FERROALLOYS

Vitaliy GNATUSH, expert with DerzhZovnishInform

The year 2000 may see Ukrainian exports of 660 ths. metric tons of ferroalloys and domestic consumption of some 460 ths. metric tons of these commodities.

Output

According to the Metallurgprom data, in the year 1999 Ukrainian ferroalloy plants of Nikopol, Zaporozhye and Stakhanov manufactured some 1,000 ths. metric tons of ferroalloys, 11% up from 1998 (see table 1). In 1999, average monthly production of electric-furnace ferroalloys amounted to 83.3 ths. metric tons, which is nearly 11% up against the 1998 average of 75.0 ths. metric tons per month.

Sources: State Statistics Committee of Ukraine, Metallurgprom association

Exports

According to the adjusted data with the State Customs Service of Ukraine, during 1999 export turnover of Ukrainian ferroalloys amounted to roughly 595.9 ths. metric tons worth some USD 225.0 mln. Average monthly export of ferroalloys within 1999 indicated 49.6 ths. metric tons against 54.1 ths. metric tons in 1998 (see the figure below).

During 1999, the pattern of ferroalloy exports was subject to sizeable alterations. According to the final available figures, the portion of ferrosilicomanganese in the total ferroalloy exports increased as high as 1.1 times and the portion of ferrosilicon – as high as 1.4 times against 1998 (see table 2). The portion of ferromanganese exports in the total Ukrainian ferroalloy exports decreased as low as 1.4 times.

Changes in the pattern of Ukrainian ferroalloy export were most probably caused by the ambiguous situation on the world ferroalloy market in 1999. On the one hand, demand and prices for ferrosilicon were on the rise. At the same time, following a slowdown, prices for manganese ferroalloys started to drift upward by the end of the year. It is likely that the technical issues of ferrosilicomanganese and ferromanganese application influenced the demand for these ferroalloys as well.

Geographical distribution of Ukrainian ferroalloy exports remained unaltered throughout the whole year (see table 3), which evidences rather stable foreign trade activities. At the same time, exports of Ukrainian ferroalloys feature an extremely irregular distribution by regions of the world, though some 42 countries worldwide are doing ferroalloy trade with Ukraine. The largest export supplies of 232.8 ths. metric tons (39.1% of the total Ukrainian ferroalloy exports) were forwarded to CIS countries. Traditionally, Russia is the largest consumer of Ukrainian ferroalloys. In 1999, Russian enterprises purchased 177.6 ths. metric tons of Ukrainian-made ferroalloys (i.e. 29.8% of the total Ukrainian ferroalloy exports and 76.3% of the total CIS-bound ferroalloy exports). Manganese ferroalloys prevail in export supplies to Russia: ferrosilicomanganese made up 67.6% of the total Russia-bound ferroalloy exports and ferromanganese – 39.3%.

Asia is the second largest importer of Ukrainian ferroalloys. During the period under review, some 182.3 ths. metric tons or 30.6% of the total Ukrainian exportable ferroalloys were bound to Asian countries. Ferrosilicomanganese, which contributed 70.8% to the total Asia-bound exports of Ukrainian ferroalloys, and ferrosilicon (28.1% of the total) enjoyed the strongest demand. The largest Asian importers were Turkey (consuming 53.5% of Ukrainian ferroalloy supplies to Asia) and Japan (18.7%).

East European countries ranked the third consuming 14.6% of the total Ukrainian ferroalloy exports. The main consumers within this group of countries were Romania (importing 38.1% of the total supplies to the region), Poland (21.3%), Czech Republic (20.2%) and Slovakia (11.8%). Eastern Europe entertains hot demand for ferrosilicon (49.3% of the total), whereas ferromanganese and ferrosilicomanganese hold approximately equal portions of this market, i.e. 26.3% and 24.4% respectively.

