In April this year, Ukrainian mining and steel producing company Metinvest Holding (Metinvest) doubled on year-on-year basis its iron ore materials prices for domestic consumers, local newspaper Delo has reported.
The newspaper cited the chairman of the board of the Ukrainian steelmaker Donetskstal, Alexander Ryzhenkov, who said that starting from April it has receives pellets from Metinvest's iron ore subsidiary Severniy GOK at the price of $140/mt. In April last year, the price of this product was $70/mt.
In 2009, the cost of raw materials produced by Ukrainian companies for local consumers was regulated by the terms of the memorandum of understanding signed between Ukraine's government and the country's mining and metallurgical companies. In accordance with this document, the miners should freeze their prices at the level of late 2008. However, in the same document signed for Q2 2010 this condition was absent.
Metinvest has not yet commented on its new prices. However, according to market experts, in line with the global uptrend in raw material prices, new higher prices have entered the Ukrainian market as well. Meanwhile, Ferrexpo supplies its material to Eastern and Central Europe at $130-140/mt, while in China spot prices for iron ore concentrate exceed the level of $180-190/mt.
The high raw material prices could be a real disaster for the Ukrainian steelmakers considering the still weak demand for their products, with the production costs for Ukrainian billet expected to increase to $600-650/mt in such conditions. The raw material price increase will, as usual, mostly affect steelmakers that do not have their own raw materials base, such as Ilyich Iron and Steel Works of Mariupol and Zaporizhstal.