The Ukrainian cabinet of ministers has prolonged for the second quarter of 2010 the memorandum of understanding (MoU) with the country's mining and metallurgical companies, signed in November 2008. The prolongation of the MoU will allow the companies to successfully compete in world markets.
As SteelOrbis previously reported, in November 2008 the Ukrainian government and the country's mining and metallurgical companies signed an MoU aimed at the minimization of the consequences of the economic crisis in the industry.
Within the framework of the MoU, the Ukrainian government granted benefits for domestic chemical as well as mining and metallurgical companies, i.e., imposed a moratorium on the increase of gas, railway transportation and electricity supply tariffs. Among the conditions for granting of benefits is the decreasing of companies' prices for the domestic market to levels not higher than their export prices.
However, this time, some government departments have opposed the prolongation of preferences for the domestic mining and metallurgical companies. In particular, the state-owned Railway Company Ukrzaliznytsya has requested the elimination of preferences for these companies, as it considers that they are quite capable of paying the full cost for transportation. According to the MoU, the companies will carry out railway transportation of their products availing of tariffs which have remained unchanged from the end of 2008.
According to local newspaper Delo, which cited the Ukrainian investment company Dragon Capital, the Ukrainian steel producers have improved their production performance, with their capacity utilization in March this year amounting to 75-77 percent, compared to 60-61 percent in March last year. In addition, considering that steelmakers are secured with orders almost until summer, their capacity utilization level is expected to exceed 80 percent this year.