Despite a number of microeconomic difficulties, the current situation on the Ukrainian ferroalloy market causes a careful optimism. Furthermore, preliminary information implies that in the near future Ukrainian ferroalloy mills will attain almost full uti

FERROALLOYS

Vitaly GNATUSH, expert with DerzhZovnishInform

Despite a number of microeconomic difficulties, the current situation on the Ukrainian ferroalloy market causes a careful optimism. Furthermore, preliminary information implies that in the near future Ukrainian ferroalloy mills will attain almost full utilization of their productive capacities.

Everything seems to be quite favorable for Ukrainian-made basic ferroalloys in the short run mainly owing to nice forecasts for booming global economy and steel output (the estimates mention that gains will come to 1-3% per year). Though the rates of growth are rather moderate, even these tempos will help Ukrainian ferroalloy companies hold out on the world market and even expand business contacts. The January 2000 results of financial and manufacturing performance of Ukrainian companies definitely prove all these statements. According to data with Metallurgprom association, in January 2000 Nikopol, Zaporozhye and Stakhanov Ferroalloy Works manufactured roughly 71,000 tonnes of ferroalloys, 7.8% down compared to output in January 1999 (see table 1 for more details).

At the same time, the January manufacturing output in ferroalloy industry surpassed the December 1999 figures by 16%. Ferroalloy manufacturers have managed to achieve such results notwithstanding limited supplies of electric power.

The latest statistical data of the State Customs Service indicate that Ukraine exported some 44,800 tonnes of ferroalloys worth approximately USD 17,800,000 in January 2000. The average monthly ferroalloy export in January was 1.2% below the December 1999 average and 11% greater than the average in January 1999.

Table 1. Ferroalloy output in Ukraine (‘000 tonnes) (Source: Metallurgprom association)

January saw a sharp reduction in the number of countries importing Ukrainian-made ferroalloys. Back in 1999 Ukrainian ferroalloys were exported to 42 states worldwide, while in January 2000 this list embraced only 21 countries.

Similar to the last year, CIS member-states were the principal importers of Ukrainian ferroalloys in January with consumption of about 50.8% of Ukrainian ferroalloy exports (see table 2).

Russia leads this pack. In January 2000 Russia imported approximately 19,700 tonnes of ferroalloys thus consuming 43.9% of the total ferroalloy exports from Ukraine. Well, a year ago Russia’s share came to only 29.8%. It is worth pointing out that ferrosilicomanganese accounted for 57.4% of the total Russia-bound exports of Ukrainian ferroalloys in January. Correspondingly, ferromanganese exports made up 41.1% and ferrosilicon – 1.5% of the total. Hence, in January manganese-based ferroalloys were the absolute favorites in exports to Russia contributing 98.5% to the total ferroalloy exports to this country.

Asian economies came second consuming 31.9% of the total Ukrainian ferroalloy exports in January 2000. South Korea imported 6,500 tonnes and Turkey – 5,800 tonnes of Ukrainian ferroalloys, which proves that Ukrainian companies still have a strong presence on these markets.

Ukraine forwarded some 11.3% of its ferroalloy exports to Eastern European states. The intensity of trade flows to these countries has deteriorated and currently equals to some 70% of the 1999 average monthly export turnover.

In January 2000 the pattern of exports underwent fundamental changes compared to 1999. The available data show that ferromanganese’s share in the total Ukrainian ferroalloy exports increased 1.15 times and ferrosilicon’s share rose 1.1 times, while ferrosilicomanganese’s share lowered 1.09 times (see table 3).

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

Export of Ukrainian ferroalloys featured the following trends in January 2000.

Ferrosilicomanganese was primarily exported to CIS countries (52.5% of the total Ukrainian exports of ferrosilicomanganese) and to Asia (37.6%). The major consumers were Russia (11,300 tonnes) and South Korea (6,500 tonnes).

Ferrosilicon was bound to Asian countries (59.3% of the total ferrosilicon exports from Ukraine) and Eastern European states (29.6%). Turkey (4,100 tonnes) and Slovakia (1,100 tonnes) were the most prominent importers of this Ukrainian commodity.

Almost all the exportable ferromanganese was dispatched to CIS member-states, which consumed 87.6% of the total Ukrainian export of this ferroalloy. Russia (8,000 tonnes) was the unrivaled leader among consumers of Ukrainian-made ferromanganese.

Ukraine also made exports of light ferroalloys, such as ferronickel (300 tonnes), ferrotitanium (80 tonnes) and ferrotungsten (20 tonnes).

The Ukrainian market lacks a whole range of ferroalloys, thus having to do imports. In January 2000 Ukrainian companies imported 1,590 tonnes of ferroalloys worth USD 1,360,000 from Germany, Lithuania, the Netherlands and Sweden.

Ferrochromium was the chief import article accounting for 90.3% of the overall ferroalloy imports to Ukraine. Besides to this commodity, Ukraine also imported ferromolybdenum, ferrovanadium and ferrosilicon.

Despite a number of microeconomic difficulties, analysis of the current situation on the Ukrainian ferroalloy market drives to something like a careful optimism (see table 4).

Furthermore, preliminary information implies that in the near future Ukrainian ferroalloy mills will attain almost full utilization of their productive capacities.

The world market for manganese ferroalloys is definitely upturning.

The US market for silicomanganese is playing a familiar game with dynamic price recovery, therefore continuing the auspicious 1999 trends. As of February 17, 2000, silicomanganese cost USD/tonne 562-595 ex-warehouse Pittsburgh (compared to the average January 2000 price of USD 573 per tonne and the average December 1999 price of USD 562 per tonne).

European prices are trying to keep up with US prices, though at the moment the European rates and figures are trailing behind. In February European silicomanganese price settled at DEM 950-1,000 per tonne (compared to January 2000 average of DEM 950 per tonne and December 1999 average of DEM 870 per tonne).

The situation on ferromanganese market is very much alike. As of the second half of February, European prices of ferromanganese, up to 7.5% carbon content, amounted to DEM 820-830 per tonne against the January average of DEM 812 per tonne. Conformably, US prices came to USD 450-465 per long ton as compared to USD/lt 449 observed in December 1999.

In December 1999 and January 2000 the European market for ferrosilicon featured a rather stable average price of DEM 1,200 per tonne. In the second half of February European prices somewhat lowered to DEM 1,100-1,200 per tonne, while US prices for ferrosilicon increased to USD 0.36-0.38 per lb.

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

Table 4. Ukrainian ferroalloy market (‘000 tonnes)

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