The Ministry of Industrial Policy of Ukraine has asked the Ukrainian steelmakers to reduce their prices for steel products for the domestic market to the level of their export prices.
According to Ukraine's deputy minister of industrial policy, Vladimir Severnyuk, currently steel product prices in the Ukrainian domestic market are 20 percent higher than export prices. Mr. Severnyuk stated that the reduction of local prices to the level of export prices is realizable, as the deliveries of the country's steelmakers to the domestic market amount to only 20 percent of the country's manufactured steel output.
Meanwhile, Ilyich Iron and Steel Works of Mariupol (Ilyich) CEO Vladimir Boyko considers that it will be really hard to decrease domestic prices, as the prices for Ukrainian coking coal and iron ore are much higher than the Russian export prices.
However, Mr. Severnyuk said that the Ukrainian government has offered the country's mining and metallurgical companies sufficient preferential treatment, and recalled that the Ukrainian steel producers have to close their debts for coking coal deliveries to state company Coal of Ukraine, which amount to UAH 70 million (approx. $8.7 million).
In addition, the Ukrainian government has asked the Ukrainian steel producers, in return for the preferential treatment they receive, to reconstruct their production facilities in order to expand their product range and to help reduce the amount of imported steel products.
According to Mr. Severnyuk, Ukraine is importing steel products which may be produced in the country, and, regarding last year's profits, not all the Ukrainian steelmakers invested them in production development and in mastering new types of products.
In 2008, Ukraine increased its imports of steel products by 9.5 percent to 2.3 million mt, while the country's steel producers reduced their deliveries to the domestic market by 26.1 percent to 6.5 million mt, both compared to 2007.