According to the Association of Ukrainian Ferroalloy Producers (UkrFA), the Ukrainian ferroalloys industry is facing a difficult situation due to the sharp decrease in outputs and the increase in production costs, which may lead to the complete stoppage of plants for an indefinite period, as happened in autumn 2008.
Accordingly, in July this year the largest Ukrainian ferroalloy producer Nikopol Ferroalloy Plant decreased its production of manganese alloys by 10.74 percent compared to June and by 19.3 percent compared to May to 71,929 mt. Another producer Stakhanov Ferroalloy Plant saw its July ferroalloy output fall by 15.7 percent compared to June and by 28.35 percent compared to May to 11,488 mt.
However, the worst situation is currently seen at Zaporozhye Ferro Alloys Plant, the output of which in July amounted to 11,842 mt - down 37 percent compared to June and down 65 percent compared to May this year. Currently, the plant produces at just a quarter of its production capacity, UkrFA noted.
In August this year, Zaporozhye Ferro Alloys Plant has been forced to halt its silicomanganese production and plans to produce only 11,000 mt of ferroalloys during the month. Meanwhile, Nikopol Ferroalloy Plant and Stakhanov Ferroalloy Plant also plan to cut their production in August to 67,000 mt and 11, 000 mt respectively.
UkrFA said that the main reasons for the current situation facing domestic producers are the complicated state of the world ferroalloy market, the seasonal decline in consumption, high production costs and the high volume of ferroalloy imports in Ukraine.
The ferroalloy producers noted that, in the current year as compared to the previous year, the cost of electricity has increased from $46 to $51 per 1,000 kilowatt-hours, while coke prices have gone up from $97 to $282 per dry metric ton.
Among other negative factors, UkrFA noted the Ukrainian government's abolition of preferential treatment for domestic mining and metallurgical companies, the increase in railway transportation tariffs, and non-payment of VAT refunds.