the Ukrainian power sector and by application of the so-called manual control in a number of cases. The evidence is an instruction of the Pres. of Ukraine Leonid Kuchma to the Minister of Energetics of Ukraine concerning uninterrupted electric power supplies to joint-stock company Nikopol Ferroalloy Works. According to Interfax agency, in March 2000 Nikopol Ferroalloy Works produced only 43,000 tonnes of ferroalloys instead of the scheduled 65,000 tonnes. At the same time, the works does not have any arrears to the budget and fully settles the payables for electric power. Nowadays, there is a hope that in the second quarter this company will hit the targets outlined.

According the latest information of the Customs Service of Ukraine, Ukraine exported approximately 53,600 tonnes of ferroalloys worth about USD 22,900,000 in March 2000.

The drop in production echoed the export recession, i.e. the March export figure came to only 82% of the February volume, though compared to January export increased 19.6%.

The total volume of ferroalloy exports in the 1st quarter of 2000, that is 163,700 tonnes, is 1.3 times greater than the level of the respective 1999′ period, however, it yields to the figure of the 4th quarter of 1999 (84.9%) (see the figure for more details).

It should be noted that the favorable balance against the 1st quarter of 1999 was reached primarily due to a 1.9-time increase in ferrosilicon supplies and a 1.7-time increase in ferromanganese exports. Since the beginning of the year the number of countries importing Ukrainian-made ferroalloys has slightly risen to 28. Traditionally, the main consumer of Ukrainian ferroalloys are CIS member-states, which imported about 50.9% of Ukrainian ferroalloy exports (see table 2).

Table 1. Ferroalloy output in Ukraine in 1999-2000 (‘000 tonnes)

Source: Metallurgprom association

Table 2. Ferroalloy exports from Ukraine in 1999-2000 (‘000 tonnes)

Russia was the leader among these states with about 70,300 tonnes or 42.9% of the total ferroalloy exports from Ukraine. Compared to the 1st quarter of 1999, the volume of supplies increased about fourfold, however the Russia’s share in Ukrainian exports grew only 2.9% against the respective period of 1999.

It is worth mentioning that ferrosilicomanganese made up more than a half of supplies to Russia, namely 55.2%, in the period under review. Portions of ferromanganese and ferrosilicon equaled 43.2% and 1.5% respectively.

Asian countries with 25.2% of the total hold the second place in consumption of Ukrainian ferroalloys. The Ukrainians still keep their ground on the markets of South Korea with 9,600 tonnes exported to this country and Turkey with 24,600 tonnes. Silicomanganese accounted for 64.1% of these exports, with ferrosilicon making up 35.9%.

East European countries purchased 11.5% of ferroalloy exports from Ukraine. Ferrosilicon made up 51.1% of the total exports to Eastern Europe, silicomanganese 23.4%, and ferromanganese 25.5%.

The breakdown of ferroalloy exports from Ukraine in the 1st quarter of 2000 differs from the figures of 1998-1999. The share of ferrosilicomanganese in the total exports decreased 1.07 times and that of ferromanganese rose 1.2 times against 1999 (see table 3).

Ferrosilicomanganese was primarily supplied to CIS member-states (48.7% of the total volume) and Asia (30.1%). The main individual consumers were Russia with 38,800 tonnes, Turkey with 15,300 tonnes, and South Korea with 9,600 tonnes. Aggressive promotion of ferrosilicomanganese made by Nikopol Ferroalloy Works has led to an increase in supplies by approximately 1.5 times against the average quarterly exports of 1999. Average monthly exports of ferrosilicomanganese surpassed the 1999 level by roughly 3%.

Ferromanganese was mainly supplied to the CIS (88.2% of the total) and countries of Eastern Europe (11.8%). Russia was unbeatable importing 30,400 tonnes or 74.9% of the total ferromanganese exports from Ukraine. Average monthly export of ferromanganese grew about 32% compared to 1999.

Ferrosilicon was exported in Asian countries (45.7% of the total) and Eastern Europe (29.6%). Turkey with 9,300 tonnes and Slovakia with 2,700 tonnes stood out among the consumer countries. Out of CIS member-states, Belarus purchased about 2,500 tonnes of Ukrainian-made ferrosilicon and Russia acquired 1,100 tonnes. On the whole, average monthly ferrosilicon export exceeded the previous year’s figure by approximately 6%.

Ferronickel with 2,600 tonnes, ferrotitanium with 200 tonnes, and ferrotungsten with 200 tonnes were in hot demand among light ferroalloys.

