Ukrainian steelmakers, excluding those in the eastern provinces that
were seized by rebels in 2017, managed to increase their output of pig
iron and steel in 2018, supported by favorable conditions in the global
steel market, and higher prices in particular.
Production of pig iron in Ukraine increased by 5% year-on-year in 2018
to 20.56 million tonnes, the country’s steel union, Ukrmetallurgprom,
said in its latest report.
Crude steel output was up by 1% year-on-year, to 21.1 million tonnes,
while rolled steel output increased by 3% year-on-year, to 18.36 million
tonnes.
Most of the rolled steel volumes were exported. In January-November
2018, Ukrainian producers shipped 16.84 million tonnes of steel products
to foreign customers. This figure was largely unchanged year-on-year,
Ukrmetallurgprom said.
Semi-finished steel product exports accounted for 43.68% of the total
volume, or 7.36 million tonnes, up by 4% year-on-year.
The annual
average price for CIS export billet was
$481.04 per tonne fob Black Sea in 2018, up by $45.64 per tonne against
$435.40 per tonne in 2017, according to Fastmarkets’ price archive.
The annual average price for CIS export slab was
$510.37 per tonne fob Black Sea in 2018, up by $70.90 from $439.47 per
tonne fob Black Sea in 2017.
Finished flat steel shipments accounted for 34.85% of the total export
volume in 2018. Ukrainian producers exported 5.87 million tonnes of flat
steel products over the first 11 months of 2018, up by 2.8%
year-on-year.
The annual average price for CIS export hot-rolled coil (HRC) was
$550.57 per tonne fob Black Sea in 2018, up by $48.28 per tonne against
$502.29 per tonne in 2017, according to Fastmarkets’ price archive.
Export shipments of finished long steel products accounted for 21.47% of
Ukraine’s total steel exports in January-November 2018, reaching 3.62
million tonnes. This was down by 8.6% year-on-year.
The annual average price for CIS export rebar was
$535.51 per tonne fob Black Sea in 2018, up by $67.65 per tonne against
$467.86 per tonne in 2017, according to Fastmarkets’ price archive.
The major export outlets for Ukrainian steel products were Europe, the
Middle East including Turkey, and Africa.
Ukraine’s domestic steel consumption rose by 6.5% over the first 11
months of 2018, to 4.98 million tonnes, according to Ukrmetallurgprom.
Of the total volume, 1.35 million tonnes was imported, up by 12.5%
year-on-year. The share of flat steel products in the total import
volume was 50.82%, while long steel comprised 46.04%.
Situation in East Ukraine
In 2017, pro-Russia rebels seized control of steelmaking assets in the
east of Ukraine, including Metinvest’s Yenakiieve Iron & Steel
Works and its Makiivka unit, the Alchevsk
Iron & Steel works, which formerly belonged to Industrial Union of
Donbass, and pig iron producer
Donetskstal (DMZ).
The mills are continuing to operate under the management of a company
called Vneshtorgservice, using iron ore sourced from Russia, sources
told Fastmarkets, after raw material shipments from other parts of
Ukraine to the region were blocked in early 2017.
The mills, once under the rebels’ control, were heard to ship products
to the Russian market as well as to export them through the Russian
ports of Novorossiysk and Temryuk via another company, called
Gaz-Aliance.
In August 2018, Gaz-Aliance was also granted control over several assets
of the bankrupt Russian Mining & Metallurgical Co. These included the
Revyakino Steel Mill in the Tula region, which has capacity for 500,000
tonnes per year of long steel products, and Stavstal in Stavropol
territory, which can make 500,000 tpy of billet and 350,000 tpy of
rebar.
These mills had been idle for several years, but market participants
have said that operations recently restarted, using semi-finished steel
supplied from East Ukraine.
Russian Mining & Metallurgical was also a former trader in Russia of
products from Industrial Union of Donbass.
In December 2018, market sources reported a sale of Stavstal-origin
billet to Turkey at a price $20-25 per tonne below the market level. The
true origin of the material could not be confirmed, but billet from East
Ukraine was traditionally $20 per tonne cheaper than material from other
CIS suppliers.
Some market participants said that exports of billet from East Ukraine
were not affecting the rest of the CIS billet market, because of the
comparatively small volumes.
According to estimates by market participants, billet export volumes
from East Ukraine varied within the range of 30,000-50,000 tonnes per
month, but production at the various sites was not consistent, for a
number of reasons.
“The issue is not in volumes themselves,” another market source said,
“but in the fact that most of those volumes were concentrated in the
Middle East markets [Turkey in particular], which are traditional buyers
of CIS billet.”
Shipment volumes of slab from Alchevsk Iron & Steel Works were also
reported to be inconsistent.
“We heard of a 30,000 tonnes allocation in December. They had some
production issues,” one source said, adding that in October the mill
allocated 80,000 tonnes of slabs for export.
Slabs from East Ukraine are often heard offered in Asia and Turkey at a
price $10-15 per tonne lower than from traditional CIS suppliers.
The mill ships around 20,000 tpm of plate to the Russian market, sources
said. But in January, it was heard to have redirected shipments for
exports.
Makiivka, a long steel unit of the Yenakiieve Iron & Steel Works, was
heard to supply around 70,000 tpm of rebar to Russia, mostly to the
southern areas.
Both rebar and plate from the assets under rebel control were offered in
the Russian domestic market at lower prices than material from local
mills, pressuring the market.
Meanwhile, combined pig iron shipments from East Ukraine were 90,000 tpm
on average, sources estimated. DMZ remained the key pig iron supplier;
Alchevsk and Yenakiieve sell pig iron now as well, but they are focused
on steelmaking, several sources said.
Prices for pig iron from East Ukraine are normally lower than the
average market level, sources said, mainly due to buyers’ risks and
payment terms. The supplier asks for prepayment, while normally cargoes
from traditional suppliers are sold for payment upon delivery.
Fastmarkets’ price assessment for CIS exports of high-manganese
pig iron was $320-330 per tonne fob
Black Sea on January 24, stable from the previous week.
Meanwhile, the latest deal for East Ukraine origin pig iron was heard at
$345 per tonne cfr in Taiwan. The freight rate would be close to $35 per
tonne, traders estimated.
Turkey, Italy and Peru were heard to be other outlets for pig iron
exports from East Ukraine.
Source from Fastmarkets MB |