According to the preliminary data, in June this year Ukraine's ferrous scrap exports amounted to 99,430 mt - up 68.4 percent month on month and down 24.4 percent year on year.
According to Derzhzovnishinform (DZI), the Ukrainian national research and information center for monitoring international commodity markets, regardless of the €18/mt export duty for scrap effective in Ukraine, of high freight prices and of problems in receiving timely VAT refunds, the Ukrainian scrap processing companies are forced to search for external sales markets and to increase their exports, due to the current situation in the Ukrainian domestic market.
"The scrap purchase prices of the domestic steel mills decreased in the first half of 2009. In addition, in the Ukrainian domestic market the scrap suppliers have to work without prepayments, as a result there is a high rate of nonpayment on the part of steelmakers for delivered scrap," the head of the supervisory board of the Ukrainian Metal Scrap Association (UAVtormet) Valentin Makarenko stated.
In June 2009, the main consumers of Ukraine's scrap were Turkey and Moldova. The Ukrainian scrap suppliers increased their June deliveries to Turkey by 40 percent month on month, as the rise of steel output led to the increase of consumption of Ukrainian origin scrap by Turkish steel producers. The deliveries to Turkey are profitable due to the low freight rates in the Black Sea, while the Turkish companies are making timely payments to their Ukrainian partners.
Meanwhile, Ukraine's scrap deliveries to Moldova's only steelmaker Moldavian Metallurgical Plant (MMZ) increased in June by more than ten times from 400 mt in May to 5,590 mt in June, as the mill restarted its production of crude steel and its rolled steel production operations. Due to the geographical proximity and common land border, the scrap deliveries to the Moldavian market are more advantageous than those supplied to Turkey. However, because of the unstable financial situation at MMZ, the Ukrainian scrap suppliers are reluctant to conclude long-term contracts with the Moldavian side.
In the first half of 2009, Ukrainian exports of ferrous scrap decreased by 28 percent to 296,200 mt.
According to the president of the Ukrainian Association of Scrap Metal Valentin Kulichenko, despite the crisis in the world steel industry, in 2009 Ukrainian scrap exports may increase to one million mt, or at least will not decrease to less than the 637,000 mt registered in 2008.