In 1999, Ukraine exported the following ferroalloys:

Ferrosilicomanganese was primarily supplied to Asia (37.6% of the total), the CIS (35.2%) and North America (11.4%). The largest consumers were Russia (102.3 ths. metric tons of Ukrainian ferrosilicomanganese), Turkey (68.9 ths. metric tons), Japan (25.7 ths. metric tons), South Korea (21.7 ths. metric tons), Egypt (17.3 ths. metric tons), Finland (12.7 ths. metric tons) and Canada (12.2 ths. metric tons).

Ferrosilicon was mainly exported to Asian countries (41.8% of the total), Eastern Europe (34.9%) and the CIS (14.8%). Regular trade partners of Ukraine were Turkey (importing 28.4 ths. metric tons of Ukrainian ferrosilicon), Romania (11.9 ths. metric tons), Belarus (10.4 ths. metric tons), Czech Republic (10.6 ths. metric tons), Latvia (8.1 ths. metric tons) and Slovakia (8.6 ths. metric tons). Only 3.8 ths. metric tons of ferrosilicon were destined to Russia.

Ferromanganese was mostly exported to CIS member-states (75.8% of the total) and Eastern Europe (18.7%). The largest consumers were Russia (69.8 ths. metric tons of Ukrainian ferromanganese), Kazakhstan (16.9 ths. metric tons) and Romania (19.1 ths. metric tons).

Along with basic ferroalloys, Ukrainian manufacturers also exported lightweight ferroalloys. These included ferronickel (5.6 ths. metric tons exported), ferrotitanium (some 0.9 ths. metric tons), ferromolybdenum (0.4 ths. metric tons) and ferrotungsten (some 0.3 ths. metric tons).

IMPORTS

In 1999 Ukraine imported some 15.5 ths. metric tons of ferroalloys worth USD 19.2 mln. Supplies were made from 15 countries of Europe and Asia. The three leading exporters to Ukraine were Russia (10.1 ths. metric tons), Brazil (0.5 ths. metric tons) and Kazakhstan (some 0.5 ths. metric tons). One can easily guess that ferrochromium (9.1 ths. metric tons or 58.9% of the total ferroalloy imports) was the chief ferroalloy imported to Ukraine. Other import items included ferrovanadium (0.7 ths. metric tons imported), ferrosilicon (0.5 ths. metric tons), ferromolybdenum (0.4 ths. metric tons) and other ferroalloys.

Conclusions and outlooks

Summarizing the data on ferroalloy output, exports and imports for 1998-1999, one can notice that the situation with Ukrainian ferroalloys is quite auspicious (see table 4).

Considering the situation in the world economy and favorable short-term forecasts, we suppose that Ukrainian ferroalloy plants are capable of boosting output by 10-12%. Given such an increase, one should expect ferroalloy export turnover of 660-670 ths. metric tons in 2000 and domestic consumption of 455-466 ths. metric tons. However this may remain nothing but a forecast if Ukrainian electric power companies fail to ensure normal functioning of the electric power system.

According to the analysts’ estimates, the world market for manganese ferroalloys will feature a favorable tendency in 2000. It is expected that in the first quarter of 2000 global consumption of high-carbon ferromanganese will increase by 5% and silicomanganese – by 6% against the fourth quarter of 1999. Along with this, in the first quarter of 2000 European prices for high-carbon ferromanganese will amount to USD 400 per tonne in average, while average silicomanganese prices will indicate USD 460 per tonne. The MBR predicts that the 2000 prices for high-carbon ferromanganese will come to USD 525 per tonne and for silicomanganese – USD 530 per tonne. As of the beginning of January, the forecast precisely correlates with the actual European prices, i.e. with USD 425–430 per tonne for high-carbon ferromanganese and USD 500-505 per tonne for silicomanganese.

The world market for ferrosilicon will be a turbulent one in 2000. The MBR estimates a 3-5% increase in ferrosilicon consumption against 1999. By the year-end, this will induce a recovery of European prices up to USD 685 per tonne and in US prices up to USD 0.44 per lb.

• DerzhZovnishInform

• Editor of the Markets column — Vladimir PIKOVSKY, Head of Metal Markets Research
  and Information Department with the National Research and Information Center for
  Monitoring of International Commodity Markets