Ferroalloy exports from Ukraine in 1999-2000

Table 3. Pattern of Ukrainian ferroalloy exports (% of the total)

Ukraine imported about 5,200 tonnes of ferroalloys worth USD 5,500,000 in the 1st quarter of 2000. The scope of suppliers comprised eight countries, namely Belgium, Germany, Kazakhstan, Latvia, the Netherlands, Russia, Singapore, and Sweden. The main supplies of 4,200 tonnes were made from Latvia. Ferrochromium with 4,000 tonnes, i.e. 77.7% of the total ferroalloys imported, led the way among ferroalloys dispatched to Ukraine. Besides, Ukraine imported ferromolybdenum, ferrovanadium, ferroniobium, ferrotitanium, and ferrophosphorus.

In spite of the complicated situation in the Ukraine’s economy, analysis of the current state of production and exports of Ukrainian ferroalloys drives to careful optimism.

The figures in table 4 demonstrate that domestic ferroalloy manufacturers have confidently passed the edge of the 1st quarter and have nice outlooks, especially because the world economic situation has been auspicious, i.e. steel outputs in the world are growing from 4.3% in Africa to 26.2% in the CIS compared to the 1st quarter of 1999. On the whole, 63 countries of the world increased steel outputs by 11.8% in the periods compared.

Taking into account the world experience, Ukrainian ferroalloy manufacturers have begun undertaking preventive measures to protect domestic market from unfair competition. Analysis of Ukrainian trade in ferroalloys shows that some types of ferroalloys are both exported and imported (see table 5 for details).

According to the information with Ukrainian ferroalloy makers, certain foreign suppliers are rather actively trying to negotiate Ukrainian works to supply manganese ferroalloys at low prices. A 15% duty on imports of ferromanganese (codes 7202 11 800 and 7202 19 000) and ferrosilicomanganese (code 7202 30 0000), approved by resolution of the Ukraine’s Cabinet of Ministers dated April 12, 2000, will shield the market from such a policy.

RUSSIA

Apparently, Soyuz Electrometallurgov (the Union of Electrometallurgists), establishment of which was initiated by the Department for Economy of Metallurgical Complex with the Ministry of Economy of the Russian Federation, will target its activities at coordination of steps of Russian electrometallurgists.

According to information with Interfax agency, in the 1st quarter of 2000 public joint-stock company Chelyabinsk Electrometallurgical Works increased ferroalloy output to 145,000 tonnes, i.e. +22.9% compared to the respective period of 1999. Capacities producing low-carbon ferrochromium were 100%-utilized in the 1st quarter of 2000. Chelyabinsk Electrometallurgical Works commenced reconstruction of furnace No.31 to increase output of low-carbon ferrochromium. It is noteworthy that back in 1999 Chelyabinsk Electrometallurgical Works augmented production of ferroalloys by 45% to 529,000 tonnes compared to 1998.

ChermetInformatsiya Bulletin informed that the European Commission decided to lift the EUR/kg 0.31 antidumping duty on ferrochromium, which was imposed against Russian and Kazakh manufacturers. It is mentioned that Russia manufactured 249,000 tonnes of ferrochromium, while joint-stock company Ferrochromium, the biggest manufacturer of ferrochromium in Kazakhstan, made 260,000 tonnes.

Table 4. Ukrainian ferroalloy market (‘000 tonnes)

Table 5. Exports and imports of ferroalloys in 1999

Global market

The situation on the world market for manganese ferroalloys remained rather stable in the 1st quarter of the current year.

The American market for silicomanganese continues to steadily keep up relatively high prices, surpassing the 1999 levels by approximately 20%. As of April 10, the price for silicomanganese amounted to USD/t 551-573 ex-warehouse Pittsburgh, against the average price of USD/t 573 in March 2000 and USD/t 575 in February 2000. Prices on the European market during that period followed the American prices and gained about 25% against the average 1999 price. In the first decade of April 2000, the price for silicomanganese on this market reached DEM/t 990-1,020 against the average March price of DEM/t 1,005 and February price of DEM/t 965. The Asian market for silicomanganese is rather stable and prices are kept within USD/t 385-395.

In the 1st quarter similar situation was traced on the ferromanganese market as well. At the beginning of April, ferromanganese price, up to 7.5% carbon contents, amounted to DEM/t 860-900 on the European market against the average March price of DEM/t 865 and February prices of DEM/t 818. Compared with 1999, the prices grew about 20%. Ferromanganese price on the US market increased about 5-8% against 1999 and reached USD/lt 470-485 against USD/lt 468 in March 2000.

Prices of the European ferrosilicon market continued smooth reduction in the 1st quarter and amounted to DEM/t 1,100 –1,150 in the first 10 days of April against the average price of DEM/t 1,200 in January 2000.

In comparison with 1999 the decline is insignificant and it does not go beyond 4%. Prices on the American market for ferrosilicon are quite stable. At the beginning of April US prices stabilized at USD/lb. 0.41-0.42 against the average March price of USD 0.41 per lb.

Table 6. World prices for ferroalloys

Sources: MBR Ferro-alloys Monthly, Metal Bulletin

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