IRON ORE POTENTIAL OF UKRAINE
IRON ORE POTENTIAL OF UKRAINE
In the 12 months of 2000, Ukraine’s mining and
metallurgical enterprises produced some 42.3 mln. tons of concentrate, 38.7 mln. tons of
sinter, and 12.3 mln. tons of pellets.
Despite some adverse factors (energy supply restraints,
lack of rolling stock, and scheduled overhaul/upgrade activities at a number of
enterprises), total production of iron ore and concentrate outran the 1999’ figures by
17% (+8.2 ths. tons and 6.4 ths. tons respectively). Output of prepared raw materials also
added 12% or 5.7 ths. tons; in particular, sinter +8% or 3 ths. tons and pellets +28% or
2.7 ths. tons.
Auspicious conjuncture on the market for iron ore products
(IOP) in 2000 drove export up. In the period under review, shipments from Ukraine grew by
35% against 1999 and outran 17.8 mln. tons. By and large, in January-December 2000,
Ukrainian IOP exports comprised some 6.0 mln. tons of sinter, 5.9 mln. tons of cocentrate,
and 6 mln. tons of pellets.
Average monthly shipments from Ukraine in 2000 made some
490 ths. tons of concentrate at an average price of USD/mt 22 and 500 ths. tons of pellets
at USD/mt 27.
No changes in by-region distribution of Ukraine’s IOP
export happened in 2000. As ever before, Poland, the Czech Republic, Slovakia, and Austria
were major markets for the Ukrainian commodities. These four contributed the total of 85%
to the exports. Countries, whose share in Ukrainian IOP export outran 30%, were the Czech
Republic and Poland (sinter and concentrate), as well as Austria (pellets). By-region
distribution of IOP supplies from Ukraine in 2000 is illustrated at Figures 1-4.
Figure 1. By-region distribution of IOP export from
Ukraine in 2000
Figure 2. By-region distribution of sinter supplies
from Ukraine in 2000
Figure 3. By-region distribution of concentrate
supplies from Ukraine in 2000
Figure 4. By-region distribution of pellet supplies
from Ukraine in 2000
As compared to 1999, physical import of IOP was 54% up with
currency earnings increasing by 84%.
Like in 1999, the only supplier of IOP to Ukraine in 2000
was the RF. In the period under review, Ukraine’s total imports of IOP outran 7 mln.
tons, including 5.1 mln. tons of concentrate and 2.1 mln. tons of pellets. Monthly average
supplies in 2000 comprised 420 ths. tons of concentrate at an average price of USD/mt 21
and some 180 ths. tons of pellets with USD/mt 36 as an average price.
Reference
Producer prices in 2000 for iron ore raw materials, EXW,
VAT not included, USD/мт
iron ore concentrate:
the RF
Stoylensky Ore Mining and Concentrating Works (OMCW) (67%
Fe) 12.5-13.2
Mikhaylovsky OMCW (65% Fe) 11.5-12
Ukraine
Ingulets OMCW (63.7% Fe) 14
Yuzhny OMCW (63% Fe) UAH/mt 73.68
pellets:
Mikhaylovsky OMCW (62-63% Fe) 18-22
Poltava OMCW (62% Fe) 20
Severny OMCW (59% Fe) 22.5
Tsentralny (59.8% Fe) 22-22.5
Ukraine’s import of IOP in 2000 originated from
Lebedinsky, Stoylensky, and Mikhaylovsky OMCWs. The first two contributed impressive 97%
to total IOP supplies to Ukraine. As regards commodity range, concentrate dominated in
Ukraine-bound shipments from Stoylensky OMCW (67% of total 2000’ import turnover),
whereas supplies from Lebedinsky OMCW primarily embraced pellets (90%).
Situation and development trends on the world IOP
market
Annual export turnover of IOP in the world comes to 0.5
bln. tons. Brazil and Australia top the list of exporters with aggregate 70% of the world
iron ore export and annual output of 190 mln. tons and 150 mln. tons respectively.
The leading importers of IOP comprise Japan (over 150 mln.
tons per annum), Germany (45-50 mln. tons), USA (30-40 mln. tons), and South Korea. Japan
imports iron ore mainly from Australia, Brazil, and India; Germany – from Brazil,
Sweden, Canada; whereas the USA obtain IOP from Canada, Venezuela, and Liberia.
The following trends have recently evolved on the market:
- increasing portion of iron ore pellets and, thus,
shrinking share of sinter in export supplies to the markets of developed countries. This
is mostly attributable to environmental requirements getting tougher;
- tightening of requirements for iron ore quality, which is
fostered by further advance of direct reduction technology (high content of iron and low
amount of silica and alumina).
- misbalance of supply and demand ratio on the world market
for raw iron ore materials. Consumption tends to grow against virtually steady production
level.
Growing demand is fueled by increased capacities in ferrous
metallurgy of Eastern and Southeastern Asia, which lack high-quality crude iron ore. Thus,
for instance, steel production in Asia (Japan included) is expected to add 60 mln. tons by
2005, one-third of these (20 mln. tons) due to production boom in China. Output should
also increase in South Korea, Taiwan, and India.
Price forming factors
Since iron ore is not an exchange commodity, its market
price is traditionally fixed during annual negotiations between suppliers (Brazil,
Australia, and Republic of South Africa) and major consumers, which are Japan and Western
Europe.
Talks on IOP supplies in 2001-2002 began in the second half
of October 2000.
Pointing out growing steel production in the world,
Australia’s producers of coal and iron ore aim at a 3-5% increase in prices. Thus,
Australian and Canadian exporters have already succeeded to raise the price for
Japan-bound coking coal export by USD/mt 3-8 depending on the grade.
In return, Japanese steel producers will put stress on low
profitability of steel making, which is lately traced, as well as dropping production
growth rates in the second half of 2000. Another factor in the way of raising of iron ore
prices, which is to be mentioned during negotiations on supplies in 2001-2002, may be
notable increase of purchase prices for coking coal, considering that mines and deposits
usually belong to the same suppliers.
While holding negotiations, IOP exporters from Ukraine and
the RF to countries of Eastern Europe should take advantage of growing cost of marine
transportation, as iron ore exported from these countries is freighted by railways.