CEO of Ukrainian steel producer Ilyich Iron and Steel Works of Mariupol (Ilyich), Vladimir Boyko, has stated that the company is refusing to sign iron ore purchase contracts for April with subsidiaries of Ukrainian miner and steelmaker Metinvest under the previous year's conditions, and may halt its purchases unless the companies in question decrease their prices.
Since the beginning of the economic crisis, a number of terms of Metinvest's long-term supply contracts with Ilyich and other producers have been annulled, while new price offers have been arranged on a monthly basis since November 2008. According to Mr. Boyko, the economically feasible cost of iron ore concentrate in the Ukrainian domestic market is a maximum $35/mt, while Ilyich is forced to pay $55/mt.
In addition, Mr. Boyko stated that raw material suppliers, including coke and iron ore suppliers, should switch over to an open-cost calculation for setting sales prices.