At the SteelOrbis 2015 Spring Conference & 72nd IREPAS Meeting in Paris on March 23, Vitali Postolenko, deputy head of the ferrous metal division at the Ukrainian National Center for Global Market Research (DZI), said that in Ukraine almost all iron and steel mills are located in the eastern region of the country which has been impacted by the military conflict and that four of them have shut down completely, though the conflict is not the only reason for this.
Mr. Postolenko pointed out that the Ukrainian metallurgical industry is one of the most energy-intensive metallurgical industries in the world, with one of the highest rates of raw material consumption, due to its mostly outdated equipment, with open-hearth furnaces accounting for 20 percent of crude steel output. He added that the share accounted for by the continuous-casting process is increasing, while iron and steel mills are implementing long-term modernization programs.
The DZI official noted that Turkey was the largest consumer of Ukrainian scrap in 2013, importing 77 percent of Ukraine's scrap exports, with Moldova accounting for 23 percent. In 2014, Turkey accounted for 82 percent of Ukraine's scrap exports. Ukraine's scrap exports amounted to 254,000 in 2013, while reaching 1 million mt in 2014. Mr. Postolenko underlined that the difference in these export volumes was caused by the lower scrap export quota the Ministry of Economic Development allotted in 2013.
Mr. Postolenko emphasized that the pattern of Ukrainian scrap imports is inconsistent, because only the large companies, usually affiliated with major mills, can afford to import raw materials, which they subsequently mix with cheaper and lower quality scrap of Ukrainian origin. He also recalled that Ukraine has an import duty of five percent on scrap.
According to Mr. Postolenko, given the events in Ukraine, in the near future the country could expect to see a significant decline in its rolled steel production. According to the most optimistic scenario, in 2015 output volumes might only reach the level of 2014. He said that, considering the expected decline in production, missing volumes of rolled steel will be substituted by additional imports. Consumers will mainly consider price over quality. In the short term, consumption of long steel products is expected to dip due to negative trends in domestic machine-building and construction sectors, he concluded.