According to the data issued by the Ukrainian independent investment company Phoenix Capital, in 2009 Ukrainian steel producers are expected to decrease their steel output by 18-22 percent year on year to 28.9-30.4 million mt.
Phoenix Capital predicts that in the second half of 2009 Ukrainian steelmakers' daily average steel output will increase by 10-16 percent compared to May 2009, to 82,500-88,500 mt, due to low raw material prices, the high level of vertical integration of the Ukrainian steel sector, and due to the signs of stability registered in the world steel markets.
The increase in steel product output registered by Ukrainian steel producers in May was mainly due to the growth in demand for semi-finished products in the emerging markets in April and in the first half of May. A further rise in production should be expected from the second half of 2009. Even according to the most pessimistic scenario, Ukraine's average daily steel output in H2 2009 would fall no lower than 75,000 mt, Phoenix Capital said.
According to Phoenix Capital's expectations for the Ukrainian steel market for June-August 2009, demand for longs and flats will remain stable in June and will start growing in July-August. Meanwhile, in June a slight fall in prices for Ukrainian semi-finished and rolled steel products will be registered in the Ukraine's main export markets, including Turkey and the Middle East countries. In addition, during the period in question, the Ukrainian steelmakers are expected to maintain their competitiveness in the external markets due to low prices for raw materials, and most of producers are expected to see profits, with EBITDA profitability staying at 12-15 percent.
In addition, Phoenix Capital notes that in June 2009 and in the first half of July it does not expect sharp increases either in steel product prices or in raw material prices.