At the SteelOrbis IREPAS conference in Prague on Tuesday, speaker Svetlana Delamure, Head of International Steel Markets Department from Metal Courier in
Ukraine, discussed the situation of the
CIS long products market.
Ms. Delamure cited data from 2005 showing that the main producers of steel long products in the
CIS were
Ukraine and
Russia with
Russia having a total of over 20 mills and
Ukraine following with over 10 mills. Finished long product output for January – July 2006 showed
Russia producing 10.4 million metric tons and
Ukraine with 6.0 million metric tons.
Production growth in both
Russia and
Ukraine is up. However,
Ukraine may see a possible decline in its
production in the long run. The main producer in the
Ukraine is Mittal Steel, which is actually expected to have a long product cut back by 2009, diverting their efforts instead to flat products.
Russia is considered a domestically-oriented industry while
Ukraine is export-oriented. The
construction market in
Russia is booming resulting in a very high demand for long products and driving domestic prices up. These higher domestic prices are influencing export quotations. In
Ukraine, the domestic prices depend on the export market conditions.
Consumption is expected to increase in
Ukraine and
Russia as many factors are driving
consumption figures up. Such driving forces are the booming
construction industry, stable GDP growth rates, the steady performance of the machine building sector, and growth in the metal ware sector.
Since domestic prices for long products are so high in
Russia, imports look very attractive to buyers.
Ukraine's import market is looking up as well. Today,
Russia's import market share is 12% while
Ukraine's import market share is 17% and is expected to climb further due to high domestic prices. However, in the long run, imports are expected to decrease because of seasonal lull in demand and the ramping up of local products.
Overall, the market conditions are good for finished long products. Specifically in terms of
production,
Russia is increasing, while
Ukraine is remaining neutral. As for
consumption, both
Russia and
Ukraine are seeing increasing numbers. For imports,
Russia will see a decrease while
Ukraine is expected to increase its imports.
Both
Russia and
Ukraine have increased
billet exports to
Turkey while
Ukraine has been doing more export business with the
Middle East.
Russia has pulled out of
Middle East business for now.
As for the
scrap market, domestic supplies are growing in
Russia, but we are expected to see a decrease in
scrap exports or if not a decrease, then definitely an increase in price. The expected
scrap prices will not go below $250 per metric ton CFR.